We regularly receive enquiries for business vehicle finance from people who have an ABN but don't have all the documentation and financial records required by major banks or they don’t meet all the criteria required by some lenders and most banks to be eligible for a business car loan.
If you’re in this situation, Jade Car Loans may have a solution that suits your circumstances.
What is an ABN Only Car Loan?
An ABN Car Loan comes under a broader loan category which also includes No Docs Car Loan and Low Docs Car Loan. All these loan types relate to loan applicants with little documentation except they have secured an ABN. The term ‘documentation’ in the finance sector usually refers to financial records. The loans have similarities and differences which we detail in this article.
Who does this loan suit?
There is clearly a growing trend of people setting up their own business as a side-hack, a ‘hobby’ business, to supplement their primary source of income in their full-time job, to be in a position to operate as a contractor or in the normal course of their career progression.
- Across all trades in the building industry, it is not common for recently qualified tradespeople to want to branch out into their own business as soon as they feel it is viable to do so.
- Professionals and consultants very often set up their own business structure either to take on ‘outside’ work or in a transitioning-to-retirement phase.
- With the expansion of online marketplaces, many craftspeople are finding outlets for their wares and over time, they make the move into a more formal business structure.
- Contractors are extremely prevalent in many industries including cleaning, construction, IT and creative sectors.
- People in a whole range of industries decide to set up their own businesses.
All these new businesses will need an ABN under the Australian Corporation laws regulated by ASIC. But as new businesses that may not have actually started trading, they will likely not have financial records and other documentation.
Anyone in these categories may urgently need a vehicle to carry out their business or they may choose to purchase their car in the business name rather than as private vehicle to realise the tax benefits.
Requirements and Conditions of an ABN Car Loan
In securing an ABN Car Loan, some information is required and some lenders may impose certain conditions on this type of loan.
- ABN is essential
- Advise of the GST status of the business. That is, if your business is registered for GST or not registered. Businesses not registered for GST may attract additional conditions from some lenders.
- Proof of your ID is essential as it is with most financial transactions in Australia such as opening a bank account.
- If you have been trading and have some financial documents such as bank statements, BAS and some form of accounts, even prepared by yourself, it may be beneficial to your loan prospects.
- Some lenders may request you to provide a Business Plan if you are a start-up.
- Due to the nature of an ABN Car Loan, lenders view such finance as ‘higher risk’ and a higher interest rate is likely to apply compared with a fully documented loan application.
- In most cases the lender will accept the vehicle as guarantee against the loan. However, in some cases, especially if you have only recently received your ABN, as no additional security by way of business records is provided, some lenders may require you to pay a deposit.
- Individual lenders have limits on the age of vehicles they will finance. An ABN Loan may not be available on very old used cars.
Your Jade consultant will be negotiating with the lenders on your behalf and will be working hard to secure you the best deal available.
Finance Available with an ABN Car Loan
An ABN Car Loan can apply to the range of commercial finance types, depending on individual lender requirements. These include:
- Business Vehicle Leasing
- Hire Purchase Cars (CHP)
- Sole Trader car loan
Refer to our web pages for full details of each of these loan types.
Comparison: ABN v Low Docs v No Docs
Depending on how much documentation or financial records you have for your business will actually determine if you require a no docs, low docs or ABN-only car loan. Your Jade consultant will discuss this with you while preparing your application.
- All these loan types are considered higher risk by lenders and attract a higher interest rate. But the more financial information you can provide, which is verifiable, the better your prospects for a better interest rate and securing your loan.
- No Docs Car Loans for businesses essentially have the same requirements as listed above for an ABN Car Loan.
- Low Docs Car Loans will usually attract a better interest rate but will require you to provide some financial information such as BAS records, bank statements, tax portals and financial accounts which can be verified from the bank statements.
If have a new business but very little or no financial documentation but you need a car so you can get on with your business, contact Jade Car Loans to discuss your options. As a professional finance broker, we are accredited with many banks and lenders. So if the bank has rejected your application or you’ve been hesitant to approach your bank, we may be able to assist.
Give us a call and discuss your ABN Car Loan options with one of our Jade Car Loans consultants. Call 1300 000 003.
