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The car limit is the maximum value the ATO allows for depreciation and GST claims on a passenger car bought for business use, indexed each year and currently around $69,000. You can finance a car above the limit, but depreciation and the GST claim are capped at the limit, and luxury car tax may apply above the LCT threshold. Utes and vans with a one-tonne payload are generally not subject to the limit. Your accountant confirms the figures for the year of purchase.

A chattel mortgage suits a car owned by the business and used mostly for business: the business owns it, claims GST and depreciation, and the repayments come from business cash. A novated lease suits an employee, including a company director on salary, who wants the car packaged from pre-tax pay with running costs bundled. The right answer depends on who drives the car, how much private use there is and the entity structure, which your accountant and broker work through together.

It can. When a business-owned car is available for an employee’s or director’s private use, fringe benefits tax applies, calculated on either the statutory method or the operating cost method using a logbook. Keeping a 12-week logbook usually reduces the FBT for cars with high business use. Eligible electric vehicles are currently exempt. Your accountant advises on the method that suits your usage.

Yes. Businesses with an ABN of two years or more and a clean credit file are commonly approved for business car finance up to $150,000 to $250,000 with no financials, often the same day, and some lenders extend low-doc to premium vehicles. Newer ABNs and higher-value cars may need a deposit or financials. Your broker checks fit across the panel first.

Often no deposit is required, particularly for established businesses buying standard assets from a dealer. A deposit is more likely where the business is new, the asset is older or specialised, the credit profile is weaker, or the amount is large relative to turnover. Deposits typically range from around 10% to 30% in those cases. Putting money in reduces the amount financed and can improve the terms offered, but it is not always necessary.

The common ones are an establishment or documentation fee charged at settlement, a monthly account-keeping fee, and a PPSR registration fee for recording the lender's interest in the asset. A brokerage fee may also apply, which we disclose to you in writing before anything is submitted. Some agreements include an early termination or break cost. Fees vary by lender and are typically a modest part of total cost compared with the interest, but they should still be compared.

Lenders publish maximum residual or balloon percentages that fall as the term lengthens, because the asset is worth less at the end of a longer term. For a vehicle, a common pattern is up to roughly 50% on a two-year term, reducing to around 20% to 30% on a five-year term. The ATO also sets minimum residual values for finance leases. A larger balloon lowers monthly repayments but increases total interest and leaves a lump sum to deal with at the end.

It is far less common than it once was. Under hire purchase the financier owns the asset and you hire it, with ownership transferring automatically after the final instalment. Since the GST changes that made chattel mortgage more attractive for businesses accounting on a cash basis, most equipment lending is written as a chattel mortgage or lease instead. Some lenders still offer commercial hire purchase, and your accountant can advise whether it suits your circumstances.

The Personal Property Securities Register is the national register of security interests in personal property, including vehicles and equipment. When a lender finances an asset, it registers its interest so the security is publicly recorded and its priority is protected if the asset is sold or the business fails. It also means a buyer searching the register will see the finance. The registration is released once the contract is paid out, and a small registration fee is usually passed on to you.

A balloon is a lump sum left to pay at the end of a chattel mortgage, which lowers the regular repayments during the term. For example, a 30 per cent balloon on a $100,000 vehicle leaves $30,000 to pay at the end, so the monthly amount is calculated on $70,000 plus interest on the full balance. Balloons are commonly set between 0 and 40 per cent depending on the asset and term, and at the end you can pay it out, refinance it or sell the asset to clear it. A balloon reduces monthly cost but increases total interest, so your broker shows both figures side by side.