Quick answer
Business vehicles are usually financed with a chattel mortgage, hire purchase or lease secured on the vehicle, over terms of up to five or seven years. Before choosing, decide which entity should own it, whether it's a 'car' for tax purposes, and how big a balloon you can realistically clear. For 2026–27 the car limit is $69,883, but utes and vans built to carry a tonne or more sit outside it.
Key points
- Passenger cars face the $69,883 car limit for 2026–27; vehicles built to carry one tonne or more, or nine or more passengers, do not
- The business entity that uses the vehicle should normally own and finance it
- Set any balloon at or below the vehicle's likely trade-in value, not at the maximum the lender allows
- Adding several vehicles at once tests your total repayments, so lenders look at the whole fleet, not one van
Three decisions shape a business vehicle purchase long before the lender’s paperwork arrives: which kind of vehicle it really is for tax purposes, which entity should own it, and how you’ll leave the loan at the end. Get those right and the finance is straightforward. Get them wrong and the business can end up paying for a car it no longer drives, or claiming less than it should.
Is it a car, a ute or something else?
The ATO treats passenger cars and working vehicles very differently, and the 2026–27 thresholds set out the gap.
| 2026–27 figure | Amount | What it means |
|---|---|---|
| Car limit | $69,883 | The most you can use as the cost for depreciation on a car |
| Maximum GST credit on a car | $6,353 | One-eleventh of the car limit |
| Luxury car tax threshold, fuel-efficient vehicles | $91,661 | LCT is charged on the value above this |
| Luxury car tax threshold, other vehicles | $80,809 | Same, for vehicles that aren’t fuel-efficient |
The ATO’s definition catches people-movers seating up to eight and rated for under a tonne of cargo. A dual-cab ute, van or cab-chassis rated to carry a tonne or more, measured as the GVM on the compliance plate less the basic kerb weight, sits outside it. For a GST-registered business that uses the vehicle fully for work, that can mean a much larger GST credit and depreciation claim on an expensive ute than on a car of the same price.
Two cautions. Check the actual payload figure for the exact model and build, because accessories like canopies and bull bars don’t change the rated figure but some variants fall just under a tonne. And private use still reduces what you can claim, whatever the vehicle. Our pages on commercial vehicle finance and business car loans go deeper into each category.
Who should own the vehicle?
As a rule, the business that uses the vehicle to earn income should own it and take the finance. If a company runs the trade, the company buys the van. That keeps the GST credit, depreciation and interest deductions in the right place and avoids messy reimbursements later.
Where it gets more nuanced:
- Company cars for employees, including directors, can raise fringe benefits tax if they’re available for private use. Some work utes and vans qualify for exemptions when private use is minor and incidental.
- Novated leases are a salary packaging arrangement between employer, employee and financier. They suit employees wanting a car as part of their pay, not a business buying its own fleet. See novated lease vs chattel mortgage.
- Sole traders buy in their own name, but should still keep a logbook to support the business-use percentage.
Picking the structure and term
For most businesses the choice comes down to owning (chattel mortgage or hire purchase) or leasing. Our comparison of chattel mortgage vs hire purchase covers the GST and ownership differences.
Terms usually run from one to five years, sometimes seven for new vehicles. A useful habit is to match the term to how long you’ll realistically keep the vehicle. If you replace work utes every four years, a seven-year loan means rolling unpaid debt into the next one.
Thinking about one vehicle or several? Let us know what you need. The form is a minute’s work and doesn’t record a credit enquiry.
How big should the balloon be?
Leaving a final lump sum (the balloon) unpaid until the last month trims every repayment along the way. Lenders will often allow a balloon up to a set percentage of the price depending on the term and vehicle. The maximum isn’t the target.
The safer approach is to estimate what the vehicle will be worth when the loan ends, given the kilometres your business puts on it, and keep the balloon at or below that figure. A courier van covering long distances every week will be worth far less after five years than a manager’s car that does short trips, even if both cost the same new.
If the balloon is bigger than the trade-in value, you’ll either pay the difference in cash or refinance it, and refinanced balloons are an easy way to keep paying for a vehicle that’s already gone. A balloon payment is a tool for managing cash flow, not for making an unaffordable vehicle fit.
Buying several vehicles at once
Adding a fleet changes how lenders look at you. One van is a small exposure; five vans at once is a business decision that needs to stack up on the whole set of repayments. A lender will usually want to see:
- Several months of transaction statements from the business account, plus BAS or full financials once the total climbs
- Every current commitment, from earlier van loans to equipment leases
- Evidence of the work the vehicles will do, such as new contracts or a growing customer base
- In some cases, a staged purchase, where some vehicles are funded now and more later
Larger fleets sometimes suit an approved limit with one financier, so each new vehicle is drawn against it without a fresh application. If you’re turning down work because you don’t have enough vehicles, our rapid growth page covers how to fund expansion without stretching cash flow.
Used vehicles and private sales
Late-model used vehicles are widely financed, often on similar terms to new. Before buying from a private seller, run a PPSR search on the VIN. It shows whether the VIN shows up on stolen or written-off vehicle records and whether a financier still holds security over it. Lenders will usually need a tax invoice or a clear private sale agreement and may inspect the vehicle.
Worked example: a plumbing business adds three vans
An illustration only. A plumbing business with nine staff and four years of trading wins a maintenance contract with a property manager and needs three more vans, fitted with shelving and racking.
| Item | Amount |
|---|---|
| Three vans at $58k each (including GST) | $174k |
| Shelving, racking and signage | $21k |
| On-road costs and registration | $9k |
| Total | $204k |
The vans are designed to carry well over a tonne, so the car limit doesn’t apply. The business funds the vans and fit-out on three chattel mortgages over five years, with balloons set at a level the owners expect the vans to beat at trade-in, given the kilometres planned. The GST credit on the purchase price is claimed on the next BAS, which helps cover the registration and the first months of repayments. The contract income is more than enough to cover the extra repayments, and the lender approves after reviewing the contract and the last six months of statements.
Their bank had offered a similar deal but wanted a general security over the business. A specialist vehicle financier funded the vans on the vehicles alone.
When the bank offer isn’t there
Banks are excellent vehicle lenders for established businesses, and their offers are often the sharpest, so ask your own bank first. If they say no because you’re newly registered, you’ve had a credit blemish or you need the vehicles quickly, specialist asset financiers and non-bank lenders handle these deals daily. Our page on new business loans with an ABN under 12 months explains how newer businesses get vehicles funded.
Moving into heavier vehicles? Read finance for buying trucks.
Putting the next vehicle on the road
The right vehicle, owned by the right entity, with a balloon you can clear, is a quiet asset that just keeps working. A poorly set-up loan, by contrast, tends to haunt two or three changeovers.
If you’d like help with yours, enquiring is quick, around sixty seconds, and asking us leaves your credit history exactly as it was. Your enquiry stays with our team instead of being parcelled out to finance companies you’ve never heard of. Someone here looks at the fleet you’re planning and gives you a ring. Be exact about the vehicles, the price and your trading figures so the first suggestion lines up with what you actually need.
Frequently asked questions
What is the best way to finance a business vehicle?
For most GST-registered businesses that want to own the vehicle, a chattel mortgage is the usual choice because the GST credit can generally be claimed upfront and interest and depreciation are deductible for business use. Leases suit businesses that replace vehicles on a fixed cycle. Your accountant can confirm which works best for your structure.
Does the car limit apply to utes?
Not if the ute is designed to carry a load of one tonne or more. The ATO's car limit applies to passenger vehicles built to carry fewer than nine passengers and less than a one-tonne load. Payload is the gross vehicle mass on the compliance plate minus the basic kerb weight.
How much GST can I claim on a business car?
For a vehicle that falls under the car limit, the most GST you can claim for 2026–27 is $6,353, which is one-eleventh of the $69,883 car limit. Vehicles outside the car limit, such as a one-tonne ute, aren't subject to that cap. Partial private use reduces the claim.
Can a new business finance a work vehicle?
Often, yes. Vehicles are among the easiest assets to finance because they're easy to value and resell. Newer businesses may need a deposit, a trade-in or stronger supporting documents, and some lenders want a minimum period of ABN registration.
Should I buy new or used vehicles for the business?
New vehicles come with warranties and are easiest to finance on long terms. Late-model used vehicles can save a large amount upfront while still being widely financed. Older vehicles usually mean shorter terms and fewer lenders.
What happens if I can't pay the balloon?
Most owners sell or trade in the vehicle, refinance the balloon over a further term, or pay it from cash. Problems arise when the balloon is larger than the vehicle is worth, which is why it pays to size it conservatively from the start.