Which type of car financing is best for my business fleet?

For many businesses, a vehicle or fleet can add an important element to your business operations, whether you're looking into making house calls and home deliveries or offering your potential employees an appealing salary package. Vehicles will also add valuable assets to your company balance sheets and are often tax deductible up to a point which can help with managing your budget and accounting expenses.

For a vehicle to be considered for car finance for business, at least 50 percent of its use will need to be for commercial purposes. There are a number of options that cater to your business needs and offer you terms specific to your operations, depending on if you're a sole trader, partnership or conglomerate.

I run a cafe, restaurant, retail shop or other cash based accrual business and am looking to build my fleet
For businesses that account for its revenue and expenses on a "cash based system" (where you make most of your sales and purchases upfront without invoicing periods), a Chattel Mortgage offers the flexibility of monthly payments and upfront ownership of the vehicle, while also providing the added benefit of being able to claim GST as a lump sum at the time of purchase.

My business is predominantly B2B and I account for income on an accrual basis
For accrual based business operations, a Car Hire Purchase may be a more suitable car financing option. With this type of financing, the financier owns the car and "hires" it for the business to use for a certain term. Upon the end of the term, and usually upon payment of any residuals, the ownership of the vehicle is turned over to the company. Most importantly, this type of financing allows accrual based businesses to claim for GST immediately on their next BAS statement rather than spreading it out through the duration of the lease term.

I'm looking to give my employees a vehicle as part of their remuneration package
Salary packages with vehicles are becoming relatively common in Australia with substantial benefits for both the employee and employer. If you're considering bundling a vehicle into a salary package, you'll most likely be looking at a Novated Lease on the vehicle. In this type of arrangement between the lender, employer and employee, the business will make monthly lease payments are made on a vehicle of the employee's choice. If the employment contract is terminated for any reason, the employee takes over the monthly payments from that point on until the end of the lease term where there are the usual options to refinance or trade in. If you agree on a maintained Novated Lease, you'll be responsible for maintenance costs for the duration of the lease term.

I'm just looking to lease a vehicle
If you're not ready to own a company vehicle but still want the flexibility a company car has to offer, you can opt for a traditional Car Lease where you will be paying for the use of the vehicle throughout the lease term. A Car Lease offers lower monthly payments and much needed flexibility, especially for businesses that are just starting out.