Cash or Finance? What Buying That $70k Ute Really Costs
By 121 Brokers Team, Commercial finance brokerage
· 13 min read
· Published
Paying cash is cheaper on pure cost: financing a $70,000 ute over five years costs roughly $16,600 to $24,000 in interest at illustration rates of 7% to 10% p.a. with a 30% balloon. Finance wins when the cash earns more in the business than it costs after tax, or when keeping the buffer matters.
Cash always wins on the cost line, because there is no interest. The only question is what the $70,000 would have done if it had stayed in the account. If the answer is "sat there", pay cash. If the answer is "funded the next crew, the next stock order, or a slow quarter", finance deserves a proper look.
Three lines cover it:
On cost alone, cash is cheaper. Interest is money you would not otherwise spend.
Finance wins on return when the cash you keep earns more, after tax, than the finance costs after tax. In the example below that break-even sits at roughly 5% to 8% a year.
Finance wins on buffer when spending the $70,000 would leave the business so thin that a slow quarter forces unsecured borrowing later, which generally costs more than finance secured by the ute.
Worked example: a $70,000 ute over five years
The illustration: a dual-cab ute at $70,000 drive-away including GST, bought by a company that is registered for GST, uses the ute 100% for business, and pays company tax at 25%. The GST component of the price is about $6,364 (one eleventh of $70,000). Two illustration rates are used, 7% p.a. and 10% p.a., with the lower figure sitting just under the comparison-site floor. For context, comparison site Money.com.au listed chattel mortgage rates starting from 7.49% p.a. and ranging up to 20% p.a. or higher (data as at May 2026).
The chattel mortgage with a 30% balloon
Finance $70,000 over 60 months with a 30% balloon of $21,000 due at the end. At 7% p.a. the monthly repayment is about $1,093; at 10% p.a. it is about $1,216. Total interest over the five years is roughly $16,600 to $24,000, and the total paid, including the balloon, is roughly $86,600 to $94,000.
The same loan with no balloon
Remove the balloon and the monthly repayment rises to about $1,386 to $1,487, but total interest falls to roughly $13,200 to $19,200, because the principal is cleared faster. Nothing is owed at the end.
After tax
Interest on business-purpose finance is generally deductible in proportion to business use (more below; confirm with your accountant). At a 25% company rate, and assuming the company has taxable profit in the year, the 30% balloon structure's interest of $16,600 to $24,000 becomes a net cost of roughly $12,400 to $18,000 over the five years.
Cash
Pay $70,000 in month one: no interest, no balloon, no repayments. GST and depreciation work the same as under the chattel mortgage. The cost is the $70,000 no longer in the account.
Put your own price, deposit, rate, balloon and expected return on cash into the calculator to see the repayment, total interest, after-tax cost and the return your cash would need to earn for finance to come out ahead.
Interactive calculator
Cash or Finance? Ute Purchase Calculator
$
$1,000 to $1,000,000.
The drive-away price in dollars, including GST.
%
0% to 40%.
Per year. Pre-filled to match the finance rate, so the first result is neutral. Enter what the cash would otherwise earn or save in your business: for example the rate on a facility it would offset, or the margin it would earn in stock.
Cheaper before tax on these inputs
Neither
On these inputs cash and finance cost about the same before tax.
Finance
Amount financed
$70,000
Monthly repayment
$1,154
Balloon due at the end
$21,000
Total finance cost (interest)
$20,244
Cash
Opportunity cost of paying cash (8.5% a year on the balance still financed each month, over 60 months)
$20,244
Net difference
$0
Before tax only. GST credits, depreciation (including instant asset write-off rules) and the car limit depend on the buyer's circumstances and the vehicle; an accountant should confirm them before you decide.
GST registered: the GST in the price may be claimable on a BAS, subject to the car limit and business use. Under a chattel mortgage the vehicle is yours from day one, which is why the GST treatment differs from a lease.
Not GST registered: no GST credit is available, so the full price including GST is the cost in both scenarios.
Opportunity cost applies the rate entered to the balance still financed in each month (the deposit is paid either way, and the balloon counts until it is paid), so it falls as the loan is repaid in the same way the interest does. At equal rates the two sides match.
Estimate only, for general information. Not financial advice, a quote or an offer of finance.
Actual rates, fees and repayments are set by the lender and subject to approval and your circumstances.
Treat the result as an estimate; the financier sets the actual rate, fees and repayment on your file.
What the balloon does to the numbers
A balloon (also called a residual) is a lump sum left owing at the end of the term. It lowers the monthly repayment because less principal is cleared each month, and raises the total interest because more principal is outstanding for longer. Money.com.au lists chattel mortgage terms of 1 to 7 years and balloon payments commonly set at 20% to 40% of the amount financed (data as at May 2026).
Lower monthly repayment, more total interest
On the $70,000 example, moving from no balloon to a 30% balloon cuts the repayment by about $270 to $290 a month and adds roughly $3,400 to $4,700 of interest over the term. Moving to 40% cuts the repayment by a further $90 to $100 a month and adds another $1,100 to $1,600 of interest. The balloon is not a discount. It is a deferral, and the deferral has a price.
The 30% balloon at year five: pay, refinance or trade
When month 60 arrives, $21,000 is due. You can pay it from cash, refinance it over a further term (more interest again), or sell or trade the ute and use the proceeds. Many owners plan on the third option, and it works only when the ute is worth more than the balloon at the time. Size the balloon to what you honestly expect the vehicle to be worth and to how long you plan to keep it, not to the lowest monthly figure.
Balloon size on a $70,000 chattel mortgage over 60 months: repayment, interest and the amount due at the end (illustration)
$70,000 over 60 months (7% to 10% p.a., illustration)
No balloon
30% balloon
40% balloon
Monthly repayment
$1,386 to $1,487
$1,093 to $1,216
$995 to $1,126
Total interest over the term
$13,200 to $19,200
$16,600 to $24,000
$17,700 to $25,500
Amount due at the end
$0
$21,000
$28,000
Total paid including the balloon
$83,200 to $89,200
$86,600 to $94,000
$87,700 to $95,500
A balloon shrinks each monthly block and leaves one large block at month 60. Add up all the blocks and the total is higher, not lower.
The tax treatment, in plain terms
Tax is where these conversations go wrong, because people assume one route gets a better deal from the ATO. Under a chattel mortgage the GST and depreciation position is broadly the same as paying cash; the difference is the interest, which only exists if you borrow. The points below are general information on Commonwealth rules, and each needs your accountant's confirmation against your own structure.
GST on the price
If your business is registered for GST, the GST in the purchase price (about $6,364 on $70,000) is generally claimable as an input tax credit on your BAS. Under a chattel mortgage, title passes to you at settlement, and the ATO's GST guidance says the purchaser is entitled to the entire input tax credit in the tax period in which the borrowed funds pay for the asset, on either a cash or non-cash basis. In plain terms: you finance the GST-inclusive price, then claim the GST back on the next BAS, exactly as if you had paid cash. Confirm the timing and your entitlement with your accountant.
Interest is deductible in proportion to business use
The interest component of a chattel mortgage repayment is generally deductible for the business-use share of the vehicle. If the ute is used 100% for business, the whole interest amount is in play; where there is private use, a logbook usually sets the percentage. Repayments of principal are not a deduction, and neither is the balloon. That is why the after-tax figures above apply the 25% rate to interest only. Deductibility is also what separates a business loan from an ATO payment plan in our ATO payment plan or business loan maths for 2026, where the interest on one side is deductible and the charge on the other is not. Confirm the deductible share with your accountant.
Depreciation and the instant asset write-off
A $70,000 ute is above the instant asset write-off threshold, so it is not written off in one year. The write-off applies per asset, up to a threshold the ATO publishes for each income year, and a $70,000 ute sits well above it, so the ute is depreciated over time instead, through the small business pool if you use simplified depreciation or under the general rules if you do not, and a financed ute and a cash ute depreciate the same way because the business owns both. If you remember writing off a whole ute in one year, that was temporary full expensing, which ended on 30 June 2023. Confirm the method with your accountant.
The car limit and the payload question
A $70,000 ute sits right on a line worth knowing. The ATO car limit caps the depreciable cost of a passenger car and, with it, the GST credit at one eleventh of the limit. The limit is indexed each 1 July and in recent years has sat close to $70,000, so a $70,000 vehicle that counts as a "car" can have its depreciation and GST credit capped below the price; the ATO publishes the figure for each year. The saving grace for most dual-cab utes is the definition: for income tax purposes a car is a vehicle designed to carry a load of less than one tonne and fewer than nine passengers. A ute with a designed payload of one tonne or more is not a car, so the car limit does not apply and the full cost and full GST credit are claimable, subject to business use. Payload means the designed load capacity on the compliance plate, not what you carry, and some dual-cabs fall just under one tonne. Have your accountant confirm which side of the line your ute sits on before you sign.
Fringe benefits tax
If the ute is provided to an employee (including a director) and there is private use, FBT can apply. A ute designed to carry one tonne or more, or otherwise not principally designed for passengers, can be an eligible commercial vehicle exempt from FBT where private use is limited to home-to-work travel, travel incidental to duties, and other private use that is minor, infrequent and irregular. The ATO's safe harbour in PCG 2018/3 puts numbers on that: no more than a 2 km diversion on the home-to-work trip, no single return private trip over 200 km, and under 1,000 km of private travel in the FBT year. Cash or finance makes no difference here; how the ute is used does. Confirm your position with your accountant.
What your cash could be doing instead
Interest is the price of keeping $70,000 in the business for five years. Whether that price is worth paying depends on what the money does while it is there.
The buffer: a slow quarter with $70,000 less in the account
Picture the business three months after paying cash. A big client pays late or a job runs over. The $70,000 that would have carried that quarter is now sitting in the driveway, and the options are personal funds or borrowing working capital in a hurry (our guide to matching a line of credit, overdraft or term loan to a cash flow gap covers what that borrowing looks like). Unsecured working capital generally prices above finance secured by a vehicle, because there is no asset behind it. That is the buffer argument for finance, stated plainly: borrowing against the ute now, at asset-secured pricing, can be cheaper than borrowing unsecured later. It is a risk you are pricing, not a certainty.
The return: jobs, stock or an at-call account
Now picture the $70,000 kept and put to work. If it funds a second crew, a stock order at a supplier discount, or the deposit on plant that wins bigger contracts, the return can sit well above the cost of the finance. If it sits in an at-call business account, the return is whatever your bank pays, before tax, which is likely to be below the after-tax cost of the finance. An owner who finances a ute and leaves the cash idle would usually have been better off paying cash.
The break-even: what the cash needs to earn
The arithmetic is simple once tax is included. At 7% p.a., interest that is fully deductible at a 25% company rate costs about 5.25% a year after tax; at 10% p.a., about 7.5%. So the $70,000 kept in the business needs to earn more than roughly 5% to 8% a year after tax across the five years for finance to win on cost alone. The calculator above solves the break-even from the rate you enter and the return you expect. Two cautions: returns inside the business are taxed too, so compare after-tax with after-tax, and a return you hope for is not the same as a return you have.
Pay cash or finance on the $70,000 example: cash out, after-tax interest and the buffer kept (illustration)
On the $70,000 example
Pay cash
Chattel mortgage, 30% balloon
Cash out in month one
$70,000 (the GST credit of about $6,364 comes back on the next BAS)
About $1,093 to $1,216 for the first repayment, plus any establishment fee
Cash out over five years
$70,000
Roughly $86,600 to $94,000 including the $21,000 balloon
Interest cost after tax at 25%
Nil
Roughly $12,400 to $18,000
Buffer kept in the business
None of the $70,000
The $70,000, drawn down by the monthly repayment
Decision at year five
None; you own it outright
Pay, refinance or trade against the $21,000 balloon
Who it suits
Cash well beyond slow-quarter needs and no higher-returning use for it
Cash that earns more than roughly 5% to 8% after tax, or a buffer that would be thin without it
Cash empties the jar in month one. Finance keeps the jar full and lets a small amount out each month, with interest as the price of doing so.
The middle path: a deposit
Cash or finance is not binary. Putting $20,000 down and financing $50,000 on the same terms (60 months, a 30% balloon of $15,000, 7% to 10% p.a.) gives a repayment of roughly $780 to $870 a month and total interest of roughly $11,800 to $17,100. Compared with financing the full $70,000, that saves about $4,700 to $6,900 of interest and drops the balloon from $21,000 to $15,000, while keeping $50,000 of the buffer in the business.
The deposit is worth considering when you have more cash than the slow-quarter buffer needs but not enough to pay outright without discomfort. Ask for the deposit variant to be quoted alongside the full-finance option so you are choosing between real numbers.
Questions to answer before you decide
How to decide whether to finance or pay cash for a business vehicle, in five questions:
What is the business-use percentage? It sets the deductible share of interest and depreciation, and whether FBT is in the picture.
How long will you keep the ute? Longer than the term means a balloon you pay out; shorter means one you trade against, so size it to the likely resale value.
Would you borrow working capital later at a higher rate? If paying cash leaves the buffer thin, that later borrowing is part of the cost of cash.
What will the cash earn if you keep it? Put a real after-tax number on it and compare it with the roughly 5% to 8% break-even.
Is the quote for a chattel mortgage? Lease and hire purchase quotes carry different tax and ownership effects, and this comparison only holds for a chattel mortgage.
Take the answers to your accountant for the tax side and to a broker for the finance side. Operators in trades and construction and transport face this decision more than most, and the same logic applies to plant bought under equipment finance.
General information only: not financial, legal or tax advice, and it does not take account of your objectives, financial situation or needs. 121 Brokers arranges business-purpose finance only and is a broker, not a lender. The $70,000 ute, the 7% and 10% rates, the 25% tax rate and every repayment, interest and break-even figure in this article are illustrations, indicative only, and not quotes or offers. Approval, amounts, rates, fees and timing are determined by the lender or financier and are subject to its assessment criteria. Confirm any tax position with your accountant and at ato.gov.au.
On cost alone, cash is cheaper because there is no interest. Finance makes sense when the cash you keep earns more in the business than the finance costs after tax, or when paying cash would leave you thin enough that a slow quarter forces dearer borrowing later. On a $70,000 ute over five years, the break-even in our illustration is a return of roughly 5% to 8% a year after tax. Run your own numbers before deciding.
What is a balloon payment on a chattel mortgage?
A balloon, also called a residual, is a lump sum left owing at the end of the finance term. It lowers each monthly repayment because less principal is cleared during the term, and it raises the total interest because more principal stays outstanding for longer. At the end you pay it out, refinance it, or sell or trade the vehicle to cover it. Size the balloon to what the vehicle is likely to be worth at that point, not to the lowest monthly repayment.
How much is the repayment on a $70,000 ute over 5 years?
In our illustration, $70,000 over 60 months with a 30% balloon of $21,000 comes to about $1,093 a month at 7% p.a. and about $1,216 a month at 10% p.a. With no balloon the repayment rises to about $1,386 to $1,487 a month. These are indicative figures at illustration rates, not quotes. The financier sets the actual rate, fees and repayment on your file.
Can I claim a $70,000 ute on the instant asset write-off?
Not in one year. The instant asset write-off applies per asset up to a threshold the ATO sets for each income year, and a $70,000 ute is well above it, so the ute is depreciated over time instead. Paying cash or financing makes no difference to this. Confirm the method with your accountant.
Is the interest on a ute loan tax deductible?
Generally yes, for the business-use share. The interest component of chattel mortgage repayments on a vehicle used in the business is usually deductible in proportion to business use, which a logbook sets where there is private use. Principal repayments and the balloon are not deductions; depreciation covers the cost of the vehicle itself. This is general information, so confirm your deductible share with your accountant.
What happens at the end of a balloon payment?
At the end of the term the balloon falls due in full. You can pay it from cash, refinance it over a further term (which adds more interest), or sell or trade the vehicle and use the proceeds. The trade option works when the vehicle is worth more than the balloon at that point, which is why the balloon should be sized to the likely resale value and to how long you plan to keep the ute.
Should I put a deposit on a chattel mortgage?
A deposit is the middle path between cash and full finance. In our illustration, $20,000 down and $50,000 financed over 60 months with a 30% balloon costs roughly $780 to $870 a month and $11,800 to $17,100 in interest, about $4,700 to $6,900 less than financing the full $70,000, while keeping $50,000 in the business. It suits owners with more cash than the buffer needs but not enough to pay outright comfortably.
Does financing a ute affect my ability to get other business finance?
It can, in both directions. A chattel mortgage adds a monthly commitment that lenders count when they assess serviceability for later borrowing, so it reduces headroom slightly. On the other hand, keeping $70,000 of cash in the business usually presents better to a lender than an account run down by a large purchase, and a well-conducted asset loan builds a repayment record. Each lender assesses an application against its own criteria.
