Quick answer
Business car finance is finance taken out in your business's name to buy a sedan, hatch, wagon or SUV used mainly for work. It's usually structured as a chattel mortgage, hire purchase or lease rather than a personal loan. Because cars are passenger vehicles, the ATO's car limit caps the GST credit and depreciable cost, and private use by employees can trigger fringe benefits tax.
Key points
- Finance the car in the business's name if it's mainly for business use.
- The car limit caps GST credits and depreciation on passenger cars — $69,883 for 2026–27.
- Private use by employees or directors may create a car fringe benefit.
- Chattel mortgage, hire purchase and finance lease all work for cars.
- Car limit 2026–27
- $69,883
- Max GST credit 2026–27
- $6,353
- Usual structures
- Chattel mortgage, HP, lease
- Purpose
- Business use
What counts as business car finance?
It’s finance for a passenger car — a sedan, hatch, wagon, people mover or SUV — bought by your business and used mainly for business purposes. Real estate agents visiting listings, consultants travelling to clients, sales reps covering a territory, managers moving between sites: all of them need a car rather than a ute or van.
The difference from a personal car loan is who borrows and why. With business car finance, the borrower is the business — through its ABN — and the car is used to earn income. That changes how the finance is assessed, what structures are available and how tax works.
Which finance structures suit a car?
| Structure | Who owns the car | GST timing | Often suits |
|---|---|---|---|
| Chattel mortgage | Your business | Claimed on purchase (capped) | GST-registered businesses keeping the car |
| Commercial hire purchase | Financier until final payment | Generally up front | Accountant preference, some dealer deals |
| Finance lease | Financier | On each payment | Fixed replacement cycles |
| Operating lease | Financier, returned at end | On each payment | Staff car fleets |
Most single-car purchases by small businesses end up as chattel mortgages because they’re simple and flexible. Leases suit businesses that want to change cars every few years without dealing with resale.
How does the car limit affect you?
Passenger cars have a special tax rule the ATO calls the car limit. It caps the cost you can use to work out depreciation, and it caps the GST credit you can claim when you buy.
- For 2025–26, the car limit was $69,674, with a maximum GST credit of $6,334.
- For 2026–27, the car limit is $69,883, with a maximum GST credit of $6,353.
So if your business buys a car costing more than the limit, the excess isn’t depreciable and the GST credit stops at the cap. The ATO says the car limit applies to passenger vehicles designed to carry a load of less than one tonne and fewer than nine passengers (other than motorcycles). Our car limit page explains what’s in and out.
What about fringe benefits tax?
If your business is a company or trust and an employee — including a director — can use the car privately, that private use may be a car fringe benefit. FBT is paid by the employer, and the ATO’s rate is 47% for the FBT years up to 31 March 2027. Sole traders and partners using their own business car privately don’t pay FBT; instead, they only claim the business-use portion of costs.
Eligible battery electric cars can be exempt from FBT. See FBT on business vehicles and electric vehicle finance.
Business use: why the percentage matters
Every tax benefit on a business car — GST credits, depreciation, running-cost deductions — generally depends on how much the car is used for business. A logbook is the standard way to show it. The ATO says a logbook must cover at least 12 continuous weeks and is valid for five years, though you can start a new one any time.
Our business-use percentage helper turns logbook kilometres into a percentage and shows how it splits running costs.
Which cars are easiest to finance?
Lenders like cars that hold their value and suit the business:
- mainstream sedans, hatches and SUVs from popular brands;
- late-model used cars with service history;
- cars priced sensibly for the business’s size and income.
Prestige and luxury cars can be financed for business use too, but lenders look harder at whether the car fits the business, and luxury car tax may apply above the threshold. See prestige car finance for those.
Illustrative example: a real estate agent’s SUV
Illustrative only. A real estate agent operating through her own company needs a mid-size SUV to take buyers to inspections. The company buys a dealer car priced under the car limit through a chattel mortgage, claims the GST credit for the business-use share on its next BAS, and starts a 12-week logbook. Because she also uses the SUV on weekends, the company’s accountant works out the FBT position before the end of the FBT year on 31 March.
What will a lender ask for?
The usual list for a business car:
- ABN and GST registration details;
- ID for the borrower and any guarantors;
- the dealer invoice or private seller details;
- recent bank statements or BAS for low-doc deals;
- financial statements for larger amounts or longer-established businesses;
- details of any trade-in.
Business car or ute: which is right for the work?
If the job involves carrying tools or materials, a ute or van is usually more practical, and neither is capped by the car limit when it’s designed mainly to carry goods. Our ute finance and 4WD finance pages cover those vehicles. If the job is moving people — yourself, clients, staff — a car is the right tool.
Ready to finance a car for your business?
Tell us about the car, how it’ll be used and your business, and we’ll explain the structure that fits. Start a 60-second enquiry.
There’s no credit check when you first enquire. Your details stay with one CarsOne specialist instead of being circulated to a list of lenders, and that person calls you to talk it through. Accurate answers — especially the car’s price, who’s selling it and how much it’ll be used for business — help us get it right first time. Check what you could qualify for.
Frequently asked questions
Can I finance a car through my business if I also use it privately?
Yes, as long as the business use is genuine. You can generally only claim GST credits and deductions for the business-use share, and if the business is a company or trust providing the car to you as an employee or director, FBT may apply to the private use.
What is the car limit?
It's the maximum cost the ATO lets you use to work out depreciation on a passenger car. For 2026–27 it's $69,883, and the maximum GST credit on a car is one-eleventh of that, which is $6,353.
Does the car limit apply to SUVs?
It applies to passenger vehicles designed to carry a load of less than one tonne and fewer than nine passengers, which covers most SUVs. It doesn't apply to vehicles that aren't passenger vehicles under the rules.
Is a business car loan cheaper than a personal car loan?
We don't compare rates, because every deal is priced on its circumstances. Business finance is assessed differently and may suit better when the car is used for business, partly because of how GST and tax are handled.
Can a sole trader get business car finance?
Yes. Sole traders, partnerships, companies and trusts can all finance a car for business use through their ABN.