The best new business vehicle finance is the commercial credit product that suits the accounting method, tax and balance sheet approach and goals of the entity. The beginning of a new calendar year is a popular time for many individuals to take the big step into self-employment. Many will require a vehicle as a tradesperson, delivery contractor, agri operator, or as a business owner. Whether it’s carrying gear, making pick-ups and deliveries, travelling to customer meetings and service calls, or general purposes, a motor vehicle is integral to many commercial operations.
Many will also require financing for that vehicle. To ensure the operation gets off to the best start possible, business owners should consider their loan options carefully. Not all loan products are the best for all businesses. The type of loan used to fund assets such as motor vehicles, can have a significant impact on the financials of the operation.
As specialists in commercial vehicle financing, we explain the loan options available, what is required to get approved, and how we may assist operators to secure their cheapest car loan.
Eligibility for New Business Vehicle Finance
All types of business structures and set-up can be eligible for commercial credit products for motor vehicles. An individual setting up as self-employed may structure their operation as a sole trader, an ABN-only holder, partnership, trust, or as a Pty Ltd company. All are eligible for commercial financing.
The essential requirement for commercial financing is to have ID and an ABN. The ABN may be newly acquired. GST registration is not an essential requirement but can be considered a positive by some lenders.
The loan application requires applicants to provide records of their financials, typically for at least 12 months or 24 months. These records include annual accounts, tax returns, current accounts and turnover, profit and loss statements, asset and liability schedules and BAS returns. Some lenders also require the enterprise to have been trading for a minimum of 12-24 months.
As a new business that is just setting up or has only been operating for a few months, will clearly not have the 12-24 months trading history or financial documents. Where the operation does not meet those requirements, they may consider sourcing Low Doc Vehicle Financing through Jade Car Loans.
These eligibility criteria apply to loans for all types of vehicles, new and second-hand.
New Business Vehicle Finance Products
Whether with full or low documentation, the same selection of loan products applies for all types of commercial entities and all types of vehicles. The commercial credit products to fund business vehicles are Chattel Mortgage, Lease and Commercial Hire Purchase.
All are secured format loans where the vehicle is used as the collateral for the loan. Each credit product has its own features and benefits which will suit different commercial set-ups. All can be used to fund all types of vehicles including popular cab chassis models such as the Toyota HiLux, commercial vans like the Ford Transit, prestige business sedans from Audi or Mercedes Benz with all power units - petrol, diesel and EV models such as Tesla.
Variations with New Business Vehicle Finance
A key difference with commercial credit facilities is their compatibility with accounting methods. Chattel Mortgage is compatible with the cash method, Lease with the accruals method and CHP with both.
Variations can be found between loans for new and second-hand vehicles. While good condition second-hand vehicles are typically accepted as security for the loan, different loan amounts, terms and rates may apply compared with new vehicles.
Ownership of the car while under financing varies. With Chattel Mortgage and CHP the enterprise has ownership from settlement while the lender holds ownership with Leasing until the loan is finalised.
Interest rates vary with the credit product and will also vary for individual loan applications. Chattel Mortgage and CHP offer the lowest rate while Lease is slightly higher. New operators may be seen as higher risk that long-established operators and may expect a higher interest rate loan.
New operators may also expect that their personal financial information and credit history will be requested and assessed by lenders. Additional collateral may be required with personal assets not under finance used.
Where low doc and no doc car loans are required, there will be variations in the loan amount approved and rate offered, compared with loans secured with full financial documentation.
Deciding Your Best New Business Vehicle Finance
So which is the best car loan for your new operation? To make the decision as to the most suitable credit product, it is advisable to discuss the matter with an accountant. The accounting method that the accountant has recommended for your operation may be key.
The approach to the balance sheet in regard to ownership of the vehicle during the loan term is another key deciding factor. Many start-ups prefer not to have large assets on their books as it may hamper their efforts to take on further financing. Tax deductions are available on all commercial credit facilities.
Achieving the best interest rate will be important to most new operators to ensure they keep their repayments as low as possible to support the operation in its initial phases. We have access to a very large selection of lenders and can assist with sourcing the best car loan rates.
If you’ve made the decision to work for yourself and need a car loan, contact Jade Car Loans on 1300 000 003 for your best new business vehicle finance.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
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