Buying a business vehicle

Discover the ins and outs of buying and financing a business car, truck or other vehicle.

Purchasing a new or used vehicle for your business can be expensive, but there are financing options to help you get there. Here, we look at what you should know if you’re looking for a new set of wheels.

Get familiar with the costs

Research the market price for the vehicle you’re interested in before you go to a dealer, so you know what to expect and are prepared to negotiate. The price of the vehicle under finance might be higher than the market value, often so the dealer’s finance provider can cover the costs of lower interest rates or other benefits offered in the proposal. 

Confirm delivery times

Supply chain hold-ups can be common. Make sure you understand how long it will take for your vehicle to arrive and if the agreed price will apply regardless of delivery time. Some models have a much shorter wait period than others, which means you can upgrade sooner.

Choose how to get financed

There are two main ways you can finance your business vehicle:

  • A bank or other finance provider
  • Directly through the car dealer

Consider the different finance options available—like equipment loans, hire purchase, finance leases or operating leases—and take the time to understand and compare them, to pick the best option for your situation. To maximise savings, consider negotiating the price of your vehicle and your finance arrangement separately.

Get a quote

Your quote should include the type of finance agreement, the cost of the vehicle, all fees, the term of the loan, interest rate, repayments and the balloon or residual payment if you have one. 

A balloon or residual payment is a lump sum you pay at the end of your loan term that covers any remaining money owing. The benefit of the balloon payment is that it lowers the repayment amount to help with business cash flow, but you may pay more interest over the term. 

Pay attention to additional costs, like monthly account fees, as they can add up over time. It’s important to understand exactly what’s included in your agreement and what makes up your repayments. 

Look at sustainable options

When you apply for a quote, ask about what sustainability options the finance provider offers. Some may give you the option to offset your vehicle’s estimated emissions for a certain period or even the life of the loan. They may also offer a discount for choosing an energy-efficient vehicle.

If you’re thinking about sustainability in your business but aren’t sure where to start, check out our Sustainability Plan Template.

Understand any restrictions and conditions

Maintenance plans, additional warranties, insurances and optional extras may be included as conditions of the offer. Make sure you know what these extras are and decide if they meet your needs and budget.

Get pre-approval for your financing

If you decide to finance your vehicle from somewhere other than where you buy it, you’ll need pre-approval before purchase. Pre-approval from a bank or other finance provider effectively gives you a budget for when you negotiate with the manufacturer or dealer. 

Think about tax implications

There are other potential tax benefits in financing a business vehicle, including claiming depreciation and a deduction for interest charges, or a credit for the goods and services tax (GST) paid. Consider talking to a financial adviser, tax accountant or tax adviser for advice.

If you go ahead with finance for a vehicle, make sure you have a clear understanding of what the total after tax implications will be, what the finance option involves, and what will best suit your business goals and budget.

We have a range of asset finance lending options available to suit your specific business needs.

Things you should know

This article is intended to provide general information of an educational nature only and is prepared without taking into account your individual and/or business needs and objectives. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this, consider the appropriateness to your circumstances. Examples used in this article are for illustrative purposes only.

Credit provided by the Commonwealth Bank of Australia. These products are only available to approved business customers and for business purposes only. Applications for finance are subject to the Bank’s eligibility and suitability criteria and normal credit approval processes. View our current Terms and Conditions for Asset Finance and consider them before making any decision about these products. All rates are subject to change. Fees, charges, terms, conditions and lending criteria apply. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.