Car Loans - Your Options
Wednesday, November 22, 2006
Personal Car Loan
For those who don't have their own business and don't receive a car allowance.
Ø 1 – 7 year term available
Ø Deposit is sometimes needed, but not generally
Ø The financer owns the goods until you make the final
Hire Purchase
Ø A hire purchase is generally a 1 – 5 year term.
Ø You can have a balloon payment remaining at the end, generally up to 40%, depending on the deal. This means that you don’t have to make repayments on the balloon amount, and the at the end of the term you can either pay the balloon out or refinance it.
Ø Deposit are not generally needed
Ø If you are a business, the interest component can be tax deductible, as is depreciation if used 100% for business purposes
Ø The financer owns the goods until you pay the last repayment.
Chattel Mortgage
Very similar to a Hire Purchase, a Chattel mortgage gives you the ability to claim the GST upfront
Ø With a Chattel Mortgage, a business can claim the GST component in the first BAS after purchase. This means you will get 10% of the purchase price refunded with your next BAS after the purchase.
Ø The goods are not shown of the company balance sheet, as an asset or liability as with Hire Purchase.
Ø You own the goods from purchase, however the finance company has a mortgage over it until you make the last repayment
Finance Lease
With a Finance Lease, the finance company buys the goods on your behalf and you make repayments over a 1-5 year term.
Ø There must be a balloon payment due at the end of the term – it is usually the agreed value of the equipment at that time.
Ø At the end of the term the finance company will sell off the goods and you need to pay any shortfall if they sell for less than the agreed balloon. You can make a reasonable offer to purchase the goods
Ø The rental repayments are tax deductible if used 100% for business purposes
Ø The goods are owned by finance company.
Novated Lease
A novated lease is for individuals that receive a car allowance from their employment. Repayments are over a 1-5 year term.
Ø The loan agreement is between the employee and the finance company, and the repayments are made from the employees salary package. If the employee changes employers, the lease remains in the employees name
Ø There must be a 25% – 65% balloon remaining at the end of the term. This can be paid out or refinanced
Ø No deposit required – must be 100% financed.
Ø If the goods are used for business purposes only, the repayments are 100% tax deductible.
Ø The goods are owned by the finance company until the final repayment is made.
posted by Daniel Serratore @ 10:07 pm,
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The Author
Daniel Serratore
Daniel is heading up the new generation of Finance Brokers in Sydney. With his fresh approach and "can do" attitude, Daniel has developed relationships with key people within the Sydney lending market which enables him to source great deals for his clients. Daniel is big on customer service and has built his business purely by referrals from clients and other businesses. You can catch him via the email link on the top of this page
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This blog was developed as a resource for our clients and the general public. Although the internet will provide you with many lending providers, I am still to find a resource that shares ideas, tips and general useful info to assist borrowers make the right decisions. Hence this blog was born!
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