Car Loans for Business: Cars, Utes and Vans
If you use a car, ute or van for your business, financing it through the business can be simpler and more tax-effective than a personal car loan. Here’s how business car finance works, the tax limits to know about, and how to choose the right option.
Business car finance options
- Chattel mortgage: the most popular choice. Your business owns the vehicle and the lender holds security over it.
- Finance lease: the lender owns the vehicle, and your business leases it.
- Novated lease: for employees, through salary packaging. See novated lease vs car loan.
Business use matters
Tax deductions are generally limited to the business-use portion of the vehicle. If you use your ute 80% for work, you can generally only claim 80% of eligible costs. Keep a logbook so you can prove it.
The car limit and utes
For passenger cars, there’s a cap on the cost you can use to work out depreciation. The ATO has set the car limit at $69,883 for 2026-27. If you buy a car above that price, the extra cost generally can’t be depreciated.
The car limit doesn’t apply to vehicles that aren’t passenger cars, such as utes and vans designed to carry a load of one tonne or more, or vehicles that carry nine or more passengers. That’s one reason many tradies choose a one-tonne ute. See the ATO’s guidance on car limits and the instant asset write-off, and ask your accountant how the rules apply to the vehicle you’re looking at.
GST on business vehicles
If your business is registered for GST and you buy with a chattel mortgage, you can generally claim the GST credit upfront for the business-use portion. There’s also a limit on the GST you can claim on expensive cars. Your accountant can confirm the right amount.
What affects your rate
- New or used, and the vehicle’s age
- Your time in business and credit history
- Whether you own property (many lenders give better terms to property owners)
- The size of any deposit or balloon
- Dealer or private sale
Tips before you buy
- Get finance pre-approved before you negotiate, so you know your budget
- Compare the total cost, including fees, not just the rate
- Be careful with dealer finance. It can be convenient, but it isn’t always the cheapest. ASIC’s Moneysmart guide to car loans has a useful checklist.
- Keep any balloon realistic compared to what the vehicle will be worth
- Think twice about add-on insurance sold with the loan
FAQs
Can I get a business car loan as a sole trader?
Yes. Sole traders with an ABN can use a chattel mortgage, as long as the vehicle is mainly for business use.
Can I buy from a private seller?
Yes. The lender will usually check the vehicle has no money owing on it and may ask for an inspection.
Will a business car loan affect my home loan?
Yes, lenders count it. If you’re planning to buy a home, talk to us first. See self-employed home loans.
Albert Waldron is a Credit Representative (407514) of Australian Finance Group Ltd, Australian Credit Licence 389087. This is general information only and does not take into account your personal circumstances. Please seek advice before acting. Finance is subject to lender approval, terms and conditions. Tax information is general only; speak to your accountant about your situation.