Refinancing the loans on a tyre shop, auto electrical workshop or exhaust business starts with four debts: the site, the bay equipment, the service van and the overdraft. Each one can be moved, merged or kept, and every choice shifts the monthly outgoings and the lifetime interest in its own way.
Is the wheel aligner showing its age while you are still paying off the loan that bought it? Has the tyre supplier's account filled up before the busy weeks, with the overdraft carrying the rest? Are four repayments leaving the business on four different dates? Has the site gone up in value while its loan stayed with the same lender at the same rate?
The ABS counts of Australian businesses show 3,624 automotive electrical services businesses operating at the end of June 2025, and 1,835 of them employed staff. That count covers auto electricians alone, before tyre and exhaust shops are added.
Whether those loans sit with one lender or several, we at Ardent Capital Group can assist in refinancing every one of them, from the land under the bays to the van on the road.
Where the pressure on a tyre or auto electrical shop comes from
The loans are repaid from the shop's takings, on fixed dates however the bookings fall.
- Stock bought before it sells. Tyres, batteries and parts are commonly bought on a supplier trade account, which is credit from the supplier with a limit. Walk-in customers pay by card on the day, while fleet and business customers are invoiced on account and pay later.
- Equipment that wears. A tyre shop runs a wheel aligner, tyre changers, wheel balancers and hoists. An auto electrician adds scan tools and electrical test benches, and an exhaust shop adds pipe benders and exhaust stands. Some shops are adding calibration equipment for the driver-assistance cameras and sensors on newer vehicles.
- Licences and site rules. Technicians who work on vehicle air conditioning need a refrigerant handling licence, which is valid for two or three years. In Sydney, for example, Sydney Water requires automotive businesses to have a connection agreement and approval before trade wastewater goes into the wastewater system. Trade wastewater is the water a business sends down the drain from its work, as opposed to its toilets and kitchens. The connection agreement is the written permit to send it into the system.
- Wages. Tyre fitters, wheel aligners and automotive electricians are all covered by one award, the Vehicle Repair, Services and Retail Award, so each award increase lands in the pay run. An award is the legal document that sets minimum wages and conditions across an industry.
Example: a tyre and auto electrical shop's loans side by side
The figures are illustrative: the owner holds a freestanding three-bay workshop and runs a tyre and auto electrical business from it, with the bay equipment and a call-out van on separate loans.
Each of the shop's three loans is set out by what is still owed, its rate (assumed here), how many months are left and what it debits every month.
| Loan | Balance | Assumed rate | Months remaining | Monthly debit |
|---|---|---|---|---|
| Property loan on the site | $820k | 7.4% | 156 | $8,199 |
| Bay equipment: aligner, tyre changer and balancer | $46k | 10.5% | 20 | $2,517 |
| Service van | $32k | 9.9% | 30 | $1,208 |
| Total | $898k | $11,924 |
Start with the site: $820k remains at an assumed 7.4%, with 156 months still to run, costing $8,199 a month. Add the other two and $11,924 leaves the account each month. The bay equipment is paid off after month 20, which brings the total down to $9,407. The van finishes after month 30, leaving $8,199.
Beside these sits a $40k overdraft, $30k of it in use. An overdraft lets the shop's account dip below nil, down to a set limit. Its interest, at an assumed 10.5%, comes to about $263 a month, and none of the refinancing options touch it. The supplier's trade account stays out too, since the supplier sets its terms. All rates here are assumptions for working the numbers, not offers.
What changes when a shop's loan is refinanced
Refinancing means a lender, new or existing, pays out some or all of the shop's current loans and writes a fresh loan in their place. Three things about the new loan then set how much leaves the shop each month and what it costs in the end.
- Rate. The rate is the price of the money, applied to the balance still owing. With the months held fixed, a lower rate shrinks the monthly debit and the overall interest together. The figure a lender offers rests on what backs the loan, the shop's trading record and the directors' credit histories.
- Term. The term is how long the loan runs. Extra months shrink each repayment, yet interest is charged for longer, so the total climbs. Paying more interest in exchange can still suit a shop while a new aligner beds in.
- Security. This is the asset a lender can call on if repayments stop: the site, the equipment, the business or the home. Property as security generally brings the rate down compared with equipment or the business on its own, and the property is then committed to that debt.
All three of the shop's loans are amortising: each runs down to nil by the end of the term, unless it ends in a balloon, a lump sum left to the final repayment. Some equipment and vehicle contracts finish with one. Each repayment first meets the month's interest, and whatever remains reduces the balance. Interest is calculated on whatever is still owed, which is why it takes its biggest bite in the first months.
Worked example: splitting one bay equipment repayment
Pulling one repayment apart shows how little interest is left on a loan nearing its end. The bay equipment loan has $46k owing at an assumed 10.5%, so this month's interest is about $403. The other $2,114 of the $2,517 repayment reduces what is owed. In a year's time the balance will be about $19,400, roughly $26,600 lower than now.
Refinancing each of the shop's loans
Land, machines and a van wear out or hold their value at very different speeds, so each loan can be handled on its own terms.
The loan on the site
Owning the building usually means the loan on the site is the biggest balance on the list, and it is where the shop's equity has built up. Equity is what the site is worth minus what is still owed against it. The site might be a small freestanding building on a main road, or a strata unit with a forecourt.
A workshop counts as standard commercial security, in the same group as warehouses and factories, and lenders lend up to 80% of what a fresh valuation says it is worth. That figure is the LVR, short for loan-to-value ratio. Bank terms on commercial property commonly run 10 to 15 years, and non-bank terms 25 to 30. A fresh valuation puts a site that has grown in value since purchase at today's figure.
Depending on the lender and the valuer, a valuation of an automotive site can include questions about how the land has been used. At least one lender lists contaminated land as security it does not accept, so the choice of lender matters on these sites. Records of how oil, batteries and used tyres are stored and taken away help answer the questions.
A fixed rate on the property loan may mean a break cost, a fee for ending a fixed rate early. The more rates have fallen since the rate was fixed, the bigger it is. Asking the lender to put that number in writing comes before any comparison. Our page on refinancing an automotive site you own covers the loan on the site in more detail, including the valuation and questions about past land use.
Wheel aligners, tyre changers and test gear
The bay equipment does the work the shop charges for, and it wears out sooner than the building. It is typically bought on a chattel mortgage or on hire purchase. Under a chattel mortgage the shop owns the machine outright from the start, with the lender's charge registered over it. Under hire purchase the financier owns it until the last payment.
Effective life is the number of years an asset can be used to produce income, taken from the ATO's determination or worked out by the business. It is a tax figure, not a promise of how long the equipment will run.
The Effective Life Determination 2025 lists wheel alignment machines at 7 years. Wheel balancing and tyre fitting machines are listed at 5, as are scan tools. Electrical test benches, hoists for car and light truck repairs, and pipe and tube benders are each listed at 10, and exhaust stands at 11.
On its own loan, the bay equipment is paid off within those effective lives. Folded into the property loan, the same balance would run for 13 or 25 years, long after the aligner is replaced. If the shop ends an equipment contract early, that contract may add an early payout charge, an extra fee on top of what is still owed. A written payout figure shows that charge within the amount needed to clear the contract on a given day.
When a new aligner or calibration rig is planned, clearing the old contract and funding the new machine can be weighed as one decision. Refrigerant recovery machines are listed at 5 years. Driver-assistance calibration equipment has no listing of its own, so the business works out its effective life with its accountant.
Service vans and mobile call-outs
For a shop that fits tyres or fixes electrics at the customer's kerb, the van is a second workshop on wheels. Vans are commonly financed on a chattel mortgage, and some contracts end in a balloon.
The determination gives a light commercial vehicle carrying a tonne or more an effective life of 12 years. The loan on the van can move to a lower rate on its own, keeping the months it has left. Spread across the property loan's term, the van would still be owed on after it had been replaced. A balloon at the end can be paid from savings, refinanced or covered by trading the van in.
Tyre stock, the overdraft and the ATO
Tyres sit on the racks before anyone buys them, so a tyre shop pays for its stock before the takings come in. The trade account lets the shop take the stock now and pay on the account's terms. It is not a loan from a lender, so a refinance leaves it where it is.
An overdraft or line of credit can carry the gap between paying the supplier and being paid by customers. Card takings settle quickly, while fleet invoices are paid on account. If the overdraft is rolled into a term loan, the drawn amount is repaid over that term and the shop loses the buffer. Our page on overdrafts and lines of credit for working capital sets out how each one runs.
An ATO payment plan can cover overdue GST or PAYG withholding, the tax held back from wages the shop pays. GST, the goods and services tax, is added to every tyre and battery the shop sells. The refinance can take that plan in as well, through a business loan and subject to the lender. Loan interest the shop pays may be deductible for tax, which means it comes off the shop's taxable income. The interest the ATO adds to tax paid late stopped being deductible on 1 July 2025, and your accountant confirms how each applies to the shop.
Putting the shop's loans together
Once the three loans are clear one by one, the shop can look at them as a set: kept apart, partly merged or rolled into one.
Worked example: three ways to rearrange the same $898k
The lowest monthly figure and the lowest total interest come from different choices. Each choice is measured against keeping all three loans unchanged, first for the monthly figure and then for the interest still ahead.
| Choice | Paid each month | Monthly difference | Interest remaining | Interest difference |
|---|---|---|---|---|
| Keep all three loans unchanged Today | $11,924 | Starting point | $468k | Starting point |
| Refinance only the property loan at a lower rate, keeping 156 months | $11,701 | $223 less | $433k | $35k less |
| Merge all three loans over 156 months | $8,735 | $3,189 less | $465k | $3k less |
| Merge all three loans over 25 years | $6,695 | $5,229 less | $1,110k | $642k more |
Rounded, illustrative figures. The rates are assumptions used to do the sums; none is a quote or today's market rate. Not included: the overdraft, the supplier trade account, any break cost or early payout charge, and the fees for setting up the loans and valuing the site.
One merged loan over 156 months cuts the repayment by $3,189 a month. It still saves $3k of interest, because the property loan's lower rate outweighs stretching the equipment and van. Against refinancing only the property loan, though, folding them in adds $32k of interest.
Merging them into a 25-year loan lowers the repayment by $5,229 a month and adds $642k of interest. The aligner, tyre changer and van inside it would be paid for over 25 years, against effective lives of 5 to 12 years.
A lower repayment can cost more interest over time, and which choice suits depends on the shop's trading and the age of its equipment. Once the payout figures are known, the Ardent Capital Group team can set these choices out for your own shop and take the one you pick to lenders that accept automotive sites.
The site, the equipment, the business or the home as security
Several of the shop's assets, and the owner's home, could secure the new loans, each with its own trade-off.
- The site. Within an 80% LVR, the site can secure the bay equipment and van balances as well as its own loan.
- The equipment and vans. A chattel mortgage is secured by the equipment or van it paid for.
- The business. A general security agreement lets a lender claim all of the business's assets, tyre stock and fleet customers' unpaid invoices included. It is registered on the PPSR, the national register of security interests in personal property. It does not cover land, buildings or fixtures to land. Paying out the old loans lifts the old registrations.
- Directors' guarantees. Business loans generally come with guarantees, where each director personally promises to repay what the company cannot.
- The home. Putting the home up can open a lower rate or more years, and in return the house becomes security for the shop's borrowing. Whether to do that is your decision. If the home already secures business debt, a later refinance can release it once the site and the takings support the loans alone. The house's own mortgage is a separate matter, handled through our home loans for business owners.
When a trust holds the land, or a second site is planned
The land and the business are not always in the same name. Where a family trust owns the site and a company operates the shop, the rent between them shows in both sets of accounts, and both go in with the application. A second site and a refinance of the first can be planned together.
Before you apply to refinance the shop
A tyre or auto electrical business keeps its own dates and records, and they shape what a lender sees when the application arrives.
When to apply, and when to wait
Certain dates in the shop's year affect the cost of refinancing or the figures that go to a lender.
- Break costs on a fixed rate. Written payout figures show whether the break cost would swallow the saving. If it would, the end of the fixed period is a natural point to revisit.
- Equipment due for replacement. Lining the refinance up with the new aligner, scan tools or van means the payout and the new equipment can go into one application.
- A late BAS or tax return. On its business activity statement, or BAS, the shop tells the ATO what GST and PAYG withholding it owes. Getting it lodged first means the application can include the latest figures.
Where the loan on the site carries an annual review, the lender looks over how the workshop is trading. It reads recent takings and asks about anything new, such as a calibration rig for the cameras on newer vehicles. With the latest figures ready, the review is also a good time to compare the workshop's loan with other lenders. Each step is set out in our guide to the annual review.
What the shop's records show a lender
The shop is paid in more than one way, and each way leaves its own record.
- Card takings. Walk-in sales settle into the business account through the card terminal, so bank statements show the work going through the bays.
- Fleet and account customers. Invoiced work appears in an aged receivables list, showing each customer's balance and how overdue it is.
Documents to gather
The paperwork mostly exists already, in the shop's systems and with its accountant.
- A written payout figure for each loan, including break costs and early payout charges
- Property loan statements and the latest valuation, if there is one
- Equipment and van finance contracts, including any balloon
- Recent BAS, plus the past two years' accounts and tax returns, and an ATO account statement
- Statements for the business bank account showing card settlements, plus the aged receivables list
- Supplier trade account statements
- The trade wastewater approval or connection agreement, if the site has one, and records of how oil, batteries and used tyres are handled
- Personal loan and credit card statements for each director
Questions tyre, auto electrical and exhaust shop owners ask about refinancing
My aligner still has a loan on it and I need a new one. Can both go into one deal?
They can, subject to the lender. Clearing the old contract and funding the new aligner can go through as one application, starting from the written payout figure and the supplier's quote.
The site's gone up since I bought it. Can that equity pay out the van and the bay equipment?
It can, subject to a fresh valuation and the lender. Lenders can lend up to 80% of the valuer's figure on a workshop. Balances moved onto the property loan are then repaid over its term, and the worked example shows the effect on total interest.
Will the contamination questions on the valuation hold my refinance up?
A valuation of an automotive site can include them, depending on the lender and the valuer. Records of how oil, batteries and used tyres are stored and removed help answer them. Lenders differ on land with a contamination history, so the choice of lender matters.
Most of my tyres are bought on a supplier account. Is that counted as debt?
It shows in the accounts as money the business owes, so it is part of the figures that go with an application. It is not refinanced like a loan, though an overdraft can carry the stock between paying the supplier and being paid.
Can I refinance just the van and leave the rest alone?
Subject to the lender, the van's finance can move by itself and keep the months it has left.
My van contract ends in a balloon next year. What are my options?
The lump sum can be paid from savings, refinanced as a new loan over a fresh term, or covered by trading the van in. Refinancing spreads it out, and adds interest for the months it runs.
Will I need to offer my home as security?
Not necessarily. The loans can rest on the site, the equipment and the business, subject to the lender. Bringing the home in generally lowers the rate but commits the house to the shop's debt, and that call is yours.
I haven't lodged last year's tax return yet. Can I still apply?
An application can start, though lodging the return first lets the latest full year be included.
If I spread everything over 25 years, what does that add in interest?
In the worked example, one 25-year loan lowers the repayment by $5,229 a month and adds $642k of interest against carrying on as things are.
We're thinking about a second workshop. Does the refinance come first or after?
Planning both at once helps, because equity used for one is not there for the other. Our page on finance for buying an automotive site covers the purchase side.
Going through the shop's loans together
A refinance can line up the life of each loan with the thing it bought: the land under the bays, the aligner and test gear, and the van on the road. Ardent Capital Group can assist with the workshop property's loan, the bay equipment and vans, and the overdraft that funds your tyre stock. Drawing on a background in financial planning, the Ardent Capital Group team can map out how the new loans sit beside your household debts, and your accountant confirms the tax side. When it suits you, the team would be glad to go over the shop's loans with you.
