Whether you’re buying a work ute, family SUV, or prestige vehicle, understanding vehicle finance options saves you money and hassle. Here’s what you need to know before signing anything.

Chattel mortgage vs commercial hire purchase vs consumer car loan

The right finance structure depends on how you’ll use the vehicle. Business owners buying work vehicles have different options than individuals buying personal cars.

A chattel mortgage suits businesses and sole traders. You own the vehicle from day one, claim tax deductions on interest and depreciation, and potentially claim back GST on the purchase price. There’s usually a balloon payment at the end, which you can refinance if needed.

Commercial hire purchase means the lender owns the vehicle until you make the final payment. You can still claim tax deductions on interest and depreciation. This structure works well if you want to keep the vehicle long term.

Consumer car loans suit individuals buying personal vehicles. Simpler structure, no GST considerations, and no balloon payments in most cases. The downside is no tax deductions since it’s not a business expense.

MAW Money assesses your situation and recommends the structure that makes financial sense, not just the one that gets you approved fastest.

New vs used vehicle finance

Lenders love new cars. They’re easier to value, come with warranties, and hold value more predictably. You’ll typically get lower interest rates and can borrow up to 100% of the purchase price.

Used vehicles over five years old or with high kilometres attract higher rates and may require a larger deposit. Some lenders won’t finance vehicles over a certain age or kilometre threshold at all.

If you’re set on a used vehicle, working with a broker expands your options. MAW Money knows which lenders offer competitive rates on older vehicles and can structure finance that works.

Balloon payments: helpful or risky?

A balloon payment reduces your regular repayments by deferring a lump sum to the end of the loan term. This can be 20% to 50% of the vehicle’s value.

Balloons help cash flow if you’re confident you can refinance or pay the lump sum when it’s due. But if the vehicle’s value drops more than expected or your circumstances change, that balloon payment becomes a problem.

Consider your exit strategy before agreeing to a balloon. Will you trade the vehicle in? Refinance the balloon? Pay it from savings? Have a plan, not just hope.

Don’t focus only on the monthly payment

Car dealers love talking about weekly or monthly payments because it distracts from the total cost. A $200 per week payment sounds manageable until you realise you’re paying it for seven years.

Look at the total interest you’ll pay over the loan term and the comparison rate, not just the advertised rate. A loan with a lower rate but higher fees might cost more overall.

Pre-approval gives you negotiating power

Walking into a dealership with finance pre-approved puts you in control. You’re a cash buyer as far as the dealer is concerned, which often means a better price on the vehicle.

Dealer finance might seem convenient, but you’re negotiating the car price and finance terms at the same time, which usually favours the dealer. Separate the two transactions and you’ll likely save thousands.

Get expert advice before committing

Vehicle finance impacts your borrowing capacity for other loans. Taking on car payments might delay your plans to buy property or expand your business.

MAW Money looks at vehicle finance in the context of your broader financial goals. We structure loans that get you into the vehicle you need without compromising other plans. We work with multiple lenders to find competitive rates and terms that suit your situation.

Whether you’re buying your first car or upgrading your business fleet, getting vehicle finance right matters. Talk to the team at MAW Money before you start shopping. We’ll make sure you understand your options and secure finance that works for you, not just the lender.