Financing a business vehicle can be a smart move for ABN holders, but many business owners focus only on interest rates and monthly repayments without considering the hidden costs involved.
These additional expenses can add up over time, affecting the total cost of ownership and impacting cash flow. Understanding these costs before committing to a loan can help businesses make more informed financial decisions.
One of the most overlooked costs is fees and charges associated with the loan. Some lenders charge application fees, ongoing account fees, or early repayment penalties, which can increase the overall expense of financing.
Balloon payments — larger sums due at the end of the loan term — can also catch borrowers off guard if they haven’t planned for them. It’s important to review the full loan agreement and factor these costs into your budget to avoid surprises.
Another hidden expense is insurance and maintenance. While a financed vehicle remains an asset to the business, it also comes with financial responsibilities, including comprehensive insurance, servicing, and unexpected repairs. If the vehicle is under a lease or chattel mortgage, there may be specific insurance requirements set by the lender, adding to the ongoing cost of ownership. Businesses should budget for these expenses to prevent any disruptions to cash flow.
Finally, depreciation and resale value should not be ignored. Vehicles lose value over time, and if a business plans to sell or upgrade the car before the loan is fully repaid, it’s important to consider how depreciation will affect the resale price.
Some finance agreements may also have restrictions on vehicle modifications or usage limits, which can impact resale potential.
By carefully assessing all potential costs and working with a finance broker, ABN holders can choose a financing option that best suits their long-term business goals.
Disclaimer
“The information provided on this blog is for informational purposes only and does not constitute financial, investment, or professional advice. While we strive to ensure that the content is accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information. Any reliance you place on such information is therefore strictly at your own risk.”
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