Benefits of Company Car Loans: What Every Business Should Know

Whether you’re financing an entire corporate fleet of vehicles or purchasing a delivery van for your small business start-up, there are some fantastic benefits of company car loans. No matter how big or small your operation may be, the various business car loan perks and features available could help support the long-term growth of your business… without wreaking havoc on your cash flow!

The Benefits of Company Car Loans

There are numerous factors to consider when financing a company vehicle. Your choice of finance will affect your current and future cash flow, while also impacting the value of your monthly and annual financial statements and registers. Despite this, many business owners find themselves stumbling around in the dark when it comes to corporate car finance options. 

This is why the team at ZEP Finance would like to share some useful information on the benefits of company car loans. We’ll start by answering the question, ‘Why choose a company car loan?’ We’ll also discuss the advantages of business vehicle financing and consider some business car loan perks and features.

Why Choose a Company Car Loan?

It’s a question that finance brokers often hear: “Why choose a company car loan?” After all, most Australians are familiar with the concept of a regular car loan, and many assume that what works well for a private purchase will work equally well for a commercial one. However, there are some unique advantages of business vehicle financing.

The biggest difference between a company car loan and a regular car loan is that you are awarded more benefits when you opt for a business car loan. This could include access to lower interest rates or higher flexibility in repayment structures. You may also be given the option of using the actual vehicle as collateral or security for the loan, as opposed to using business capital.The pros of corporate car finance options also include access to a range of tax benefits. For example, if the vehicle becomes a business asset under a chattel mortgage, your tax benefits are determined by the depreciation of the vehicle and the interest charged on your loan. If you decide to opt for commercial leasing, the cost will be tax-deductible as long as the vehicle remains functional in terms of business-related transport.

What Corporate Car Finance Options are Available?

A car loan for business is intended to be exactly that: financing solutions that cater specifically to the needs of commercial enterprises (from small businesses to large-scale enterprises) and their employees. These loans cover all vehicles, including employee cars, company fleet cars, delivery vans, equipment and even trucks. It all depends on the business you run! Here are some of your options:

• Chattel Mortgage: A chattel mortgage is a business loan used to purchase movable assets, such as vehicles or equipment. The borrower owns the asset, while the lender holds a mortgage as security.
• Hire Purchase: Also known as a commercial hire purchase (CHP), this is a commercial loan arrangement where a company hires a vehicle from a lender and has the option to purchase it at the end of the contract. The business gains immediate use of the asset while paying it off over time, making it a flexible financing option.
• Lease: This is a rental agreement that allows a business to use vehicles without actually owning them. Instead, the business makes regular payments to a leasing company for the use of the vehicle, typically for a fixed term. It’s a convenient way for a company to access vehicles without the upfront cost and responsibility of ownership.
• Novated Lease: A novated lease is an agreement between an employer, their employee and a third-party finance company. The employee leases a car of their choice, and the employer deducts lease payments from the employee’s pre-tax salary, reducing taxable income.
• Personal Loan: A personal company car loan allows employees to purchase a vehicle through the company they work for. The individual owns and uses the car for both personal and business purposes, with the company providing the financing. It’s a more flexible car finance option for those who need a vehicle for both work and private use.

What are the Advantages of Business Vehicle Financing?

The pros of corporate car finance options far outweigh any perceived cons. While some business owners erroneously believe that it is always quicker and easier to obtain a traditional car loan, this is generally not the case when working with an experienced finance broker.

The benefits of company car loans include:

1. Tax Deductions: With a company car loan, businesses may be able to claim significant tax deductions on interest and depreciation associated with company vehicles. This can lead to substantial cost savings and reduce the overall tax liability for the business.
2. Flexible Financing Options: Business car loan perks and features allow for a more flexible approach to car finance. Business owners can choose from various financing options, such as chattel mortgages, novated leases or commercial hire purchase agreements. These options allow companies to tailor their financing to suit their specific needs and financial circumstances.
3. Cash Flow Management: One of the biggest advantages of business vehicle financing is that it makes it easier to manage cash flow more effectively. With fixed loan terms and interest rates, businesses have the clarity they need when planning for future expenses. This ensures that cash is available when needed.
4. Upgrade Options: Some car loan products, such as finance leases, offer the option to upgrade vehicles at the end of the lease term. This makes it easier for a business owner to keep their fleet up to date.
5. Competitive Advantage: In some industries, having a modern and well-maintained fleet can give businesses an important edge over their competitors. Having access to the right vehicles can help to improve efficiency, reliability, and customer service, which are crucial factors in staying ahead of the competition.

Find Out More About the Benefits of Company Car Loans with ZEP Finance

Would you like to learn more about the advantages of business vehicle financing? At ZEP Finance, we can help you to find the company car loan that will be most beneficial for your business. 

Whether you’re looking for a novated lease, a chattel mortgage or a hire purchase arrangement, our skilled car finance brokers can answer all your questions, make expert recommendations and help complete the necessary paperwork. We can even assist with refinancing your existing company car loan while getting you a new car. Please also speak to us if you are self-employed or looking for a solution that requires minimal documentation – our low document options simply require your ABN to be registered for a minimum of 2 years. If you would like to find out more, use our convenient online contact form.