FAQ

Docs refers to the financial documents, income tax returns, annual accounts etc which banks and lenders request as part of the business finance application process. Businesses that have very little or none of these docs can seek low doc and no doc finance. The minimal requirements are a current ABN, ID and good credit rating. Being registered for BAS is not essential but viewed on favourably by some lenders. The quantity of docs a business has determines if they seek low or no docs. The more the docs produced to support a finance application, typically, the more favourable the loan conditions. Businesses just starting up can apply for the category of finance. While some banks and lenders have a minimum requirement of 12-24 trading time as eligibility for finance, there are non-bank lenders that do not have this requirement.

Yes. Sole trader is a recognised business operating structure and is eligible for business vehicle finance. Sole traders are required to acquire an ABN in order to operate as a business and that is the main criteria for business lending. Being registered for GST is not an essential requirement. It can be seen as favourable by some lenders and if a business has a turnover exceeding $75,000 pa, the ATO requires they register for GST. All types of businesses are eligible for business vehicle finance including owner operators, SMEs, large corporations, partnerships and family enterprises.

No. Business loan products, known as commercial finance facilities attract varying interest rates. The variations reflect the differences in the loans from the risk and lender perspective. Chattel Mortgage which is also known as Vehicle Loan, attracts the lowest rate across the range of business loan products. Commercial Hire Purchase is typically the same or similar to Chattel Mortgage as it shares similar features. Leasing attracts a higher rate. This is universal across the finance lending sector. However, the rates offered by individual banks and lenders vary, at times, significantly across all loans. These difference reflect how a lender prices that particular loan segment and their own costs of sourcing funding.

All finance agreements on secured business vehicles will stipulate that the borrower take out a comprehensive insurance policy on the vehicle. This is in addition to the compulsory third-party insurance, CTP. Most commercial finance products are based on a secured loan format. That means the lender uses the vehicle as security against the loan such as with Chattel Mortgage or the lender retains ownership of the vehicle on their balance sheet. In order to assure that security the borrower needs to take out an insurance policy. The lender will want to be assured that should the vehicle be stolen, damaged or completely written off in an accident, the insurer will cover your loan.

It could be possible to achieve a business vehicle loan with a newly acquired ABN. Select lenders provide specialised services for businesses just starting up and for applicants that do not meet all the requirements as designated by say the major banks. Loans for this category of applicant are referred to as start-up business loans, The minimum requirement is to hold a current ABN and have identification. Being registered for GST is not essential but preferred. From that point, the more documentation you can provide to support your application, the better your prospects in regard to terms and conditions. The criteria for this type of loan are stricter than for fully-documented business vehicle loans but all loan products are available. Individual lenders will apply their own set of conditions after assessing an application. These may include additional property ownership or security, a good credit profile and possibly request the total loan amount be reduced.

Yes. There are a number of self-serve finance resources which allow businesses to plan their purchases and their loan structure. These include a Loan Comparison Calculator and an Equipment Finance Calculator. The Loan Comparison Calculator is an easy to follow chart which shows the cheap interest rates that are currently being achieved across a loan portfolio. By entering the amount you want for your total loan and the loan term you would prefer, you will see a rough estimate of repayments on each different loan type. The Equipment Finance Calculator is another self-serve device which goes a step further than the loan comparison chart. You can enter the loan amount, loan term and any balloon/residual you may like to include. The calculator then formulates a repayment ballpark based on the data you have entered. You can play around with the figures to get an idea of how you would like your loan structured to achieve the repayment level you prefer.

A comprehensive selection of business finance products is available for vehicle purchases. These include Chattel Mortgage, Leasing, Commercial Hire Purchase and Rent to Own. The differences in these loan types include suitability to either the cash accounting method or accruals method of accounting; balance sheet entry; treatment of GST; and what elements at what timing tax deductions are realised. All offer benefits in different ways depending on individual set-ups, financial objectives and personal preferences. Deciding which is the best loan for your business should be discussed with your accountant or financial advisor. These loans include fixed interest rates, fixed repayments, fixed loan terms and individually negotiated terms and conditions.

Yes in many cases. This is often referred to as no deposit finance and is the preferred way to go for many businesses. Most businesses are looking to capitalise fully on any tax deductions and other benefits associated with their choice of finance deal and rarely want to use their cash at hand to make a deposit on a vehicle. Finance is sourced which covers the purchase price, and dealer delivery charges which usually incorporate the first year’s registration and CTP. A no deposit finance deal allows borrowers to free up cash flow for other purposes. Commercial finance products include an option for a balloon or residual. This is an amount of the purchase price which is payable at the end of the finance term. Sometimes considered as paying the deposit at the end. By varying this amount you can achieve the repayments that suit your expectations. Use a loan calculator to play around with different variations to see what may work for you.

Yes. A pre-approved loan can be extremely useful when approaching a vehicle purchase and is quite common practice for many businesses. Pre-approved vehicle finance is arranged in similar steps to that of a loan arranged after a vehicle is selected and/or a purchase deal is agreed upon. Except, it is usually based on an estimate of what our customer anticipates their vehicle will cost rather than on an invoice for sale issued by the seller. Most people have at least a rough idea of what they will be paying for a vehicle so estimating a loan amount is quite easy. A loan quote is sourced for that amount. On approval of the quote, the application is processed through to the final approval stage. Customers can then proceed with confidence to select a vehicle and commit to a purchase. The loan amount is then finalised on the contract and any adjustments are made when the final invoice is received.

Business vehicles are classified as vehicles that are used in a business or for the purpose of operating predominately (more than 50%) in a business and are purchased and financed through a business entity. This can include passenger cars used by reps, light commercial vehicles, vans used for delivery or specific purposes such as set up as a technician or repairer mobile workspace, utes, cab chassis, light through to heavy trucks, MPVs, 4WDs, wagons and buses. Finance is also available for other types of vehicles such as materials handling vehicles including forklifts and pallet trucks, bulldozers, and earthmoving vehicles. These categories could be considered as construction equipment categories or as business-related vehicles.