Business car finance is a great way to purchase a new or used vehicle for your business. The vehicle is usually the security for the loan, and this means you are not outlaying a large sum of cash or equity to purchase the vehicle. The rates are more competitive than consumer loans and there are many attractive tax benefits.
Interest Rates vary considerably for Business Car Finance
Unlike home loans, interest rates for business car loans vary considerably. This is all dependent on the lender’s perception of risk. Basically, the higher they perceive the risk, the higher the interest rate. The lower the risk, the lower the interest rate.
More Diverse Criteria is Available Today
Many lenders do not like lending for second hand privately purchased vehicles. Generally, new vehicles from dealers are viewed as lower risk by most lenders and attract better interest rates. However, in today’s competitive market there are an increasing number of lenders who have very competitive rates for older vehicles purchased privately. The age, condition and kilometres of the vehicle are the consideration.
Business Car Finance Application Guide
Like interest rates, the criteria to evaluate business car loan applications also varies. The following is a guide to what most lenders consider when evaluating a business car loan application:
- Time in business and GST registration: lenders usually prefer 12months or more in business with GST registration;
- Property owner: being a property owner is favourable with many lenders but not always essential;
- New or used vehicle: the preference is new as the vehicle is usually the security for the business car loan;
- Whether dealer or private purchase: lenders view purchasing from a dealer as preferable;
- Credit rating: a good credit rating gives lenders confidence that the borrower is a reliable payer and of good character;
- Loan amount: the higher the amount over a shorter term usually attracts a better interest rate;
- Loan term: Loan terms are usually 2 – 5 years;
- Ability to repay debt: lenders want evidence that the borrower has the ability to repay the loan.
Good business finance brokers understand their lenders’ perception of risk and the associated criteria. Will Finance is a finance brokerage that specialises in business car loans. They will save you time and money by sourcing the business car loan that suits your needs.
Phone Will Finance (07)3106 3921 to make an appointment for a broker to source the best deal and save you time and money by doing the necessary work for a successful application.