If you’re self-employed – whether as a sole trader, tradie, or small business owner – getting a car loan might not be as straightforward as it is for someone with regular payslips. But flying solo doesn’t mean you’re out of options to finance your new wheels.
With the right knowledge and correct documentation, you can access competitive vehicle finance options that suit your business needs, support cash flow and offer handy tax benefits.
In this guide, we’ll walk you through how self-employed car finance works, what lenders look for, and how to improve your chances of approval.
Table of Contents
Australia’s self-employed workforce: a snapshot
Being self-employed means you work for yourself rather than an employer. Instead of receiving a salary or wage from a company, you make your own money selling products or services. A significant part of the Australian economy, approximately 15.7% of people identify as being self-employed, with a further one million engaged in some form of freelance work to earn a secondary income.
Common self-employed industries include:
- Medical practitioners
- Construction trades
- Transport operators
- Agricultural workers
- Real estate agents
- Consultants & technical experts
- Hair and beauty
- Health and fitness
The number of small businesses, many of which are self-owned and run, has grown steadily in recent years. Here’s a snapshot of what that looks like:
- New South Wales (NSW): 34% of all Australian small businesses
- Victoria (VIC): 28% of all Australian small businesses
- Queensland (QLD): 19% of all Australian small businesses
If you recognise yourself in these figures, congratulations – you’re part of a growing group of Australians making a living on your terms. In response, lenders have introduced a growing number of finance options for self-employed individuals.
FIDO SAYS: Having an ABN isn’t mandatory for self-employed individuals, but it can help you when applying for a car loan (more on that below).
How self-employed income is assessed for loan purposes
If you’re self-employed or don’t have payslips to show regular earnings, your financing options may be different to someone who works for a regular payslip or punches into the office in a traditional 9-5 job.
Income that varies month to month can make some lenders more cautious – even if your business is thriving. The key to securing a self-employed car loan is to demonstrate that your business is stable and that your income is consistent enough to repay the loan successfully. Instead of fixed salary slips, lenders will typically focus on:
- How long you’ve held your ABN
- Your business revenue and expenses
- Your credit history plus any existing debt
- Your ability to consistently meet repayments
FIDO SAYS: Lenders assess loan applications on a case-by-case basis, but it’s best to have tax returns and financial statements from the previous 12 to 36 months. This provides a clear picture of your financial position and how well-suited you are for a car loan.
What are my options for a self-employed car loan?
There are several options when it comes to securing car finance while self-employed, each offering its own benefits based on your situation and what the vehicle will be used for.
It’s helpful to understand what lenders will look for, depending on the type of loan you’re interested in. This typically includes proof of income, as lenders need to verify that you can make your repayments before approving you.
Consumer Loan
If your car is going to be used for business and personal use, a consumer loan is the easiest and most conventional way to finance your new purchase.
As part of the loan application process, you’ll need to provide documentation that includes proof of identity and bank statements that demonstrate you can pay the loan back on time. Consumer loans may feature flexible balloon payment features to reduce your month-to-month repayments.
A consumer loan is secured against your vehicle. This gives the lender the right to repossess the car if you fall behind or default on payments. On the plus side, since your vehicle acts as security for the loan, you won’t need to put down a deposit or offer up other collateral.
Simple!
Key Benefits:
- Choice of loan term and repayment frequency
- Maximise your savings with a fixed interest rate
- 100% finance for approved customers with no upfront costs
Business Loan
Business loans – also known as Chattel mortgages – help you buy and own vehicles under your ABN, including cars, 4WDs, utes, vans and light commercial trucks. You can purchase new or second-hand cars as long as the vehicle will be predominantly used for business purposes (more than 50% of your time on the road).
Maybe you’re a sole trader who needs a new work car to travel to clients, or you need an extra vehicle to support a growing sales team. Whatever your needs, if your vehicle is (mostly) used for work, a business loan is the best option.
Business car loans are typically available with no upfront deposit and no extra security. This means you can finance a work vehicle (with drive-away prices up to $250,000, depending on the lender), without tying up valuable capital that can be used to support your business.
If you’re motivated by tax benefits (what business owner isn’t?), a business loan allows you to use your vehicle as an asset on your balance sheet immediately and claim GST and depreciation on your business activity statements.
Key Benefits:
- No upfront costs and no extra security required
- Reduce your monthly payments with an optional balloon payment
- Offset your costs with potential benefits that could reduce your tax payable
FIDO SAYS: As a small business owner, chances are you’re looking for ways to maximise profits and reduce expenses. When taking out a car loan on a business vehicle, any interest you pay can be claimed as a tax deduction. New car and tax benefits? Win-win.
Low Doc Loan
A low doc (low documentation) car loan is designed for self-employed individuals, contractors, small business owners and other ABN holders who have difficulty providing traditional income documentation, such as tax returns or financial statements.
Low-doc car loans are popular among self-employed individuals because they require minimal documentation (hence the name) compared to more traditional loans. On the other hand, there can be a trade-off between competitive interest rates and flexible terms. This is because the lender carries a higher level of risk compared to a standard loan.
Key Benefits:
- Minimal documentation to assess income and repayment capacity
- Borrow from $10,000 to $250,000 (amount depends on lender)
- Fast and streamlined process with less paperwork involved
Tips to boost your chances of approval
It’s common to feel a little anxiety about applying for a car loan when you’re self-employed – especially when lenders make you jump through hoops or don’t understand the realities of being your own boss.
Some of the ways to get your application over the line include:
- Keep your ABN active
- Build a good credit score
- Reduce existing debt (where possible)
- Avoid unpaid invoices or late payments
- Maintain up-to-date and accurate business records
Many self-employed individuals have their car loans rejected for avoidable reasons, so it helps to think ahead to identify hurdles before they arrive.
For example, what type of vehicle are you looking to purchase? Are you interested in expanding your business or looking for a car that blends work and play? Do you need repayment terms that align with seasonal income?
By understanding what you want from your vehicle, you’ll be able to plan ahead and get financing that works with the unique nature of being self-employed.
🦴 Fido’s fetched you something: This is the BEST TIME to upgrade your car
Let Fido Finance help get you on the road
We work with over 30+ lenders to help ABN holders and self-employed business owners find the right vehicle finance solution — whether you’re a tradie, sole trader, or small business owner with plans to grow.
As proud 1st place winners of ProductReview.com.au’s “Car Loan” category in 2023, 2024 & 2025, we can help you:
- Compare low doc and full doc loans
- Secure chattel mortgages with helpful tax benefits
- Structure monthly repayments around your income cycle
- Understand your loan eligibility based on your business setup
Chat with a car broker to understand your financing options or call the team at 13 34 36 to learn more.
