vehicles · Equipment & asset finance
Business car finance
The structure matters more than the rate on a business car. We explain how chattel mortgage, lease and novated lease differ before you sign anything.
What is business car finance?
Business car finance is funding for a passenger vehicle bought through a company, trust or sole trader for business use, secured against the car. In Australia the structure chosen — chattel mortgage, novated lease or finance lease — changes the tax and GST treatment, so the right answer depends on who owns the vehicle and how it is used.
A business car is a straightforward asset but a complicated tax question. Buying through the business with a chattel mortgage means the company owns the car, claims the GST in the next BAS and depreciates the vehicle up to the car limit set by the ATO. A novated lease instead ties the car to an employee’s salary package, with the employer making payments from pre-tax and post-tax income and the employee carrying the car if they leave.
What is right depends on who drives the car, how much of the use is genuinely business, and whether fringe benefits tax will apply. None of that changes the vehicle you want, but it changes the total cost meaningfully. Your broker sets out the options and the numbers, and your accountant confirms the tax treatment before anything is signed. Getting that order right takes an afternoon and can change the cost of the car over five years.
Business car finance at a glance
| Typical price range | $25,000 – $150,000 |
|---|---|
| Finance term | Up to 84 months |
| Useful life | About 10 years |
| New or used | New cars attract the sharpest rates and full warranty; late-model used cars under five years old are financed on similar terms with slightly higher pricing. |
| Indicative rates (Chattel mortgage) | 6.9% – 14.5% p.a. · rate history |
| Finance structures | Chattel mortgage (recommended), Business vehicle finance, Novated lease, Finance lease |
How lenders assess business car finance
Business cars are funded on minimal documentation for established ABNs, often with same-week settlement. The structure drives the tax outcome: a chattel mortgage makes the business the owner with GST claimable up front and depreciation claimed against the car limit; a novated lease moves the arrangement to an employee’s salary package. Vehicles above the luxury car depreciation limit are still financeable but the deductible depreciation is capped. Fringe benefits tax can apply where a car is available for private use.
Before you buy
- Talk to your accountant about the car depreciation limit before you buy — it caps what you can claim regardless of what you paid.
- Consider running costs over the whole term, not just the purchase price; servicing and tyres differ sharply between makes.
- If the car will be provided to an employee, compare a novated lease against a company-owned chattel mortgage before committing.
Commonly financed
Toyota Camry Hybrid · Toyota RAV4 Hybrid · Mazda CX-5 · Volkswagen Golf · BMW 3 Series
Estimate business car repayments
- Number of repayments
- 60
- Balloon at end of term
- $17,600
- Total interest (est.)
- $24,910
- Total repaid (est.)
- $112,910
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is business car finance?
Business car finance is a secured loan or lease used to acquire a passenger vehicle for business use, with the car as security. Common structures are a chattel mortgage where the business owns the car, a finance lease, and a novated lease arranged through an employee’s salary package.
What is the car depreciation limit?
The car limit is a cap set by the ATO on the value used to calculate depreciation and GST credits for a passenger car. Amounts above the cap cannot be depreciated even if the car is fully used for business. The limit is indexed each financial year.