The Ultimate Guide to Business Car Loans in Australia

When running a business, having the right vehicle can be essential to operations. Whether you’re a tradie needing a ute, a courier requiring a van, or a business owner looking for a company car, financing your vehicle efficiently can make a significant difference. In this guide, we’ll answer some common questions about business car loans to help you make informed financial decisions.

Are Car Loan Payments Tax Deductible?

One of the key benefits of using a car for business purposes is the potential tax deductions. In Australia, car loan repayments themselves are not tax-deductible, but the interest portion of the loan and vehicle-related expenses (such as fuel, maintenance, insurance, and depreciation) may be claimable. It’s essential to track your business use percentage and consult with an accountant to maximise your deductions. We can introduce you to trusted accountants who can advise you on your tax affairs. 

How Does a Car Loan Work?

A car loan allows you to borrow money to purchase a vehicle, with the loan repaid in regular installments (weekly, fortnightly, or monthly) over an agreed period. The lender charges interest on the loan, and the vehicle itself often serves as security. For business owners, options like chattel mortgages and hire purchase agreements provide tax benefits and flexible repayment structures.

Can a Car Loan Be Refinanced?

Yes, refinancing a car loan can be a smart move if you’re looking for better interest rates, lower monthly payments, or improved loan terms. Refinancing involves taking out a new loan to pay off the existing one, ideally at a lower cost or lower repayment. This can be beneficial if your credit score has improved or market interest rates have dropped.

What Car Loan Can I Afford?

Affordability depends on your business cash flow, credit profile, and existing financial commitments. Lenders assess your ability to make repayments by looking at your income, expenses, and liabilities. A good rule of thumb is that your total vehicle-related expenses should not exceed 15-20% of your monthly business revenue.

How Is Car Loan Interest Calculated?

Car loan interest is typically calculated using either a fixed or variable rate. With a fixed-rate loan, your interest rate remains the same throughout the loan term, providing predictable repayments. A variable-rate loan, however, can fluctuate based on market conditions, potentially reducing or increasing costs over time. Interest is usually charged on the remaining loan balance.

How Does Car Loan Interest Work?

Interest is a fee you pay for borrowing money. Lenders calculate it based on the loan amount (principal), the interest rate, and the repayment period. Interest is typically charged monthly and is higher at the start of the loan (since the principal is higher) before gradually decreasing as repayments reduce the outstanding balance.

Who Should I Refinance My Car Loan With?

Choosing the right lender for refinancing depends on your needs. Business owners should compare banks and non-bank lenders. Specialist finance brokers (like Working Capital Finance Brokers) can help to find the best rates and terms. A finance broker can negotiate competitive offers and structure the loan to align with your cash flow.

Can I Get a Car Loan with Bad Credit?

Yes, there are lenders who specialise in bad credit car loans. If you have a low credit score due to past financial difficulties, you may still qualify for a loan, though the interest rate may be higher. Demonstrating stable income, making a larger deposit, or providing a guarantor can improve your chances of approval.

Can I Get a Car Loan with an ABN?

Yes, if you’re a sole trader or small business owner, you can apply for a business car loan using your Australian Business Number (ABN). This is commonly referred to as an ABN car loan, and it often doesn’t require full financials. Instead, lenders may assess your bank statements, GST registration, or business income to determine eligibility.

Car Loan vs Cash: Which Is Better?

Paying cash for a vehicle eliminates interest costs and reduces overall expenses, but it also ties up capital that could be used elsewhere in your business. A car loan allows you to preserve cash flow and take advantage of tax benefits but comes with interest costs. The best choice depends on your financial position and business strategy.

Can I Get a Car Loan Without Bank Statements?

Some lenders offer low-doc or no-bank-statement car loans, particularly for self-employed individuals. These loans may require alternative proof of income, such as BAS statements or proven track record of making payments on time. While they provide more flexibility, they may come with higher interest rates or stricter terms.

Benefits of Using a Finance Broker for Your Car Loan

A finance broker can help business owners secure better loan terms, negotiate competitive rates, and structure finance to fit cash flow needs. Brokers have access to multiple lenders, including specialist financiers, which can improve approval chances—especially for self-employed individuals or those with unique financial circumstances. Using a finance broker can save you the time and effort required to research the best fit for your scenario.

Get Expert Help with Your Business Car Loan

Navigating business car finance can be complex, but Working Capital Finance Brokers can help you secure the best loan for your needs. Whether you’re looking for a new vehicle, refinancing an existing loan, or need flexible financing options, our team is here to assist.

Why Choose Us?

✅ Access to multiple lenders, including non-bank options
✅ Fast approvals and hassle-free application
✅ Tailored finance solutions for small businesses and ABN holders
✅ Expert guidance on maximising tax benefits and structuring your loan

Book in a call here to get started today!