Personal vs Business Trailer Finance: Which Is Right for You?
The way a trailer will be used decides which kind of finance applies. It affects the products available, the paperwork, the tax treatment and the legal protections you get.
It comes down to how the trailer will mostly be used
Lenders look at the predominant purpose of the loan. If the trailer will be used mainly for a business, it can be financed as business (commercial) finance. If it's mainly for personal use, such as a boat trailer, horse float for a hobby or a camper for holidays, it's consumer finance. You'll usually be asked to sign a declaration about the purpose.
Consumer (personal) trailer finance
- Applied for in your own name, with no ABN needed.
- Assessed on your income, living expenses and existing debts.
- Covered by the National Consumer Credit Protection laws, which require lenders and brokers to make sure the loan is suitable and that you can afford it.
- Usually a secured personal loan or consumer car-style loan, with the trailer as security.
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- Applied for through your ABN, as a sole trader, partnership, company or trust.
- Assessed on your business's trading history and cash flow as well as your personal credit.
- Structures include chattel mortgage, finance lease and hire purchase, with optional balloons.
- May give you access to GST credits and tax deductions. Your accountant can confirm what applies.
- Low doc options are more widely available.
Be accurate about purpose. Don't call a personal trailer a business one to get a different product. Misstating the purpose can cause problems with the loan and with your tax, and it means you lose the consumer protections that apply to personal loans.
What about mixed use?
Plenty of trailers do both: a tradie's box trailer that also does the tip run, or a horse float used for both a riding school and weekend competitions. The question is which use is predominant. If it's mainly business, commercial finance is usually the right fit. For tax purposes, you'd typically only claim the business-use share. Keep a simple record of how the trailer is used.
Quick guide
- Camper trailer, boat trailer or horse float for leisure: personal finance.
- Tradie trailer, plant trailer or anything used to earn income: business finance.
- Prime mover trailers, tippers, reefers and other transport equipment: business finance.