The short answer
Ute and van finance, often called commercial vehicle finance, is a business loan or lease used to buy a ute, van, cab-chassis or light truck that will be used mainly for the business. It's usually written as a chattel mortgage, where the business owns the vehicle from settlement, or as a finance lease. Terms typically run from one to five years, with an optional balloon, and trays, canopies, racking and service bodies can be financed with the vehicle. The tax details are what make work vehicles different. Under ATO rules, a vehicle designed to carry a load of one tonne or more isn't a car, so the car limit on depreciation doesn't apply to it (ATO). Payload is the gross vehicle mass less the kerb weight, so check the figures before you buy. FundFox arranges business finance only. Novated leases for employees are a different product.
Is your ute a car for tax purposes?
It depends on what the vehicle is designed to carry. The ATO treats a vehicle designed to carry a load of one tonne or more, or more than eight passengers including the driver, as something other than a car. That matters because cars are subject to the car limit, which caps the cost you can depreciate. To work out carrying capacity, take the gross vehicle mass on the compliance plate and subtract the basic kerb weight. Many single-cab and cab-chassis utes clear one tonne. Some dual-cab four-wheel drives do and some don't, so check the specific model.
Light commercial vehicles with a carrying capacity of one tonne or more and a gross vehicle mass of 3.5 tonnes or less also have a statutory capped effective life of 7.5 years if you use the Commissioner's determination.
Chattel mortgage, finance lease or novated lease?
| Option | Who it's for | Key point |
|---|---|---|
| Chattel mortgage | Businesses and sole traders buying a work vehicle | You own it from day one and can usually claim the GST upfront |
| Finance lease | Businesses that prefer to rent the vehicle with an option to buy | GST is claimed on each lease payment |
| Novated lease | Employees salary packaging a vehicle | A three-way agreement with the employer. FundFox doesn't arrange these. |
Can the fit-out be financed?
Trays, canopies, toolboxes, ladder racks, drawer systems, refrigeration and signage can usually be included. Accessories fitted by the dealer go on the dealer's invoice. A body built by a separate fabricator needs its own tax invoice, and some lenders cap how much of the deal can be fit-out. A specialised body adds value to you but less to the lender, because it narrows the resale market.
What do lenders look at?
- ABN age and credit. Established businesses with clean credit get the widest choice, and many lenders offer low-documentation approvals for straightforward vehicle deals.
- Business use. The vehicle must be used mainly for the business. A family car bought through the business doesn't qualify.
- The vehicle. Age, kilometres and whether it's a dealer or private sale.
- Property ownership. Owning a home or investment property often opens better terms with less paperwork.
What about FBT if staff take the ute home?
If an employee, which can include a working director of a company, has private use of a work vehicle, fringe benefits tax may apply. The ATO exempts eligible vehicles, such as utes designed to carry a tonne or more, when private use is limited to travel between home and work, travel incidental to work, and other private use that's minor, infrequent and irregular. Keep records that show the use stays within those limits.
Example scenario
An electrician buys a two-year-old single-cab ute with a service body for $66,000 including GST. Assuming 8.9% a year, a five-year chattel mortgage costs about $1,367 a month with no balloon, or about $1,104 a month with a 30% balloon. The business claims the GST credit on its next BAS, and the tradesperson keeps a logbook for the private use questions.
Example only. It isn't a real client, and the rate is an assumption for illustration. Your rate depends on the lender, the asset and your business. Run your own numbers in the repayment calculator.
