Cars - Financing and Deals
Discussion
Following the 'daily dreaming'thread just wondering how others finance their cars and also what deals might be out there.
The finance possibles in Australia for what I can see involve:
- straight loan
- secured loan
- secured with balloon
- commercial hire purchase/Chattel Mortgage
- leasing
Now leasing I think is damn expensive and not really advantageous, even at a notated basis due to the full fat charge on everything and the tax offset isn't great.
Straight loans are ok but rates 10% +
The CHP/Chattel Mortgage is ok but solely business use and also the interests rates seem worse an normal loans and only good if you can claim the GST being self employed/ABN.
This leaves the affordable option being secured with/without balloon as rates seem to be around 6-6.5%. Also if you sue for business you can till offset a % of business use as tax deductible.
When i got my Falcon at $43k, it had a 40% balloon, cost $700 pm but with the tax deductions the rebate was c.$5k(including depreciation) so it actually came in at about $300 pm which was great.
The issue you have is that you can't get good finance balloons on cars over 4 years which means nice cars e.g E9# M3's etc are out the question unless you can afford $1500 pm so for most people you are looking at sub $50k cars and newish which leaves you with Commodores etc.
What's the view on this, how did you get your car financed and any tips ideas on getting something special/older easily financed?
The finance possibles in Australia for what I can see involve:
- straight loan
- secured loan
- secured with balloon
- commercial hire purchase/Chattel Mortgage
- leasing
Now leasing I think is damn expensive and not really advantageous, even at a notated basis due to the full fat charge on everything and the tax offset isn't great.
Straight loans are ok but rates 10% +
The CHP/Chattel Mortgage is ok but solely business use and also the interests rates seem worse an normal loans and only good if you can claim the GST being self employed/ABN.
This leaves the affordable option being secured with/without balloon as rates seem to be around 6-6.5%. Also if you sue for business you can till offset a % of business use as tax deductible.
When i got my Falcon at $43k, it had a 40% balloon, cost $700 pm but with the tax deductions the rebate was c.$5k(including depreciation) so it actually came in at about $300 pm which was great.
The issue you have is that you can't get good finance balloons on cars over 4 years which means nice cars e.g E9# M3's etc are out the question unless you can afford $1500 pm so for most people you are looking at sub $50k cars and newish which leaves you with Commodores etc.
What's the view on this, how did you get your car financed and any tips ideas on getting something special/older easily financed?
For the Forester, which we bought new, we got a straight unsecured loan, using a friend who's a broker - we got a good rate, about 8.5% which wasn't too bad in 2007.
All other cars have been financed from the mortgage offset account, with a plan of how to repay the funds into the account within 12 months. Mortgage rate is around 5%, funds are available with no application, seller sees a buyer with cash.
Our cars aren't used for business so there's no advantage there.
I did look at salary sacrifice a few years ago, but the packaging didn't do us any favours and overall was no cheaper for us than an unsecured loan.
All other cars have been financed from the mortgage offset account, with a plan of how to repay the funds into the account within 12 months. Mortgage rate is around 5%, funds are available with no application, seller sees a buyer with cash.
Our cars aren't used for business so there's no advantage there.
I did look at salary sacrifice a few years ago, but the packaging didn't do us any favours and overall was no cheaper for us than an unsecured loan.
Unless paying cash I'd usually look at a secured loan, balloon payment that is nailed on and shop around on the rate. Having just bought a new car the rates on offer varied from 9% to 6%.
I had heard of 4% being possible but couldn't get near it.
I've previously found that if you have negotiated a price for the car at say 7% over 3 yrs then if you can usually get a lower rate or further discount the car price if you go for 5 yrs as the longer the period the more profit they make.
I had heard of 4% being possible but couldn't get near it.
I've previously found that if you have negotiated a price for the car at say 7% over 3 yrs then if you can usually get a lower rate or further discount the car price if you go for 5 yrs as the longer the period the more profit they make.
Some Interesting answers cheers.
Quotes at moment for a secured with balloon coming at 6.5%.
Chap at work buys new, runs 3 yrs then gets rid and he swears its the only way for him because new cards get a greater depreciation tax write off than older cars means together with tax offsets means he can run a $50k car for about $2500k per annum net.
Quotes at moment for a secured with balloon coming at 6.5%.
Chap at work buys new, runs 3 yrs then gets rid and he swears its the only way for him because new cards get a greater depreciation tax write off than older cars means together with tax offsets means he can run a $50k car for about $2500k per annum net.
When we arrived we had some cash in our pocket but were nervous about spending a big chunk on a car so we went down to a large dealer who said "Is it true, that I'm selling a used Mazda 6 for $20k with zero deposit required over 5 years?.......Just over the Causeway in Victoria Park".
So I took the finance deal, preserving our cash for rental deposits and all those other costs you have soon after arrival. I now wish I'd put down a bigger deposit.
I called the finance company about 6 months ago asking if I could pay off the secured car loan early and was told that I could but the charges would be quite significant. I'm now over paying to the point at which I'll be left with a regular monthly payment of less than $20 for the last couple of years hence it's not "paid off" as such so I wont have to pay the early settlement fee but will save heaps on the interest. Getting the details of how to make overpayments was a long tiresome process though as they clearly dont want you to do it.
So I took the finance deal, preserving our cash for rental deposits and all those other costs you have soon after arrival. I now wish I'd put down a bigger deposit.
I called the finance company about 6 months ago asking if I could pay off the secured car loan early and was told that I could but the charges would be quite significant. I'm now over paying to the point at which I'll be left with a regular monthly payment of less than $20 for the last couple of years hence it's not "paid off" as such so I wont have to pay the early settlement fee but will save heaps on the interest. Getting the details of how to make overpayments was a long tiresome process though as they clearly dont want you to do it.
Pommygranite said:
Some Interesting answers cheers.
Quotes at moment for a secured with balloon coming at 6.5%.
Chap at work buys new, runs 3 yrs then gets rid and he swears its the only way for him because new cards get a greater depreciation tax write off than older cars means together with tax offsets means he can run a $50k car for about $2500k per annum net.
Buy Gallardo for $170K, $3k / month with $80K balloon you say?Quotes at moment for a secured with balloon coming at 6.5%.
Chap at work buys new, runs 3 yrs then gets rid and he swears its the only way for him because new cards get a greater depreciation tax write off than older cars means together with tax offsets means he can run a $50k car for about $2500k per annum net.
papahet said:
Pommygranite said:
Some Interesting answers cheers.
Quotes at moment for a secured with balloon coming at 6.5%.
Chap at work buys new, runs 3 yrs then gets rid and he swears its the only way for him because new cards get a greater depreciation tax write off than older cars means together with tax offsets means he can run a $50k car for about $2500k per annum net.
Buy Gallardo for $170K, $3k / month with $80K balloon you say?Quotes at moment for a secured with balloon coming at 6.5%.
Chap at work buys new, runs 3 yrs then gets rid and he swears its the only way for him because new cards get a greater depreciation tax write off than older cars means together with tax offsets means he can run a $50k car for about $2500k per annum net.
Not much different from all those new C63 AMG's - that's how they get bought.
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