Personal Motor vehicle finance has become more competitive over the years with the arrival of a number of specialised car financiers who have introduced new products at rates substantially better than what the banks are offering.
Thankfully, the days of having to either go to the bank for an expensive personal loan or place yourself at the mercy of the Car dealer and their ruthless finance departments are long gone!
No longer is there one type of loan to fit all, with a number of different financing options now available for you to consider. These options are listed below.
With motor vehicle finance being so competitive rates have fallen considerably in recent years. However, be careful not to fall into the trap of the 0% or low interest rates offer. Take a moment to read this article if you’re not sure why ( Be Wary of the Low Interest Car Finance Con )
Finance your next vehicle with a balloon, reduce your payments or purchase a better vehicle!
For years business owners have been able to finance their vehicles with a balloon payment in the contract and now consumers can do the same. A balloon payment allows you to reduce your monthly commitment but also ensure that at the end of the contract term they only owe what the vehicle should be worth.
For instance, a vehicle purchased for $40k and financed over 4 years with a 30% balloon payment due at the end of the term means that the owner will still owe $12k at the end of the contract. This amount can them be paid in full, refinanced or you can upgrade to a newer model and trade your car in (and the balloon will be paid out).
* May have to put a deposit down or may be 100% funded depending on your financial situation.
* Repayments are usually fully tax deductible if the vehicle is being used for work in some way.
* Repayments can be structured to suit you, the borrower, and maximize allowable tax deductions.
* Motor vehicle owned by the lender and leased to you.
* A residual payment is structured into the contract.
* Upon completion of the contract you will have the following options:
a) Purchase the vehicle for the Residual value;
b) Re-finance the residual amount for an extended term; or
c) Trade the vehicle, pay out the residual and retain the difference.
PERSONAL NOVATED LEASE:
* You can get to choose the vehicle and benefit from any equity in the vehicle.
* Portable between employers allowing employment flexibility.
* A three-way agreement – lender, employer, employee (you)
* Tax effective as the employer makes payments from the employee’s pre-tax income (Salary sacrificing)
SECURED CAR LOAN
* The lender will take security of the car to guarantee the loan
* A balloon can be added to these loans reducing the monthly repayments.
UNSECURED CAR LOAN
* This is an easier way to get finance as the approval is not so stringent but interest rates are higher
* The motor vehicle is not taken as security