What is a business vehicle loan?
A business vehicle loan is basically the same as a typical car loan, but the vehicle purchased is for business purposes.
And, just like any other loan from a lender, you’ll make regular repayments over a set period. Often, you’ll get to choose your loan term and your repayment frequency to suit your circumstances.
What makes a business vehicle loan unique from most personal loans from a bank is the option of a ‘balloon payment.’
A balloon payment is a commitment by you to make a lump sum payment at the end of your vehicle loan term. This reduces the amount of your regular repayments throughout the life of your loan. It can be a clever way to get the vehicle your business needs, without putting too much pressure on your cash flow.
If you choose a vehicle loan with a balloon payment, you’ll need to make sure you have enough money to cover that last, larger payment (if you plan to keep the vehicle at the end of the loan term).
Your business can also benefit from tax deductions that come with borrowing to buy a vehicle.
What you need to know before applying for a business vehicle loan
As with any loan, there’s a little prep work that’s required before you apply.
Up-to-date financials
One of the first things lenders will look at is your business’s financial health. Make sure your financial statements are up to date, accurate, and reflect a stable or growing business.
This includes income statements, balance sheets, and cash flow statements. These documents will demonstrate your ability to repay the loan.
Manage your cash flow
A well-managed cash flow is crucial for securing a business car loan or other kind of business vehicle finance. Lenders want to see that your business can handle regular loan repayments without straining its finances.
If your cash flow is feast or famine, think about how to stabilise it before applying for the loan.
Keep your credit score healthy
Your business’s credit score is like its financial report card. It reflects your credit history for the past five years.
Make sure your credit score is healthy by paying bills on time, keeping debt levels low, and correcting any errors by contacting the credit reporting agency.
If your credit report needs improvement, take the steps before applying for your vehicle loan.
What you'll need to apply for business vehicle finance
If you choose a Business+ Vehicle Loan, you won’t need to print and sign any paperwork, from your supporting application documents to your loan agreement. It’s all done online or in the Business+ app.
Here’s what you’ll need to give us so we can get a picture of your business’s financial position and what you want to buy:
- Your ABN (you’ll need a minimum turnover of $75,000)
- Business financial statements
- Business tax return statements
- Details of the vehicle you’re buying from the dealership
- A business purpose declaration confirming you’ll use the vehicle wholly or mainly for your business (if you’re a sole trader)
How to apply for a business vehicle loan
This is where the rubber hits the road. You’ve found your vehicle and the loan that’s right for you. Now it’s time to apply.
If you’ve chosen a Business+ Vehicle Loan, here’s how the application process works:
- Go online to setup your Business+ profile
- Get a quick Business+ Vehicle Loan estimate of your personalised rate and expected repayments
- Open a Business+ Account for your loan repayments to come out of
- Apply for a Business+ Vehicle Loan and upload your business documents
- Digitally sign your loan agreement on approval
If you’ve got all your documents handy, the whole process only takes around 20 minutes. If your application is looking good, you’ll get conditional approval within minutes of applying.
Once we’ve reviewed your business documents and given you formal approval, you’ll have the funds in your Business+ Account within a few hours.
Vehicles are such an integral part of many small businesses. They need to be reliable and fit-for-purpose. Securing business vehicle finance is a smart way to keep your business moving while keeping your capital for other purposes.
Remember to check out our Business Hub. You’ll find heaps of free resources and plenty of helpful information to keep your business humming.
