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Business Car Loans (overview)

There are a range of options you can use if you are looking at financing a car for your business.

Financing vehicles for your business can be a solution to free up cash flow as opposed to committing your business’ funds to purchase a vehicle outright. You may also have the ability to make these expenses a tax deduction, so you can put your business’s cash flow to better uses to assist in the growth of your business.

Hire Purchase Agreement

This is a flexible business loan which allows you to have full use of the vehicle whilst ‘hiring’ it from the financier. You are paying towards ownership of your car with each repayment and this loan type would give you flexibility in regards to loan terms, deposit or no deposit, and the option of a balloon repayment.

Finance Lease

You are able to lease the vehicle from the financier in rental instalments which may be fully tax deductible to you.

The GST is paid over the lease term with your rentals and your business may also be able to claim the GST.

At the end of the Lease you will have a forecasted value as a residual payment, and you may have the option to buy the vehicle from the financier at an agreed amount.

Operating Lease

An operating lease is like a Finance Lease without the worry of having to make good on the residual value at the end of the Lease.

The financier agrees to take back the car and wear the risk of the loss between the vehicle value and the residual value. On the other hand, if there is a profit, they will also retain this.

You can even add certain running costs to your Operating Lease for a convenient all in one package.

Sale And Leaseback

If you have any cars within your business that are fully owned, you can have the ability to inject funds back into your business by selling your car to the Leasing company, and they pay you for the car in full, then you lease that car back from them under a normal Finance Lease arrangement.