What is a business car loan (chattel mortgage)?
A business car loan, often called a chattel mortgage, is finance for a vehicle used mainly in a business. The business owns the vehicle from day one, and the tax treatment is the main reason to use one.
Who it is for
Sole traders, partnerships, companies and trusts buying a car, ute, van or truck used mainly for the business. "Mainly" matters: if most of the use is personal, it is consumer credit, and a consumer loan or a novated lease is the comparison.
How the tax usually works
Navo estimates these from the business use you give. Your accountant confirms them for your business.
- GST: a GST-registered business can generally claim the GST included in the price, up to the limit that applies to cars.
- Interest: the business share of the interest is usually deductible.
- Depreciation: the business share of the vehicle’s decline in value is usually deductible, up to the car limit for passenger cars.
- Private use by a company’s employees or directors can attract fringe benefits tax.
Balloons and terms
Business loans commonly run one to five years and often include a balloon, a lump sum at the end, to lower the regular repayments. A balloon has to be paid, refinanced or covered by selling the vehicle when the term ends.
How it differs from a consumer loan
A business loan isn’t regulated by the National Credit Code, so some consumer protections don’t apply, and you sign a business-purpose declaration. Complaints can still go to the Australian Financial Complaints Authority (AFCA) for small businesses.
Lenders look at the business: how long the ABN has been active, GST registration, and financials or tax returns. With two or more years trading and GST registration, a low-doc loan may let you declare your income instead.
Worked examples
Open an example in the Navo engine, add your own income, and see the figures for every way to pay.
A plumber buying a new van
Sole trader, trading for years, GST registered, van used almost only for work.
A company buying a car for the director
Company, car used for the business and some private use.
Questions
What is a chattel mortgage?
Another name for a business vehicle loan: the business owns the vehicle and the lender holds it as security (the "mortgage" over the "chattel", the vehicle).
How much business use do I need?
The vehicle needs to be used mainly for the business. Lenders ask you to declare it; keep records such as a logbook.
Can I claim the GST on the car?
If the business is registered for GST, it can generally claim the GST in the price for the business share, up to the limit for cars. Your accountant confirms the figure.
Is a business loan better than a novated lease?
It depends on who you work for, the business use and the car. If you are self-employed there is usually no employer to package a lease through. Navo prices both where they apply.
Reviewed 7 October 2026. General information only, not tax advice. Subject to credit assessment and lender criteria.