If you have your own business and require a car loan, it can be difficult navigating the car finance options that will be best for you. If you are self-employed, aren’t registered for GST or have had your ABN for less than a year, your car loan options will vary.
As someone running their own business, you’ll have an ABN for your business, but you won’t have much of the accompanying documents traditionally required when applying for a car loan, such as payslips and tax returns. If this is the case, you have three main options: commercial hire purchase, chattel mortgage and finance lease.
This option is useful if you want to budget for your spend and enjoy a tax deduction at the same time. With a commercial hire purchase, you pay a fixed rate and your lender buys your vehicle, leasing it back to you over a certain period. Once it’s been paid off you become the legal owner. This commercial car loan usually has fixed interest rates, flexible loan features and tax deductions.
With a chattel mortgage, the lender gives you the money needed to buy the vehicle. You purchase the car while paying back the amount borrowed with added interest. With this option, you are your own car’s owner from the beginning, and you also have flexibility regarding your loan period and payment amounts. You could also be eligible for a balloon payment (lowering your repayments), as well as input tax credits if your business is registered for GST.
Here your lender purchases a car for you and you lease it from them for a monthly amount with interest. This differs from a commercial hire purchase as you can choose a balloon payment to lower your monthly repayments. At the end of the period, you can either pay off the balloon and keep the car, sell the car and use the profits to pay off the balloon amount or refinance the car to pay off the balloon amount in monthly installments. You can also make advanced payments and might be eligible for a tax deduction.
This car finance option is suitable for ABN holders who don’t have a lot of paperwork to prove their income level. To get a low doc loan, you’ll need to supply only the completed application form, proof of identity (trust deeds or partnership agreements may be permissible depending on the lending institution) and a signed privacy form.
Your business’s unique circumstances will determine which loan type you choose. If you need help deciding, contact Simply Finance so we can help you find the one most suitable for your needs.
Related Tag: Car Loans for ABN Holders Melbourne