vehicles · Equipment & asset finance
Luxury car finance
A prestige car is easy to finance and easy to get wrong on structure. We explain luxury car tax, the depreciation cap and what each option actually costs.
What is luxury car finance?
Luxury car finance is funding for a high-value prestige or performance vehicle, secured against the car. In Australia these purchases interact with luxury car tax and the ATO car depreciation limit, so the finance structure and the tax outcome need to be considered together rather than separately.
Prestige vehicles are financed in Australia every day, usually through businesses. The mechanics are the same as any car loan, but two tax rules change the maths. Luxury car tax applies at a high rate above a threshold set each year, and the ATO car limit caps the value you can depreciate, so a $200,000 car does not deliver four times the deduction of a $50,000 one.
Structure choice therefore matters. Some buyers use a chattel mortgage and accept the capped depreciation; others prefer a lease where payments are treated differently; employees often use a novated lease. None of these makes a luxury car a tax-efficient purchase in itself, and any adviser suggesting otherwise should be treated carefully. Your broker will present the finance options honestly and leave the tax advice to your accountant.
Luxury car finance at a glance
| Typical price range | $90,000 – $500,000 |
|---|---|
| Finance term | Up to 84 months |
| Useful life | About 12 years |
| New or used | Both new and used prestige vehicles are financed; used performance and collectible cars need a lender comfortable with valuation, as pricing is less standardised. |
| 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 luxury car finance
Higher-value vehicles narrow the lender pool and usually require full financial disclosure rather than a low-documentation assessment. Lenders look at the business’s ability to service the repayment and at the vehicle’s resale market — mainstream European prestige is easier than niche or collectible models. Balloons are common but set conservatively because prestige depreciation is steep in the first three years. Luxury car tax applies above the LCT threshold and the ATO car limit caps depreciation regardless of purchase price.
Before you buy
- Understand that the ATO car limit caps your depreciation claim regardless of what the vehicle costs — the tax benefit does not scale with price.
- Budget for servicing, tyres and insurance, which on prestige vehicles can run several times what a mainstream car costs.
- Check whether luxury car tax has already been paid and is included in the price you are being quoted.
Commonly financed
Mercedes-Benz GLE and S-Class · BMW X5 and M3 · Audi Q7 and RS models · Porsche Macan and 911 · Range Rover Sport
Estimate luxury car repayments
- Number of repayments
- 60
- Balloon at end of term
- $59,000
- Total interest (est.)
- $83,507
- Total repaid (est.)
- $378,507
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 luxury car finance?
Luxury car finance is a secured loan or lease used to buy a high-value prestige or performance vehicle, with the car as security. Terms usually run 36 to 84 months and lenders typically require fuller financial disclosure than for a standard vehicle.
What is luxury car tax in Australia?
Luxury car tax is a federal tax applied to the value of a car above a threshold set each financial year, with a higher threshold for fuel-efficient vehicles. It is generally included in the price by the seller and is not avoided by the way the vehicle is financed.