Whether you're expanding your current business or starting up a new venture, one of the first areas many self-employed workers will look to is a suitable commercial vehicle.
There's a range of areas to consider before you commit to the purchase, however, so here are some tips for before you sign on the dotted line.
Explore any available grants in your state
If you're an Aboriginal or Torres Strait Islander business owner, there's a number of programs designed to help you financially, such as the Aboriginal Business Development Program in the Northern Territory. It's important to find out whether you're eligible for any grants, as doing so could help you purchase your vehicle or free up more space in your budget to do so comfortably.
The incentives offered to business owners by state and territory governments will differ depending on where you live. For instance, assistance for self-employed workers in Queensland may differ from programs available elsewhere in Australia. Business grants are among the first places you should look when investing in your business, as they generally don't come with the requirement to repay the sum you receive.
Think about the type of vehicle your business needs
First and foremost, it's important to take the time to consider what type of vehicle is best for your business. Do you need something to transport your tools, haul heavy equipment or simply to take you from appointment to appointment?
Thinking carefully about the type of vehicle your business needs can help you narrow down your options more effectively and can help you avoid paying more than necessary. For instance, if you're only using the vehicle from get from A to B without any equipment transportation, it opens the door for smaller, less expensive models.
You should also consider whether your vehicle will require any upgrades so they can be factored into your budget. For example, the Wunan Foundation and Open Systems Support converted a Toyota HiLux into a mobile karaoke experience for remote communities in the Kimberley.
Consider your finance options
If you don't have enough funds to justify the purchase of a vehicle with cash, it might be worth considering a chattel mortgage to help cover its upfront cost. This is essentially a standard car loan, with one to seven-year terms and funding available up to 100% of the cost of the vehicle in some cases, but it offers several key benefits to business owners.
Perhaps the most notable are the tax benefits they offer. Those who buy a vehicle with a chattel mortgage will be able to claim the GST on the purchase price, interest portion of their repayments and the vehicle's depreciation as tax deductions.
There are other finance options available, however, with leases and hire purchase agreements also common ways for self-employed workers to access the vehicle they need for their businesses.
Assess your current credit rating
Credit ratings are among the most important factors lenders consider when assessing your finance application. It helps them determine whether to approve your business for funding, how much you may be approved for and the interest rate you'll be charged.
If your score isn't the best, things like paying off any outstanding debts, reducing your credit card limits and continuing to make timely repayments on other finance and bills can help boost your score and increase your chances of a favourable finance agreement for your vehicle.
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