A car dealership can hold its two largest debts in two different places: a property loan on the showroom, display yard and workshop, and a floorplan line that pays for the cars standing on the yard. On the property loan, the workshop equipment loan and the overdraft, a refinance can reset the rate, the term and what secures each one, while the floorplan is moved or resized as a line of its own.
Is the bank's review of the property loan landing in the same year the manufacturer wants the showroom brought up to its new design standard? Are the hoists and scan tools still being paid off while the service manager is asking for diagnostic equipment for the next models? Did a slow quarter put the GST, meaning goods and services tax owed on that quarter's sales, onto an ATO payment plan while the floorplan kept charging on unsold cars?
Figures in the Australian Industry figures the ABS released for 2024-25 put sales and service income for motor vehicle and motor vehicle parts retailers at $128.9B. With operating profit before tax of $5.1B, that is about 4 cents in each dollar of sales. On those industry figures, profit is a small share of what passes through the showroom.
Ardent Capital Group would be glad to help refinance the dealership's property, workshop and working capital loans, with the floorplan line set out next to them.
What each of the dealership's loans paid for
A dealership borrows for things that last very different lengths of time, from the land under the yard to a scan tool in the workshop. Seeing what each loan bought is the first step in deciding which ones a refinance should touch.
The land and buildings hold their value over decades. A car on the floorplan is repaid the day it sells. Each type of asset has its own effective life in the ATO's published list. 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. In the ATO's effective life table for automotive repair and maintenance, a vehicle hoist used for car and light truck repairs has a 10-year life and a scan tool has 5. It helps to match each loan to the life of the asset it bought before changing anything.
A franchised dealership also trades under a dealer agreement with the manufacturer, and that agreement has dates of its own. The Franchising Code of Conduct sets rules on how those dates are handled. A manufacturer must tell a new vehicle dealer in writing whether it intends to extend the agreement, offer a new one or do neither. That notice is due at least 12 months before an agreement of 12 months or more ends, or by a later time the two parties agree.
The agreement must give the dealer a reasonable opportunity to earn a return on investment the manufacturer requires. If it is not renewed, the agreement must provide for the manufacturer to buy back or compensate for new vehicles, spare parts and special tools.
Example: a franchised dealer's five debts listed together
A dealership's debts sit with different lenders on different terms. These figures are illustrative. The dealer owns the site, valued at $5.5M: $3.5M in the showroom and workshop buildings and $2.0M in the display yard and hardstand. Hardstand is the hard-surfaced ground where cars are parked and displayed.
For every debt the dealership carries, the figures give its purpose, its security and its monthly cost.
| Debt | What it funded | Secured by | Owing | Months to run | Each month |
|---|---|---|---|---|---|
| Property loan (showroom, yard and workshop) | Showroom, workshop, display yard and land | A first mortgage over the site, giving that lender the first claim on it if it is sold | $2.6M | 15 years | $23,370 |
| Floorplan line | New and used cars on the yard | The financier owns each car until it sells | $1.9M drawn of a $2.5M limit | Each car is repaid when it sells | Interest, or a bailment charge (a holding fee), on the cars held |
| Workshop equipment loan | Hoists, a wheel alignment machine and scan tools | The equipment | $180k | 48 months | $4,522 |
| Overdraft | Parts, wages and the days before a customer's car loan settles | A general security agreement: a claim over the company's business assets | $150k drawn | No set end | $1,250 interest |
| ATO payment plan | A slow quarter's GST, plus PAYG withholding, which is tax withheld from employees' wages | Nothing | $90k | 18 months | $5,000 |
| Total, leaving out the floorplan | $3.02M | $34,142 |
The property loan has $2.6M owing over 15 years, secured by a first mortgage over the site, and costs $23,370 a month. Across the four debts paid monthly, the total is $34,142.
For the arithmetic we have used 7% on the property loan, 9.5% on the equipment loan and 10% on the overdraft. Those are assumptions, not rates on offer today. No general interest charge, the interest the ATO adds to tax paid late, is added to the ATO plan. The floorplan sits outside the total because its balance changes with every car bought and sold.
How a refinance changes the property loan and the rest
Refinancing moves one of the dealership's loans to fresh terms. Three settings can shift: the rate, the years left to run and what backs the loan.
- Rate. A lower rate on the $2.6M property loan, kept to the same 15 years, lowers what the dealership pays each month and the interest left on the loan.
- Term. The term is the number of years left on the loan. Restarting the property loan over 25 years takes about $4,994 off each month in the example. It also adds about $1.306M to the total repaid. That can suit a dealer for a set stretch, such as while a required showroom upgrade is paid off, if the new loan accepts extra repayments afterwards.
- Security. Security means what a lender may claim if repayments stop. A loan against the showroom site is generally priced under an equipment loan or an unsecured one. Moving a debt onto the property loan makes the site security for that debt.
Every repayment on the property loan is part interest on the amount still owed and part principal, the share that brings the balance down. Interest is worked out on what is owed. That makes the interest share heaviest in the early years.
Worked example: the first month on the $2.6M property loan
Splitting one property loan repayment into its two parts shows how much of the dealership's money goes to interest at the start. At an assumed 7%, the first month's interest is about $15,167: the balance times the rate, divided by 12. Of the $23,370 repayment, about $8,203 reduces the balance. Across the first 12 months about $101.7k comes off, leaving about $2.498M owing, and about $178.8k goes to interest.
Refinancing each loan the dealership carries
The site, the stock, the workshop and the day-to-day accounts each carry their own kind of loan.
The property loan on the showroom, yard and workshop
In the example, the property loan is the largest and longest-running term debt the dealership carries.
A lender can read the showroom and workshop as standard commercial property, which gears to up to 80%. Gearing is how much a lender will lend as a share of the property's value. The display yard and hardstand can be read as land, which gears to 65%. The major banks publish no owner-occupier figure and assess each site case by case. On the example's valuation that is up to $2.8M against the buildings and $1.3M against the yard. That makes about $4.1M in all against $2.6M owing.
A refinance can change the lender, the rate and the term. Non-bank lenders write commercial terms of 25 to 30 years, against the 10 to 15 that banks commonly publish. Equity means the share of the site's value not already owed to a lender. Equity built up since purchase can be released for a showroom upgrade, a workshop extension or other debts. Our car dealership property refinance page covers the showroom, yard and land.
A showroom built to one manufacturer's design has fewer other possible occupants than a plain showroom or workshop. Where the property loan sits on a fixed rate, it helps to have the break cost confirmed in writing before any application goes in. A break cost is a fee for ending a fixed rate early. The more rates have fallen since the rate was fixed, the bigger it is. If a trust owns the site and leases it to the dealership company, the lender reads that rent together with the dealership's trading.
Floorplan finance for the cars on the yard
The floorplan keeps the yard stocked, and its balance rises and falls as cars arrive and drive away.
Under a bailment arrangement, the floorplan financier pays for each vehicle and owns it while it stands on your yard. Its interest is registered on the PPSR, the national register of security interests in personal property. It does not cover land, buildings or fixtures to land. The dealership pays interest or a bailment charge while each car is held. It repays that car's amount when the car sells.
Stock audit reports record the cars on the yard against the line. Some lines require part of a car's amount to be repaid if it stays unsold past an agreed number of days. That payment is called a curtailment.
Floorplan is a revolving line, meaning it is drawn and repaid over and over rather than run down to nil. A refinance therefore does not pay it down over years. What can change is the financier, the limit, the interest or bailment charge, the curtailment terms and the audits. The cars are not the dealer's to mortgage, so the floorplan stays out of the property loan. Before moving a new-car line, it helps to check what the dealer agreement says about how new stock is funded.
Workshop equipment: hoists, wheel alignment and scan tools
The service department's equipment wears out far sooner than the building it sits in. That shapes how long its loan can sensibly run.
The equipment can sit on its own loan: two-post and four-post hoists, a wheel alignment machine, a tyre changer, and the scan tools and special tools a manufacturer specifies. The same ATO table gives a wheel alignment machine 7 years and vehicle special tools 5. Your accountant confirms which lives apply.
A refinance can change the rate, term and any balloon here. A balloon is a larger sum held back until the final repayment. Clearing the equipment contract ahead of schedule can trigger a fee called an early payout charge. Its terms are written into the contract. In the example, $180k and 48 months remain, with about $37k of interest to come.
Moved inside a 25-year property loan at 7%, that $180k carries about $202k of interest. Scan tools on a 5-year life would then sit inside a loan that outlasts them by two decades. Over 15 years it carries about $111k.
If new models need new diagnostic equipment, the old equipment loan can be paid out and the replacement funded in one loan. The supplier's quote shows what the new loan pays for, and the equipment's effective life is a sensible guide to its term.
The overdraft and the ATO payment plan
Both carry the dealership through gaps in cash, from settlement days to a slow quarter's GST.
The overdraft can carry parts purchases, wages and the days between handing over a car and the customer's car loan settling. Once the drawn balance becomes a term loan, the overdraft is cleared. The dealership then loses that buffer for settlement gaps.
The quarter's GST and PAYG withholding can be paid to the ATO in instalments under a plan. Most plans still run the general interest charge on the dealership's balance. A business loan or a larger property loan can pay it out. Since 1 July 2025 no deduction is available for ATO interest charges, while business-loan interest may be deductible. Your accountant can work out what that means for the dealership.
Restructuring the site, workshop and ATO debts as one
Having looked at each one, the dealership can weigh the site, workshop and ATO debts as a group. Combining them changes the monthly bill and how many years the hoists and the GST are paid over.
Worked example: four ways to restructure the site, workshop and ATO debts
The dealership today, with the site, equipment and ATO debts left alone, is the starting point for every option. Total repaid from here counts every remaining repayment on the three debts, and every option stays within the roughly $4.1M the site can secure.
None of the options touch the overdraft. The starting $32,892 is therefore the $34,142 monthly total less the $1,250 of monthly interest on the overdraft.
| Option | Each month | Change each month | Total repaid from here | Difference in total cost |
|---|---|---|---|---|
| Site, equipment and ATO debts left alone Today | $32,892 | Starting point | $4.514M | Starting point |
| Refinance the property loan over 25 years, keep the other two | $27,898 | $4,994 less | $5.820M | $1.306M more |
| Add the ATO balance to the property loan over 15 years, keep the equipment loan | $28,700 | $4,192 less | $4.569M | $55k more |
| Fold the equipment loan and ATO balance into the property loan over 15 years | $25,796 | $7,096 less | $4.643M | $129k more |
| Fold the equipment loan and ATO balance into the property loan over 25 years | $20,285 | $12,607 less | $6.085M | $1.571M more |
Rounded, illustrative figures using assumed rates, not quotes. Not included: break costs, valuation and legal fees, payout figures, meaning each lender's written amount to clear its loan, and the general interest charge. The overdraft and floorplan are unchanged in every option.
Adding the ATO balance to the property loan over 15 years lifts that loan to $2.69M and takes about $4,192 off each month. Over the life of the loans it adds about $55k to the total repaid.
At the other end, folding everything into a 25-year property loan gives the smallest monthly repayment, $12,607 less than today. It also costs about $1.571M more than the current path, because the property loan runs ten years longer and the workshop and ATO debts are spread over 25 years.
Every option lowers the monthly repayment and raises the total cost, and the choice is yours. We would start from written payout figures and run the options you want on both measures. Whichever you choose, we would then take to lenders. Every number here is illustrative, and none of it is quoted or approved.
What secures the dealership's new loan
For a dealer who owns the site, the land and buildings are the main security on offer. The property loan stays secured by a first mortgage over the land and buildings. Two other kinds of security can sit around it.
- A general security agreement. Business loans can take one, registered on the PPSR next to the floorplan financier's interest in the cars. Each financier can ask what the other holds. When one of the dealership's loans is paid out, it helps to have its old PPSR registration lifted.
- The home. Borrowing against the house usually means a lower rate over more years, at the price of the house becoming security for the dealership's debts. That choice is yours. Where the house is already pledged to one of the dealership's loans, a refinance can look at whether the site and trading now carry that debt without it. Dealers wanting to refinance the house itself can read about our home loans for business owners.
A property trust and an operating company
A dealer may hold the land in one entity and sell the cars through another. With the site in a trust, trading in a company and directors guaranteeing both, every entity and every director-guarantor is assessed. Under a director's guarantee, the director becomes personally liable if the company falls behind. The assessment covers financials and tax returns for each entity, the lease from the trust to the company, and each director's own debts.
Before you apply to refinance the dealership
A dealership's income comes from several departments, each with its own seasons and paperwork.
How a dealership's income comes in
A dealership earns from the yard, the finance office, the workshop and the manufacturer.
- Vehicle sales. Car gross, the profit on each new and used car sold, which can move with model launches, manufacturer targets and the end of the financial year.
- Finance and insurance commissions. Paid by finance and insurance providers for arranging customers' car loans and cover, apart from the sale price.
- Service and parts. Workshop labour, warranty work the manufacturer pays for, and parts sales, which can hold up in a month when car sales are slow.
- Manufacturer bonuses. A franchised dealer can earn bonuses tied to sales targets, paid only when a target is met.
- Costs. Floorplan interest and bailment charges, curtailments, demonstrator running costs and wages. Salespeople, mechanics and automotive technicians, service receptionists and detailers fall under the Vehicle Repair, Services and Retail Award. Clerical staff outside service reception do not.
Before the dealership applies
A little preparation before applying can affect both the cost of the refinance and how the dealership's figures read.
- Payout figures. Written figures help for the property loan and the equipment loan, with the property loan's break cost and the equipment loan's early payout charge included. Should the cost of breaking a fixed rate exceed the saving, the property loan can be revisited as its fixed term draws to a close.
- The dealer agreement and any extension notice. If the notice is due soon, having it shows the agreement's next term.
- Every BAS and tax return lodged. A BAS, or business activity statement, reports and pays the business's GST to the ATO. It helps to have each one lodged before applying.
- A slow quarter still in the latest statements. A few more months of sales after a model launch put newer figures in the statements.
The dealership's property loan and its overdraft can both carry an annual review, the lender's check on how the dealership is trading. It considers recent sales and changes since the loan was drawn, such as a showroom upgrade the manufacturer has asked for or new cars now sold as agent. Preparing early gives time to compare lenders before the date. Our guide explains the steps in a lender's scheduled review.
Documents to gather
Much of what is needed already sits with the dealership's accounts team, its floorplan financier or the accountant.
- Payout letters for the site and equipment loans, and the ATO statement of account
- Floorplan statements, the current limit and recent stock audit reports
- The dealer agreement and any notice about its extension
- Statements for every business account, this year's BAS, and each entity's last two lodged years of accounts and tax returns
- Equipment invoices, and the trust-to-company lease if the site is held separately
- Each director's and guarantor's own debts: home loan, car loans and cards, with statements
Dealers' refinancing questions
My dealer agreement runs out in two years. Can I still refinance the site over 25 years?
It can be considered. The term offered depends on the lender, the valuation and the trading.
Can the floorplan be rolled into the property loan?
Not while it is under bailment. The financier owns each car until it sells, so the stock cannot be mortgaged with the site. The floorplan can move to another financier or be resized on its own.
The manufacturer wants a showroom refresh. Can equity in the site pay for it?
It can, where the valuation, the repayments and the lender allow. The builder's quote shows what the funds are for.
Why is the payout figure on my property loan higher than the balance?
It can include a break cost on a fixed rate, a discharge fee and interest up to the payout date. It helps to ask for a written figure dated near the planned settlement.
GST from a slow quarter went onto an ATO plan. Does that rule out a refinance?
Not on its own. Lenders check that instalments are being paid, read the ATO statement of account and note the stage the debt has reached. A refinance can clear it, and your accountant handles the tax questions that raises.
Our finance and insurance commissions fell this year. Will a lender still count them?
They stay part of the dealership's income in its accounts, and the weight they carry is the lender's call.
Do curtailment payments affect how much I can borrow?
They show as money leaving the account, and the floorplan statements show how much stock has aged past the curtailment date.
How much does folding the equipment loan and ATO balance into the property loan save each month?
In the example, doing it over 15 years takes $7,096 off each month. It also adds about $129k to the total repaid.
Do refinance applications show up on the dealership's credit file?
Yes: a formal application is listed on the company's file and on the file of every director who applies or guarantees. Approaching only lenders whose policy fits a dealership keeps those enquiries few.
We now sell new cars as agent for the manufacturer. How does that change the dealership's income?
Under agency the new stock and its sale price belong to the manufacturer, and the dealership earns a fee per sale. Those fees, used car sales and the service department become the dealership's own income.
Working through the dealership's loans with you
A dealership's loans were taken at different times for the site, the cars on the yard, the hoists and scan tools and a quarter's GST. Refinancing them means setting each against how long its asset lasts, the dealer agreement's dates and the way income arrives. At Ardent Capital Group we assist dealers with the property loan, workshop equipment and working capital, with the floorplan line beside them, and our car dealership business loans cover floorplan and working capital. With a background in financial planning, our team can map out how the loans fit together, and your accountant signs off the tax treatment. If a review date on the property loan, a showroom upgrade or an ATO plan has you looking at the dealership's loans, we would be glad to take each of the dealership's debts in turn with you.
