Top 10 Loan Questions Australians Ask (With Clear Answers)

10 Real Questions People Ask About Loans (But Rarely Get Clear Answers)

When you're looking for a car loan, commercial finance, or asset loan in Australia—especially if you're self-employed or managing a growing business—it's normal to have questions. But too often, the internet provides only surface-level answers or vague advice.

We’ve pulled together 10 real and frequently asked questions that don’t always have clear responses online—and we’re answering them with clarity.

Whether you're refinancing your car loan in Melbourne or anywhere in Australia, applying for equipment finance, or exploring business loans, this guide will help you understand what to expect.

1. What’s the best loan structure for my situation?

Loan structures aren’t one-size-fits-all. Whether you're choosing between fixed or variable interest rates, considering a balloon payment, or wondering how long to stretch your term—it all comes down to your personal or business cash flow, goals, and tax implications.

If you're unsure, working with our Professional Broker can help tailor a loan to your specific financial situation, ensuring you’re not overcommitting or under-planning.

2. How do lenders assess serviceability for self-employed applicants?

For self-employed individuals, traditional income documents like payslips don't apply. Lenders may assess your income using tax returns, BAS statements, and profit/loss reports. Some may also accept “add-backs” such as depreciation or one-off expenses.

Navigating this alone can be overwhelming. This is where our experienced Finance Broker like Veracity Financial can help match you with lenders who understand self-employed income structures.

3. Should I finance an asset under my name or through my business?

This depends on how you’ll use the asset, potential tax deductions, and the structure of your business. Business asset finance may allow GST and depreciation claims, while personal asset finance could mean simpler approvals and flexibility.

Always speak with your accountant before deciding—and consider your long-term ownership or replacement plan for the asset.

4. Will refinancing my loan hurt my credit score?

Refinancing your loan—whether it’s for a car, personal loan, or commercial finance—can temporarily lower your credit score due to a credit inquiry. However, the impact is usually minor if you're not applying to multiple lenders at once.

To avoid unnecessary hits to your credit file, use our Professional Broker who can compare options without lodging multiple applications.

5. What happens with a balloon payment if I want to sell the vehicle or equipment?

A balloon payment is a lump sum due at the end of a loan. If you plan to trade in or sell your car, truck, or equipment before the term ends, you’ll need to ensure the asset’s value covers the balloon amount. Otherwise, you’ll pay the shortfall.

Balloon payments can reduce monthly repayments, but they require forward planning—especially in industries where equipment depreciates quickly.

6. What if a guarantor wants to exit the loan early?

Removing a guarantor mid-way through a loan isn’t as simple as updating details. Most lenders will require the loan to be reassessed, possibly with new financials or a replacement guarantor.

If your financial position has improved since the loan began, refinancing might be a viable option. We can guide you through this process and help assess if it’s the right time to restructure.

7. How does depreciation impact asset finance?

Depreciation reduces an asset’s value over time. In asset finance, it's important to align the loan term with the asset's useful life. Financing an asset over a longer period than it’s expected to be used can leave you paying off something that’s no longer valuable.

This is especially relevant for tech, vehicles, and tools in fast-moving industries.

8. Can I repay my loan early, and are there any penalties?

It depends on your lender and loan type. Some loans allow early repayments with no penalties, while others include fixed-term break costs or early exit fees. Always read the fine print—or better yet, ask upfront before you sign.

Veracity Financial reviews these conditions carefully with you during the application process to ensure you're not caught out later.

9. How do I decide between leasing and buying equipment?

Leasing might be better if you upgrade equipment regularly or want lower upfront costs. Buying may suit businesses that plan to keep the asset long-term and claim depreciation.

The best choice depends on your cash flow, how fast the asset depreciates, and your business goals. Veracity Financial can help you compare both options side by side.

10. What should I include in my loan application to improve my approval chances?

To increase your chances of loan approval, have clear and accurate documentation:

• ID
• Recent tax returns
• Bank statements
• Details on the asset or purpose of the loan
• For businesses: a brief explanation of how the loan will help support your operations

A strong, complete application not only improves approval odds but can also help secure better interest rates.

Need Help Structuring Your Next Loan?

Whether you're self-employed, growing a business, or looking for smarter asset finance options, clarity is key. If any of the above questions hit home, we’re here to help guide you.

Veracity Financial specialises in helping clients across Australia secure the right car loans, commercial loans, and asset finance.