Business car finance

Business car finance helps companies buy cars for their operations through various financing options. Typically, the process involves selecting a car and then arranging financing through a lender or financial institution.

Once a car is chosen, businesses may explore different funding options such as loans, leasing, hire purchase agreements, or chattel mortgages. The specific terms and conditions of these agreements vary depending on factors such as the chosen funding option, the lender's policies, and the creditworthiness of your business.

Factors such as interest rates, repayment terms, down payments, and eligibility requirements will influence the overall cost and structure of the financing. Businesses must carefully evaluate their options, consider their budget and cash flow requirements, and assess the tax implications of different funding arrangements before selecting the most suitable option. Properly managed car finance arrangements can help businesses access the car they need while effectively managing costs and optimising cash flow.

Yes, it is possible to finance a car through a business, although you may be liable for a tax known as Benefits in Kind, (BiK). This imposes income tax on the user for their personal use of the car.

Buying a car through a limited company is much the same as personally buying a car, except the business is the vehicle owner and the user is only the registered keeper. Does it make sense to buy a car through your business? This depends on what you will use the car for, the type of vehicle, the purchase price, the type of finance scheme you use, and the vehicle’s CO² emissions. The correct balance will bring advantageous tax benefits, an incorrect balance may make you liable for added taxes.

Business car finance rates start as low as 3%. 

Business car finance can be cheaper than personal finance, depending on the tax advantages you can claim by using the vehicle for business purposes. Interest rates and fees and typically the same for business and personal car finance schemes.

Business car finance offers several benefits that can be advantageous for companies:

• Tax advantages: Depending on the financing option chosen and local tax regulations, businesses may be able to deduct certain expenses related to car financing, such as depreciation, interest payments, and operating costs.
• Cash flow management: Financing a car allows businesses to spread the cost of the car over time, maintaining cash flow for other operational expenses or investment opportunities.
• Flexible terms: Business car finance options typically offer flexible terms and repayment schedules tailored to the needs of the business, allowing companies to choose the most suitable option for them.
• Access to newer cars: Financing allows businesses to buy newer, more reliable cars without having to pay the full purchase price upfront.
• Ownership benefits: Depending on the funding option, businesses may eventually own the vehicle outright after completing the repayment term, providing an asset that can be used for trade-in, resale, or continued use within the company.
• Building credit: Timely repayment of car financing can help businesses establish and build their credit profile, improving access to funding for future car purchases or other business needs.

Yes, you can still get car finance with poor credit history. although you many be asked to pay a higher deposit or higher interest rate and fees. Even if you have been turned down elsewhere, it may still be possible to secure the business car finance  you need.

Even though key interest rates are edging upwards, they are still very low in historic terms. This means borrowing money is cheap, especially if you lock in a low rate now. Instead of tying cash up in the value of depreciating assets and putting strain on cashflow, finance your business vehicles to spread the cost and make the most of low interest rates on business car finance deals.

It can be. Leasing a car instead of buying with HP may create tax advantages for your business. However, lease options typically include a mileage allowance that you must stay within, or you will pay extra for every mile you use above the pre-agreed limit. Very high mileage costs can negate the tax advantages of leasing.

Yes. Lenders will usually conduct a credit check on your limited company, as well as the director(s). If you are asked to provide a personal guarantee for the loan you are liable for any defaults that may occur.  Late or non-payments will be recorded on your personal credit report. 

To obtain the best business car finance deals, Australian businesses will typically need a credit score above 700, (although you may still be able to lease a car with lower scores). Not sure what your business score is? 

To apply for business car finance, you will typically need:

• Company details – including structure (limited company, PLC, sole trader, etc), registration number, annual turnover, date of incorporation or founding.
• Director details – including date of birth, address, contact details, marital status and number dependents.
• Business bank details
• Last 6 months bank statements
• Balance sheet and cashflow forecast
• Details of outstanding business debts