If you’re a small or medium business owner in Australia looking to finance a vehicle, one of the first big decisions you’ll need to make is whether to buy new or used. Both options offer unique advantages—and potential drawbacks—especially when paired with a business car loan.
In this guide, we’ll break down the key differences between financing a new vs. a second-hand vehicle, what it means for your business’s cash flow, and how to choose the right vehicle finance strategy to support your operations.
Table of Contents
- Why It Matters: New vs. Used Car Loans for Business
- Pros and Cons of Financing a New Vehicle
- Pros and Cons of Financing a Used Vehicle
- What Lenders Look for When Financing Used vs. New
- How to Decide: Key Questions to Ask
- How Capital Plus Finance Can Help
Why It Matters: New vs. Used Car Loans for Business
Whether you’re buying your first work ute or upgrading your fleet, choosing between a new and used vehicle will impact:
- Your initial loan amount and monthly repayments
- Your tax deductions and GST benefits
- Ongoing maintenance costs
- Depreciation and resale value
Choosing the right path is especially important if you’re using equipment finance or a small business loan to support your purchase. Making the right decision upfront can help preserve your working capital and keep your business running smoothly.
Pros and Cons of Financing a New Vehicle
New vehicles are a popular choice for businesses that prioritise reliability, warranty coverage, and tax benefits.
Key advantages of buying new:
✅ Full manufacturer warranty (3–7 years)
✅ Lower maintenance in the first few years
✅ Latest safety and fuel efficiency features
✅ Better access to low interest rates and longer loan terms
✅ Eligible for GST input tax credits and depreciation (check with your accountant)
Potential drawbacks:
❌ Higher upfront cost
❌ Faster depreciation—especially in the first 12–24 months
❌ Higher insurance premiums
A new vehicle may be ideal if you plan to keep it for many years or use it for high-demand tasks where downtime isn’t an option.
Pros and Cons of Financing a Used Vehicle
Second-hand vehicles can offer great value if you choose wisely and secure the right loan structure.
Key benefits of buying used:
✅ Lower purchase price = smaller loan and repayments
✅ Slower depreciation over time
✅ Lower insurance costs
✅ Often faster finance approval for smaller loan amounts
However, there are trade-offs:
❌ May come with limited or no warranty
❌ Higher maintenance and repair risk
❌ Unknown service history unless bought from a licensed dealer
❌ May be harder to claim certain tax benefits (depending on age and use)
Tip: Always request a vehicle inspection report and verify logbook servicing before committing to a used car purchase.
What Lenders Look for When Financing Used vs. New
Lenders assess both the borrower and the asset when approving business car loans or equipment finance. The condition, age, and value of the vehicle will influence:
- Interest rates
- Maximum loan term (older cars = shorter terms)
- Loan-to-value ratio (LVR)
- Residual or balloon payment options
Generally, new vehicles attract more favourable finance terms because they pose less risk to lenders. However, Capital Plus Finance can help you find specialist lenders that offer competitive used car loans tailored to your needs.
You’ll typically need to provide:
- Proof of business use (ABN, business name, etc.)
- Business bank statements or BAS (for cash flow assessment)
- Vehicle invoice or dealer quote
- Driver’s licence and ID
If you’re going down the used route, you may also need to provide a mechanical inspection or valuation report, especially if buying privately.
How to Decide: Key Questions to Ask
To choose the right path for your business vehicle finance, consider the following:
✔ What’s your total budget (including insurance, rego, and fuel)?
✔ How long will you keep the vehicle?
✔ Will the car be used 100% for business?
✔ Can your business afford unexpected repairs?
✔ Is cash flow seasonal or steady throughout the year?
✔ Are you planning to upgrade again soon?
For example, a construction company might prefer a near-new ute with warranty coverage to minimise downtime, while a local delivery business might opt for a reliable used van to keep repayments low.
How Capital Plus Finance Can Help
At Capital Plus Finance, we help small and medium Australian businesses access tailored equipment finance and vehicle loan solutions—whether you’re buying new or second-hand.
We can help you:
🚗 Compare loan terms and rates across over 40 lenders
🚗 Finance new and used vehicles with flexible structures
🚗 Maximise GST and tax deductions where eligible
🚗 Access both full doc and low doc loan options
🚗 Structure repayments to suit your business cash flow
Whether you’re a tradie, delivery operator, or sole trader, we’ll find a business finance solution that supports your goals and keeps your business moving forward.
👉 Ready to finance your next business vehicle? Contact Capital Plus Finance today to speak with an expert: https://capitalplusfinance.com.au/
About Capital Plus Finance
Capital Plus Finance is a Sydney-based equipment and vehicle finance broker supporting Australian small businesses with flexible loan solutions. We specialise in small business loans, equipment finance, and ABN vehicle finance across a wide range of industries—from trades to transport and everything in between.
Explore your options at capitalplusfinance.com.au.
