Car Loans With a New ABN. Six Months Can Be Enough

The most common obstacle for a newly registered business is the two year trading history many mainstream lenders expect. It is a lender preference rather than a rule of the market. Specialist lenders can work with as little as six to twelve months of ABN registration and trading history.

What matters in place of two years of returns is the strength of the business as it stands today, the asset being financed, and your overall financial situation. Eligibility criteria apply, including credit history, business age and income.

A chattel mortgage is a business loan designed for the purchase of movable assets, which in Australia commonly includes cars, trucks, vans, agricultural machinery, construction equipment and office fit outs. Your business takes immediate ownership of the asset from the outset, and the lender takes a security interest over it as collateral.

The process runs as follows: application and assessment of your business and financial history, an indicative quote outlining potential rates and terms, loan approval and documentation, purchase of the asset with the lender registering its security interest on the Personal Property Securities Register, then regular fixed repayments covering principal and interest. Once the loan is fully repaid the security interest is released and your business retains unencumbered ownership.

• Immediate asset ownership: your business owns the asset from purchase and can include it on the balance sheet.
• GST benefits: GST registered businesses may claim the full GST component of the purchase price as an input tax credit in their next BAS, which can provide an immediate cash flow boost.
• Tax deductions: interest charges and depreciation are typically tax deductible. Always consult a tax professional.
• Fixed repayments: fixed rates and repayments make budgeting and cash flow forecasting easier.
• Flexible terms: terms can often be tailored to your cash flow cycles, with balloon payment options to reduce regular repayments.
• No upfront capital drain: you acquire the asset without tying up working capital.

Finance lease: the lender purchases the asset and your business leases it for a set period, with options to purchase, re lease or return at the end. Ownership generally remains with the financier until the end of the term.

Hire purchase: similar to a chattel mortgage, but the lender technically owns the asset until the final payment, at which point ownership transfers to your business.

Commercial loan: a general business loan may not be secured against a specific asset. A chattel mortgage is specifically tied to the asset being financed.

Be aware of potential establishment fees, ongoing administration fees and early repayment penalties, and note that the interest rate depends on your business's financial profile, the asset and market conditions. Simple Loans holds Australian Credit Licence 509582 and is a member of AFCA. This page is general information and does not take your personal circumstances into account.