Chattel Mortgage or Lease? Finance Your Next Ute, Van or Work Car

The ATO car limit applies only to cars, which the ATO defines as motor vehicles designed to carry a load under 1 tonne and fewer than 9 passengers. Utes and vans designed to carry 1 tonne or more are not cars, so the limit does not cap their depreciation or GST credit; check the payload in the manufacturer's specifications, as many dual-cab utes sit close to 1 tonne. For cars, the limit is $69,883 for 2026-27, according to the ATO. General information only; confirm with your accountant.

GST-registered businesses can generally claim the GST in a business vehicle's price as a credit upfront: for a chattel mortgage in the BAS for the period of purchase, and for a hire purchase agreement entered into from 1 July 2012 in the period of the first payment or tax invoice, according to the ATO. For a car costing more than the car limit, the credit is capped at one-eleventh of the limit, which is $6,353 for 2026-27. On a $66,000 one-tonne ute used fully for business, a GST-registered business can generally claim the full $6,000 of GST. General information only; confirm with your accountant.

Luxury car tax applies when a car's GST-inclusive value is above the LCT threshold, which for 2026-27 is $91,661 for fuel-efficient vehicles and $80,809 for other vehicles, according to the ATO. The tax is 33% of the amount above the threshold, and the GST credit cannot be claimed on the LCT itself. Commercial vehicles designed mainly to carry goods rather than passengers are generally not subject to LCT, but whether a dual-cab ute counts depends on its design, so check high-spec dual-cabs priced above the threshold. Check the vehicle with the dealer and your accountant.

A business can finance an electric car on a chattel mortgage, hire purchase or lease like any other vehicle, and the ATO car limit applies to its depreciation and GST credit. If the car is provided to an employee for private use, it can be exempt from fringe benefits tax when it is a zero or low emissions vehicle, was first held and used on or after 1 July 2022, and was below the fuel-efficient LCT threshold at its first retail sale, according to the ATO. Plug-in hybrids stopped qualifying from 1 April 2025, except under some existing commitments. Confirm eligibility with your accountant.

Business vehicles are deducted as they decline in value over their effective life, for the business-use portion only. Eligible small businesses with aggregated turnover under $10 million can use the simplified depreciation pool, deducting 15% in the first year and 30% of the pool balance each year after, and can immediately deduct assets costing less than the instant asset write-off threshold, $20,000 and permanent from 1 July 2026, according to the ATO. For cars, depreciation is capped at the car limit. Confirm with your accountant.

Business vehicle finance costs are generally tax-deductible for the business-use portion. Under a chattel mortgage or hire purchase, the interest and depreciation are generally deductible; under a lease, the lease payments are generally deductible instead. If the vehicle is also used privately, only the business share can be claimed, so keep a logbook. General information only; confirm with your accountant.

Business vehicle finance repayments depend on the amount, term, rate and balloon. As an illustration, on a $66,000 one-tonne dual-cab ute at 8.5% p.a. over 5 years, a chattel mortgage with no balloon is about $1,355 a month, and a 30% ($19,800) balloon brings it to about $1,090 a month, with the balloon owing at the end. Compare the total cost, including fees, not just the monthly figure. Indicative only, not a quote or offer.

Lenders set business vehicle finance rates from their own cost of funds, which moves with the RBA cash rate, plus a margin, then adjust for your credit file, time trading, deposit, loan amount, the vehicle's age and the structure. A new ute from a dealer usually prices sharper than an older vehicle bought privately. Published chattel mortgage rates in Australia start from around 7.5% p.a. and can reach 20% p.a. or higher for some borrowers, depending on the credit profile and the asset (money.com.au, October 2026). Business finance often has no comparison rate, so compare the total cost in dollars, including fees. Indicative only, not a quote, offer or rate guarantee.

A balloon on business vehicle finance is a lump sum due at the end of the loan term, a percentage of the price set by the lender based on the term and the vehicle's age, that lowers your monthly repayments, as in the repayment example above. At the end you can pay it out, refinance it or trade the vehicle in, so set it at a level the vehicle is likely to be worth by then. Indicative only, subject to lender assessment.

No-deposit business vehicle finance may be available for prime applications, subject to lender assessment. Lenders may ask for a deposit if your credit file is impaired, your ABN is newer or the vehicle is older or bought privately. A deposit or trade-in can also widen the lender pool and improve the rate offered.

Some specialist lenders consider business vehicle finance for ABNs registered for less than 2 years, often with a deposit, GST registration, a clean credit file or prior experience in the same industry. Established ABNs with 2 or more years of trading and GST registration usually have the widest choice of lenders. Sole traders sign the finance personally, so lenders also assess the owner's credit file and individual tax returns. Subject to lender assessment.

Business vehicle finance pre‑approval is typically issued within 24 hours* once your BAS or bank statements and the vehicle details, such as the dealer quote or the make, model and year, are provided, subject to lender assessment. Settlement timing then depends on the lender, the seller and your documents.

Refinancing an existing business vehicle loan can work when your credit or trading position has improved since you took the original loan, subject to any early payout costs on the existing loan. It can reduce repayments, combine several vehicle loans into one, or extend the term. Equifund compares your existing loan against the lender panel and only proceeds where the change suits you. Subject to lender assessment.