Which asset finance option is right for you?
Most people assume if you get a car and want to borrow money for one you'll get a car loan? Most of the time it's the way to go, but if you're a business owner there's a couple of different options for you which can be beneficial to a consumer car loan.
Consumer Car Loan
Secured car loans are for cars that are predominantly for private use. The lender will register their security interest in the car on the Personal Property Security Register and will maintain this interest until the loan is closed. They're straight forward, terms are generally between 3 and 7 years and you'll make periodical payments reducing the loan amount.
Chattel mortgages are the most popular type of finance for vehicles which will be used predominantly for business use. The lender will register the chattel (car) as security with the Personal Property Security Register. This type of loan facility can include a balloon repayment. If you wanted a 30% balloon on a $50,000 vehicle you would only make repayments on $35,000 and be required to pay the remaining $15,000 at the end of the term.
A chattel mortgage gives you ownership of the vehicle straight away. This means you can claim any applicable depreciation expenses and the GST charges as well as the interest charges attached to the loan facility.
Hire purchases are, as the title suggests, an agreement to hire an asset until the hirer (you) has made the instalment payments agreed to and then takes ownership of the vehicle. This means that if you obtain access to a vehicle using a hire purchase you will not own the vehicle straight away.
The benefit here is you can claim the lease payments made as tax deductions because you are paying to lease the vehicle where as when you have a car loan or chattel mortgage you can only claim the interest portion of the repayment. The downfall can be that you only claim GST on the lease payments and can’t claim depreciation until you take ownership of the vehicle.
These are unsecured facilites that allow you to borrow money with the lender holding no collateral against the loan. Things like holidays, weddings, debt consolidation and surgeries are common unsecured personal loan purposes.
You can use a personal loan to purchase a car, truck or trailer but you generally pay a higher interest rate than if the lender was able to use an asset as security as the lending is higher risk to lender.
On top of being able to sort your finance we also have access to a free car buying service which will shop multiple dealers on your behalf to find your car at the best price. Don't want to use the car buying service? Even being able to tell the sales rep that you are using a broker who has a car buying service can be enough to get them to give you their best offer.
If you're looking for the right product for your needs give me a call, more than happy to walk you through your options and ensure you get the best deal possible.