May 26, 2026 Automotive & Transport

Understanding Commercial Mortgages for a Car Dealership

For many car dealership principals the flagship site is rented, even though the address, frontage and layout carry the brand. Owning the freehold turns today's rent into repayments that build a lasting asset. At Ardent Capital Group we speak with dealership owners about this kind of commercial property purchase, and this guide covers how a lender sees it.

Ardent Capital Group works with car dealership operators across Australia on commercial mortgages for their premises. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.

Access finance from $100,000 to $10,000,000+, aligned to your dealership profile and location.
Over $500,000,000 facilitated across a decade for 1,000+ borrowers, with strong lender access and execution.
Service across Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra, Hobart and regional centres.
End-to-end strategy on deposit, serviceability, valuation and settlement, coordinated with your legal and accounting advisers.

Why buy rather than lease your car dealership

Dealerships sink real capital into the site. Showroom glass and tiles, compliant workshop floors and drainage, multiple hoists and wheel alignment machines, EV chargers, exhaust extraction, compressed air, oil and coolant reticulation, wash bays with water recycling, pylon signage and extensive hardstand. The location often sits on an automotive strip or high-exposure arterial where your brand equity ties to the address. Sales can be cyclical, yet parts and service create recurring income and a reason for clients to return to the same site. Loan repayments build equity in the freehold, cap rental risk and secure control over future refurbishments to meet OEM standards.

Key drivers for ownership:

Long-term control of site layout, frontage, hardstand and signage to meet franchise and brand requirements.
Shield against rent escalations and make-good costs when OEM refits are required.
Ability to leverage your equity for future site works, EV charging upgrades or expansion of service bays.
A balance sheet asset that can support intergenerational succession or exit planning.

Buying may not suit where the franchise territory could shift, the current lease horizon is short with a planned relocation, or when capital produces a better return in inventory, floor plan support or a satellite service site. The decision is yours and should reflect brand strategy, working capital needs and site longevity.

The mechanics of a car dealership mortgage

Deposit and LVR. A dealership showroom and workshop is standard commercial security, valued on comparable sales and achievable rent, so an owner-occupier purchase gears up to 80 per cent, a 20 per cent deposit. The major banks publish no owner-occupier commercial LVR at all, which is one reason a broker who knows where the file should go earns its keep. Where a site carries a large hardstand for vehicle display, the vacant-yard portion is weighted more like land and gears closer to 65 per cent, so the mix of building to yard moves the number. Some profiles reach 100 per cent effective funding by adding security such as equity in another property, and our team can outline how that is assessed.

Loan term and structure. Terms commonly run 10 to 15 years with a bank and 25 to 30 years with a non-bank lender. Repayments can be principal and interest for steady amortisation, or interest only for periods where cash flow priority sits with inventory turns, OEM refurbishments or a model-year changeover.

Security and serviceability. Lenders take a first mortgage over the property, often with director guarantees. Serviceability is tested on business cash flows, with addbacks for one-offs. When you move from tenant to owner, rent addbacks and a market rent proxy are used so the assessment reflects the new structure.

Owner-occupier treatment. Lenders generally favour owner-occupied purchases. Transparent trading history, predictable service revenue and a site in an established auto precinct can support sharper pricing, higher LVRs and smoother valuation acceptance.

Structuring the finance

Many car dealership operators hold the freehold in a separate entity, often a company or trust, and lease the premises back to the trading business at commercial rent. A lender reads that inter-entity rent as the serviceability line, and the written lease supports the valuation, clarifies outgoings and helps ring-fence the property from trading risk. We work out the lending against whichever entity holds the freehold, and your accountant settles how the ownership sits alongside the trading business.

SMSF purchase, briefly. Dealership premises often qualify as business real property, so a self-managed super fund can hold the building in a bare trust and lease it back to the trading entity at market rent through a limited recourse borrowing arrangement. The fund needs its own deposit, because the arrangement funds a single asset and cannot be cross-collateralised. The rent must be paid at an independently appraised market rate, and the bare trust must exist before contracts are signed. Ardent's part is finding lenders that will take dealership premises as SMSF security and mapping the loan against the fund; the fund's contribution capacity, tax position and paperwork are for your accountant and SMSF specialist to finalise.

How lenders size up the deal

Business financials and stability: Two to three years of financials, year-to-date performance, BAS and management accounts, with attention to service and parts gross margins.
Serviceability: EBITDA coverage of proposed debt, addbacks for non-recurring costs, adjustment for related-party rent when transitioning to ownership.
Property and valuation: Land size, corner exposure and frontage, planning and zoning, quality of hardstand, workshop compliance, EV readiness, and the proportion of specialised improvements that may be valued as plant.
Deposit and equity position: Cash, retained earnings, equity in other property, or structured contributions supported by secondary security.
Lease and occupancy: For related-party leases, market terms, outgoings, options and rent review mechanics that align with lender policy and valuation commentary.
Environmental and compliance: Trade-waste systems, oil separator maintenance, wash bay compliance, historical use and any contamination reports.

One point specific to dealerships: the vehicles on the display floor are not part of the property security. New stock is generally held under a floor plan (bailment) facility, where the financier owns the vehicle until it sells, so inventory is funded separately from the freehold and does not affect the property LVR.

A specialist broker who speaks the dealership language shortens the path to the right lender, the right valuation brief and the right structure.

A scenario worth considering

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

Profile: a metro dealership with new and used sales and a busy service department, around $28,000,000 annual turnover, profitable for three years, on a lease with two years remaining.
Opportunity: buy the current site for $6,500,000, comprising a 3,000 sqm showroom and service area plus 7,500 sqm of hardstand and pylon signage.
Options that could be mapped: up to 80 per cent against the showroom and workshop at standard pricing with 20-year principal and interest, or a lower gearing where the large hardstand is weighted more like land, with the building-to-yard mix moving the final number.
Holding arrangements a lender might see: a holding trust owning the property and leasing it back to the trading company at market rent, or an SMSF acquisition of part of the site with a compliant lease and a limited recourse borrowing arrangement.
Cash flow focus: interest only for a first period while an OEM-mandated showroom refresh is completed, then a switch to principal and interest.
Equity strategy: use a deposit from existing property, then, after settlement, refinance selected workshop equipment onto its own facility to release working capital.
How we would approach it: we would map the ranges, structures and repayments, and the owner would weigh timing, pricing and risk. The figures above are illustrative, not confirmed outcomes.

Related finance for a car dealership

Asset finance for workshop and EV infrastructure: fund hoists, wheel alignment systems, diagnostic scan tools, parts storage, compressors and EV chargers through dealership equipment finance, without tying up core capital.
Fit-out and refurbishment finance: Cover OEM-mandated showroom refreshes, new tiles, glazing, lighting and customer lounge upgrades on terms aligned to useful life.
Working capital loans: smooth seasonal swings, plate-clearance campaigns and warranty recovery cycles with working capital for a car dealership, kept separate from your floor plan facilities.
Business overdraft: Flexible headroom for timing gaps between trade-ins, wholesales and retail deliveries.
Refinancing and debt consolidation: Reset pricing, consolidate scattered facilities and align covenants to actual dealership cash flow.
Construction and renovation: Stage works for new service bays, wash bays, canopies and hardstand resurfacing with progress draws tied to milestones.
Business or premises acquisition finance: Structured funding for buying a freehold, adding a satellite service site, or a partner buy-in or buy-out alongside the property purchase.

Owning the premises can free equity for future upgrades, and a well-timed refinance can consolidate facilities so property and operating finance work together.

Specialist finance for car dealership premises

Ardent Capital Group works with car dealership owners and groups, arranging finance around how you intend to hold and occupy the property, including related-party leasing and SMSF where it suits. We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas, and have helped facilitate over $500,000,000 in funding across a decade for more than 1,000 borrowers. Owning your dealership premises is more within reach than many operators expect, and a well-structured car dealership property loan can sit alongside the facilities that fund your stock and equipment. If you want a direct conversation about optimal financial outcomes, talk to us.

Frequently asked questions

What deposit do I need to buy a car dealership freehold? Most lenders look for 20 to 35 per cent depending on the asset, the building-to-hardstand mix, location and your trading profile. Adding security such as equity in another property can reduce the cash you contribute.

Will the valuation include workshop hoists and EV chargers? Valuers often treat hoists, chargers and diagnostic equipment as plant rather than part of the freehold, which can reduce the property valuation. These items can be financed separately under asset finance.

Can my SMSF buy the dealership property and lease it to the business? Yes, dealership premises generally qualify as business real property. Your SMSF can buy the site through a bare trust and lease it to your trading entity at market rent under a limited recourse borrowing arrangement, with its own deposit, lower gearing and liquidity rules to plan for.

How do lenders assess serviceability for an owner-occupier dealership? Assessment is based on EBITDA and cash flow coverage of proposed debt, with adjustments for related-party rent when you move to ownership and allowances for stable service revenue.

Does a location on an automotive strip help the mortgage terms? Prime metro auto precincts with strong exposure and access can improve valuation confidence and support sharper pricing or higher LVRs. Secondary or highly specialised sites may attract more conservative terms.

What environmental checks should I expect? Expect review of trade-waste systems, oil separators, wash bays, historical site use and any contamination risk. Some lenders will require an environmental report as a condition.

Can I fund purchase and an OEM-required refurbishment together? Yes, a commercial mortgage for the freehold can be combined with an equipment or fit-out facility for the refurbishment, sequenced so cash flow remains stable during works.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.