Getting business car finance is a lot easier if you have iCREDIT in your corner, batting for you. Business car loans are a little different from personal car loans in a few ways, with some key differences that you should take into account.
Here are a few of the pros and cons associated with taking out business car finance in Australia.
Pro – Tax Deductions
In Australia, taking out a business car loan might make you eligible for tax deductions, specifically on the depreciation of the vehicle and interest charges. The benefit of this is that these deductions can reduce the overall cost of ownership. This is better than personal car loans, which do not have such tax benefits attached to them.
One way to benefit from these tax benefits is through the Australian Government’s instant asset write-off programme. You can also apply for temporary full expensing. This enables eligible businesses to claim immediate tax deductions for business vehicles within the eligible asset class. Doing this will make the vehicle more affordable for your business and help you save.
Pro – Interest Rates
Generally, business car loans enjoy lower interest rates than personal car loans. The reason for this is that many lenders perceive business car loans as being less risky in general, owing to the aforementioned tax deductions that come with having a business vehicle, thus making them more affordable.
On the other hand, personal car loans tend to have higher interest rates due to the higher comparative risk associated with them.
Con – Eligibility Criteria
An unfortunate downside of business car loan applications is that eligibility requirements are generally more strict when compared to personal car loans. Lenders will want to assess the financial stability of the company to determine the risk level, including looking at the credit history and cash flow.
When considering business car loan applications, lenders will have to determine the viability of the business overall as well as the period of time in which the loan is due to be repaid. This can make applications for business car loans tricky, especially for small businesses or entrepreneurs, as startups might have a little more difficulty getting business car loans compared to well-established businesses.
Con – Documentation
Aside from the eligibility requirements, getting the necessary documentation together can be a bit of a headache. However, we at iCREDIT can help guide you through the process. Among the documents needed are various financial statements, proof of business ownership and your business’s tax returns to support the loan application. This is usually more complicated than the kind of documentation required for personal car loans.
For assistance in securing business car finance, contact us at iCREDIT today! We can help you get the best deals.