Short version: for most tradies, a chattel mortgage is the usual way to finance a work ute, because it’s a business loan and can be structured around business use. The cheapest deal is rarely the lowest weekly repayment, so compare total cost and the final payment.
Your main options
Chattel mortgage
You own the ute from day one and the lender holds security over it. If you’re registered for GST you can generally claim the GST credit on the purchase price, and you may be able to claim interest and running costs in proportion to business use.
Novated lease
Only for employees, so it’s rarely relevant if you’re a sole trader or own the company.
Personal loan or car loan
Simple and quick, but usually with higher rates than a secured loan and fewer tax benefits if the ute is mainly for work.
Paying cash or using redraw
No interest, but it can leave you short of cash for materials, wages and tax. Keep a buffer.
What affects your rate
- Your credit history and how long you’ve held an ABN
- New or used, and the age of the vehicle
- Deposit size and loan term
- Whether there’s a balloon (final payment)
- Whether you’re buying through a dealer, a broker or direct from a lender
The balloon trap
A balloon payment lowers your repayments, but you still owe it at the end of the term. If the ute is worth less than the balloon, you could be out of pocket. Only use one if you’ve planned how you’ll pay or refinance it.
Dealer finance vs broker vs direct
Dealer finance is convenient but may carry extra fees or commission built into the rate. A broker can compare several lenders for you, and a direct lender may have simpler terms. Ask each one for the comparison rate and every fee in writing.
Checklist before you sign
- Get at least three quotes.
- Compare total repayments over the full term, including fees.
- Check early repayment and exit costs.
- Confirm the insurance you need (comprehensive cover is usually required).
- Ask your accountant how business-use percentage affects your claim.
Worked example: financing a $55,000 ute
This is an illustration, not a quote. A $55,000 ute financed over five years at 8.5% a year with no deposit or balloon would cost roughly $1,129 a month and about $12,700 in interest over the term. Change the rate, term, deposit or balloon and the numbers move, so ask each lender for the total amount you’ll repay.
New or used?
- New: warranty, lower repair risk and often better finance rates, but it loses value fastest in the first few years.
- Used: lower purchase price, but check the vehicle history, service records and that the lender will finance a vehicle of that age.
What to check about the ute itself
- Payload and towing capacity for the work you do
- Running costs: fuel, servicing, tyres and registration
- Resale value, since this affects any balloon you take
- Insurance cost, which can differ a lot between models
- Whether it’s treated as a car or a commercial vehicle for tax limits. Ask your accountant before buying.
Ute finance for tradies: FAQs
Can I claim my ute on tax?
If you use it for work you can generally claim the business-use portion of running costs and depreciation, supported by a logbook or other evidence. Private use isn’t deductible. Check the current ATO rules and your own situation with an accountant.
Is a chattel mortgage better than a car loan for a ute?
For an ABN holder using the ute for work, a chattel mortgage is often the better fit because it’s a business loan with GST and interest treated differently. A personal loan can be simpler but usually costs more.
Can I finance a ute with a new business?
Some lenders approve newer businesses with a deposit or a higher rate. A broker can help find lenders who will consider it.
What is a balloon payment on a ute?
It’s a lump sum due at the end of the loan that reduces your regular repayments. You still owe it, so plan how you’ll pay or refinance it.
Sources and further reading
General information only, not financial advice. It doesn’t consider your personal circumstances. Speak with a licensed adviser or your accountant before making decisions. We may earn a commission if you apply through links on this site, at no extra cost to you.