Many loan options are available on the market, but it’s best to specify what kind you’re taking out, for what purpose, and the tax benefits that await you. For many entrepreneurs and start-up businesses, there’s a wide variety that can be applicable to your circumstances.
For instance, a vehicle can truly come in handy. Being a tradie would require quite a bit of travel, after all. Plus, for product-based businesses, an automobile can also help with delivery and making your food or goods much easier to purchase and access for the average Aussie.
Granted, you will have to figure out car financing before achieving such convenience. Keep reading to understand more about car loans and the tax benefits that accommodate them:
What Are Your Car Loan Options?
Businesses have quite a number of loan options that they can take. There are personal loans or commercial hire leases that can be used as financing options. However, the most recommended choice in Australia would be a chattel mortgage.
A chattel mortgage refers to a business car loan, allowing you to obtain the deposit or the full value of the car from a lender. Upon acquisition, you’d have to pay back the loan amount over an agreed period of time. Be sure to discuss with a reputable lending specialist on the matter.
What Are Your Vehicle Type Options?
Although business car loans are the proper terms, cars are categorised as any wheeled vehicle that drives a load that’s less than a tonne. The automobile should also be able to hold less than nine passengers at the very least for it to pass as a car.
With that definition in mind, you can choose from different vehicle types. Motorcycles can be good if you’re hoping to focus on speed over storage. There’s also the potential for buying a utility truck or panel van if your priorities are different.
What Are the Common Tax Benefits of a Car Loan?
Although it might seem that you’re only shelling out rather than gaining anything from a loan transaction, that’s not entirely true. Aside from being able to get the vehicle for your business’s benefits, there are specific tax-related advantages of obtaining a business car loan, like:
- Tax Deductions Due to Interest. The interest that accompanies your car loan repayments can be claimed as a tax deduction. Depending on the percentage and the repayment period, you could get around $5000 in net savings.
- Tax Deductions Due to Other Expenses. The vehicle expenses associated with your business can also be deductible and bring forth some savings. For instance, the fuel, oil, servicing and other related costs throughout the course of its use can be accounted for.
- Tax Write-Off Due to Assets. Businesses can get an instant deduction since the company car will count as an asset upon purchase and use. With a higher asset threshold due to COVID-19, it’s possible to write off getting $100000 vehicles.
- Input Tax Credit. The Goods and Services Tax credit from the car purchase can be claimed back by businesses. This can result in a tax reduction and a more manageable payable in the future.
Car loan approvals can take some time, but their use and the tax perks that come with them make it worth the wait. Just remember to choose your business car wisely and to work with trusted lenders.
Looking for the fastest car loan approval in Sydney? Wealthy You is an Australian mortgage company that can offer various mortgage solutions to your specific financial needs. Get in touch with us today!