Business Car Loans Explained – Monzi’s Quick and Easy A to Z Guide

Business car loans may help you purchase the work vehicle that your business needs to take it to the next level. So, that’s why Monzi’s here to help. We’ll breakdown your options as well as the features that you must be aware of. Keen to learn more? Read on to discover Monzi’s ultimate business car loan guide. Let’s go.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

Business car loans: Monzi’s explanation

Business car loans, also known as commercial car loans, are exactly what you would expect. They’re a loan that you can take out as a business owner to purchase vehicles for you, or your employees, that are then used in your business operations.

Most commonly, these loans are offered with a standard principal and interest structure. In short, that means that you borrow the money required today and then pay it back via a series of repayments over a fixed period. However, these loans may also be offered in other forms, depending on the lender that you are dealing with and the structure of your business.

Now that we’ve covered the basics, we can dig further into the details. Read on for Monzi’s deep dive into business car loans covering everything that you need to know. Let’s go.

Should I use a business car loan calculator?

Yes, if you’re unfamiliar with business loan calculators, then it’s time you got acquainted. Put simply, a loan calculator is a useful online tool that you can use to get an idea of your loan costs. From there, you can compare the results to your business’ financial situation to determine if the loan would be affordable for your organisation.

To get started, you just need to enter the key features of your loan (e.g. amount, term, interest rate). Once you’ve done that, the calculator will spit out your results and provide you with an estimate of your repayments and total costs. Best of all, you can alter the key features to see how it may affect your costs.

Ultimately, using a business loan calculator is a great place to start before you apply for a business car loan. You can find them for free online with a range of different financial institutions. Do your research to find one today.

What are the rates on business car loans?

As you may or may not know, essentially all loans will come with interest. Usually, this will be expressed as an annual percentage. As a result, you will always repay more than what you borrow.

Unfortunately, though, Monzi cannot say with certainty what the rates on your business car loan may be. This is because lenders will vary in the rates that they offer. In addition to this, the structure, age and size of your organisation may impact the rate you are offered as a business. For instance, large and established organisations may be offered lower rates than small businesses.

As a result, you must approach a lender directly to determine the rate you may be offered. Alternatively, make use of comparison sites online that compile all the information you need in one place.

Are there any business car loan requirements?

Yes, there will be.

In short, all lenders will apply certain qualifying criteria that they will use to determine your eligibility and suitability for a loan. However, Monzi is unable to specifically state what these criteria may be, given that they do vary between lenders.

To give you an idea, though, these qualifying criteria will typically relate to your business’ financial position. In this way, it is very similar to applying for an instant cash loan online. However, rather than lenders assessing your income and credit history, they will assess your business’ profit and loss, credit history, capital and assets instead.

Ultimately, to receive approval, you will likely need to demonstrate that your business generates adequate income to cover the costs of the repayments associated with your loan.

Car loans for small business

If you’re a small business owner, then you know the stress that it brings. Between trying to stay on top of your finances and keeping your business running, you might feel like you’ve got no time to investigate your business car loan options. If this sounds like you, then the good news is that there may be some new car loans for small business owners.

However, it’s important to understand that as a small business, it can often be difficult to receive approval on a loan. While some lenders may be willing to consider your company, you must still demonstrate that you are earning sufficient income and have the necessary capital to cover your repayments. Obviously, this can be tricky if you’re still in the early stages of your business’ development.

Given this, it’s while some lenders may consider offering small business loans, always remember that approval is not certain. As a result, it’s never a bad idea to approach a qualified professional for advice to determine what your financing options may be.

What is the best business car loan?

Unfortunately, that’s something that you must decide. Why, you ask? Well, allow us to explain.

When it comes to loans and business loans, in particular, the best loan will depend on your business. For instance, the best loan for a well-established business with many assets will likely be significantly different from the best loan for a small business looking to purchase its first company vehicle.

Given this, if you are researching car loans for business uses, make sure that you do it from the perspective of your business. In other words, consider your needs and financial situation and how each loan would work from you. If you do that, then you may be able to find the best loan for your organisation.

Finally, a crucial element to finding the best car loan for your business is to compare loan products. By evaluating loans side-by-side, you can see how the costs and terms stack up. This will undoubtedly make your decision a little easier or more clear.

Business car loan comparison: what should I look for?

Comparing loans may seem daunting. However, once you break it down, it’s a fairly simple process. As a guide, some of the key points that you must compare include:

  • The costs: All loans will come with fees and interest. As a guide, aim to find the lowest rate possible to reduce your total costs in the long run.
  • The terms: ensure that there is a manageable term for you. A repayment term that’s too short may not be affordable for you, while one that’s too long may be unnecessary.
  • Secured or unsecured: most car loans will be secured loans with the vehicle being used as collateral. However, in some cases, these loans may be unsecured.
  • The lender: are you going to apply with a bank or lender or access finance through a dealership? Each may vary slightly in the terms and products they offer, so ensure you compare your options.

For more details on applying for a business loan and what to look for, check out the handy guide assembled by the business.gov.au.

Should my business get a fixed or variable rate on a car loan?

When it comes to car loans, both fixed and variable rates have their benefits. As a result, the right choice for your business will depend on what you prefer.

On the one hand, a fixed-rate loan to purchase a vehicle will provide certainty. You will know exactly how much you must repay, which can make budgeting easy.

On the other hand, variable rates may provide greater flexibility. You may have the option to make additional repayments and could even take advantage of favourable interest rate movements. However, there’s always the potential for rates to rise too. As a result, there may be some risk involved.

Given this, ensure you weigh up the pros and cons to determine whether a fixed or variable rate is best for you.

Car loans for new business: are they possible?

If you’re just starting in the business world, then there may be credit options available for you. However, it’s important to understand that it will often be difficult to receive approval.

As a guide, common reasons that banks and lenders reject loan applications from small business owners include:

  • Few or no assets (i.e. cannot provide security on the loan).
  • Insufficient credit history.
  • Lack of capital.
  • Little to no cash inflow.
  • Poor business plans.
  • Incomplete applications.

However, don’t be disheartened as there may be other options that you can access. For instance, if your business doesn’t have adequate assets to put up as security, you may be able to secure the loan with a personal asset (e.g. your car or home) instead. However, policies may vary between lenders. Moreover, you must consider the risks and consequences before doing so.

What are secured business car loans?

Secured loans are the most common form of vehicle finance that you will encounter. If you’re unaware of what they involve, then there’s no need to worry. We’re here to provide a quick explanation for you.

Starting with the basics, with a secured loan you must attach an asset as security. Hence the name secured loans. With personal loans, this asset will typically be a vehicle, boat, caravan or other such similar assets. If you fail to repay a secured loan, then your lender may take steps to repossess this asset to cover their losses.

With a secured car loan for your business, the vehicle that you purchase will typically be used as security on the loan. However, in some cases, you may be able to use other assets owned by your business (e.g. property or equipment).

Finally, the key benefit of a secured loan is that as there is less risk, the lender may offer lower rates, allowing you to save money on your loan. However, Monzi cannot guarantee if this will always be the case.

What is the best bank for a commercial vehicle loan?

Unfortunately, Monzi is unable to say which bank is best when it comes to offering business loans. After all, we’re simply here to provide you with a quick and accessible breakdown of your finance options to purchase a vehicle for your business.

Having said this, the advice provided earlier regarding loan comparisons will hold true when it comes to the best bank. In other words, you should compare the key features and products on offer to determine which is best for you. Moreover, remember that the best bank for you may not be the best bank for another organisation. It will simply come down to your needs, preferences and circumstances.

If you’re looking to break free from the banks, then there may be other options available (e.g. online lenders). However, we’ll touch on this more below.

Can I apply for business car loans online?

Yes, you can!

These days, banks and traditional financial institutions aren’t necessarily the only credit providers who may offer business finance. There are now a host of online lenders who could help you too.

As they’re online, there won’t be any face-to-face meetings required. Instead, you can apply all from the comfort and convenience of your office. Not only that but as they don’t have to maintain branches, their overheads are lower. With this, it may even be possible to access more competitive rates on your business car loan. However, Monzi cannot guarantee if this will always be possible.

At the end of the day, online lenders provide competition, which is never a bad thing for consumers. As a result, you should always take the time to compare the range of products on offer. Do what you can to ensure that you can access the best possible rates and terms for your business. It doesn’t matter whether it’s from a bank or a new-age, online lender.

How long does it take for a business car loan to be approved?

The simple answer is that times will vary.

On the one hand, if everything goes off without a hitch, then it may be possible for you to receive approval on the day you apply. On the other hand, it’s more realistic to expect that you will receive an outcome with a few business days.

Times will vary given that there are often a number of factors involved. With this, lenders will look to assess your business and the key factors that determine your creditworthiness (e.g. income, assets, cash flow, etc.). Once the assessment is complete, you will receive your outcome.

While Monzi cannot guarantee if you could receive an outcome fast on your application, there are potentially a few easy options that may reduce your waiting time. Firstly, apply during business hours. In addition to this, make sure that your application is complete and you have provided all the required details before submitting it. If you do these two easy things, then you may receive an outcome ASAP.

What is the average rate on a car loan for a business?

Unfortunately, Monzi cannot say.

The rates applied on business loans for car purchases may vary greatly depending on the specific features of your loan and business. For instance, an established business with several assets and good credit history may be offered a more competitive rate than a small business. Moreover, the amount you wish to borrow could have an impact too.

Given this, we cannot provide you with an estimate for what a standard rate may be. Instead, you should shop around and compare products to determine what a competitive rate may be. From there, you can submit an application.

My business has bad credit: can I still get a car loan?

In short, you may.

If you’re after loans for your business but your credit history isn’t the best, the good news is that there may be some lenders out there willing to work with you. In most cases, these will be online lenders rather than traditional institutions.

However, when it comes to credit for borrowers with a few mistakes on their record, keep in mind that you may need to apply for a secured loan to increase your chances of approval. After all, by securing the loan with an asset, your lender may have an avenue to recover their losses should you default. In addition to this, be aware that you may incur higher interest rates or additional fees.

Finally, remember that Monzi cannot guarantee if your business will be offered a loan for poor credit. It will simply come down to the lender you are dealing with and the outcome of your loan assessment.

Vehicle purchased using business car loans

What other types of business finance are available?

If you’re looking for finance for your business but not to purchase a vehicle, that’s OK. There are potentially a range of other products that may be suitable for you.

As a guide, some of the most common business loans include:

  • Line of credit: this is a flexible credit option where you’re approved to borrow a certain amount (e.g. $10,000). However, the benefit of a line of credit is that you only pay interest on what you use. In other words, you can borrow money whenever you need up to the agreed amount.
  • Term loans: this is your standard principal and interest loan. You get a cash loan today and the costs are divided into a series of repayments over a fixed period.
  • Overdraft: this is similar to a line of credit. An overdraft occurs when you make withdrawals from your transaction account that exceed your balance. Usually, you can borrow an additional sum up to an agreed amount. However, there are costs involved.
  • Credit cards: this is a fairly standard form of small business credit. Use your card to make purchases and pay off the balance each month. It’s a fairly straightforward option.

Note that this list is not exhaustive. Moreover, given the number of choices available, do your research to determine which is right for your business and it’s present cash needs.

Should I purchase a car in the business’ name or my own?

This is a question that is often asked. However, Monzi cannot provide a clear answer for you, given that there are arguments to be made from both sides.

On the one hand, buying a vehicle through your business may provide certain tax benefits. For instance, the business may deduct depreciation expenses and other running costs if it is being used for business reasons. On the other hand, you may prefer to buy the vehicle under your name so that you hold the ownership rather than the business.

Again, though, Monzi cannot say which option is best for you or the exact benefits you may experience. As a result, it may be a good idea to approach an accountant or business loan specialist to get a better understanding.

The five C’s of business credit: how does your business stack up?

If you want to apply for a business loan for your small business, you must understand the five C’s. In short, lenders use these criteria to determine your creditworthiness. In other words, the likelihood that you will repay your loan.

So, to assist you, we’ve compiled this quick guide to the five C’s. You may use this information to see how your business stacks up. Check it out.

Character

Let’s begin with your business’ character. Ultimately, lenders want to confirm that you are a trustworthy and established organisation. In assessing your character, lenders will typically assess your repayment history, finances and credit history. As a result, they can determine your overall reputability as a company.

Capacity

Arguably the most important of the five criteria, capacity relates to your ability to afford the associated repayments. In other words, will you have the cash to cover the costs? To determine this, lenders may assess factors such as your cash-on-hand, on-going expenses, cash flows and projected cash flows as well as your overall profitability.

Capital

The amount of capital that you have as a business can impact your loan outcome. For instance, if you’ve got cash and assets, then lenders may view you more favourably, given that you will likely be able to cover the costs of your loan.

Collateral

Do you have any assets that you can use to secure your loan? As a guide, lenders typically prefer to offer secured loans, given that they have an avenue to recoup any losses. With this, lenders may accept property, equipment, machinery, inventory or other such items as collateral on your loan.

If you’re a new business, then you will likely have few assets. This may make it more difficult to receive approval. However, it may be possible for you to secure your loan against personal assets (e.g. your home). Although, ensure you consider the risks before doing so.

Conditions

The final C relates to your loan rather than your business. With this, lenders will look at the terms of your loan (e.g. interest rate, credit-type, etc.) to determine whether or not it will be affordable for your business. As a result, you should only apply for the cash amount that you really need.

Can I apply with Monzi if I need a business car loan?

Unfortunately, you cannot.

At Monzi, we’ve done our best to explain the ins-and-outs of business car loans in a way that you can understand. However, we do not offer these products, nor do we offer any loan products. Instead, we’re a lender-finder service.

In short, this means that we match Aussies like you with a network of fast and understanding lenders. With this, you can apply for cash amounts for $300 to $10,000. So, whether your car’s broken down or you’re looking to consolidate a few debts, we may set you on the right path.

At the end of the day, Monzi might be able to take the hassle out of finding a lender. We may match you with a lender today and we’ll ask for nothing in return. It’s as simple and stress-free as can be. Apply today.

Am I eligible to apply for a personal loan with Monzi?

So, you’re interested in applying for quick cash in your account with Monzi. However, before you dive into an application, you must first confirm your eligibility.

At Monzi, we have four boxes that you must check for your application to progress. Check them out:

  • At least 18 years of age.
  • Australian citizen or permanent resident.
  • Own an active mobile number and email address.
  • Have an online bank account with at least three months of history.

Keep in mind that meeting these criteria does not guarantee that you will be matched with a lender or that your loan application will be approved.

How do I apply with Monzi?

While we cannot offer business loans, if you are looking to access fast cash loans online, then Monzi may be able to point you in the right direction. All you have to do is apply.

To do this, just follow these easy steps:

  1. Choose a loan amount and repayments using Monzi’s sleek loan slider.
  2. Complete Monzi’s online application form and submit it.
  3. Put your feet up while Monzi attempts to match you with an available lender from our network. Apply during business hours and you may receive an outcome in just 60 minutes.
  4. If we successfully match you with an online Aussie lender, then we’ll hand your application onto them. From there, they’ll contact you to begin the assessment process.

Note that Monzi cannot guarantee if you will be paired with a lender. Moreover, even if you are, then your application will still be assessed to determine if the loan would be affordable for you.

Can I use a personal loan for business expenses?

In some cases, this may be possible.

Personal loans may cover a variety of expenses. With this, you may be able to borrow money to help you launch a new business venture. However, the ability to do this may vary between lenders. In other words, some lenders may limit what you can spend your cash on.

In any case, if you own and operate an established business, then accessing finance for business will likely be a more appropriate option than a personal loan. After all, with a personal loan, you’re personally liable for the repayments. On the other hand, with a business loan, you may not be.

Ultimately, though, it’s up to you to determine what’s right for your business and financial situation. So, weigh up the pros and cons and consider the costs. From there, you can decide if borrowing money would be an appropriate choice.

Contact Monzi when you’ve got questions

We pride ourselves on our customer service and ability to connect with our users. So, if you’ve got any questions about what Monzi can do for you, then don’t hesitate to reach out.

Just send your questions through to hello@monzi.com.au and one of our friendly customer service team members will get back to you with a response pronto. However, keep in mind that we will only respond during business hours. No need to worry, though. We’ll get back to you as soon as we return to the office.

Finally, you must understand that Monzi can only address questions that relate to our service and organisation. As a result, if you would like to know more about commercial car loans or the rates you may be offered, then you must contact a lender directly.

Business car loans? Apply for a personal loan with Monzi

At Monzi, we’ve done our best to explain business car loans in a straightforward manner. However, as we’ve mentioned, we cannot offer these credit products. Instead, we’re a lender-finder service who may make it easy for you to access lenders online.

So, if you’re in need of a quick cash fix, then why not apply from $300 to $10,000 with Monzi today. Just scroll up and use our loan slider positioned at the top of the page. You may be matched with a lender in just 60 minutes. Let’s go!

If you would like to stay in touch with Monzi, then you can keep up to date on Facebook, Instagram, Twitter and Pinterest. We’re always looking for new friends.

Factor In

Costs

Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.