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Learn more about the difference between common types of car finance
Finance for private use?
Will your car be predominately used for private purposes, greater than 50% of the time? Suitable finance types may include:
Finance for business use?
Will your car be mainly used for private purposes, greater than 50% of the time? The following finance types may better suit you:
Fixed rate car loan
With a fixed rate car loan the interest rate remains the same throughout the entire loan term. Repayments can be tailored to suit your budget depending on the total amount financed, term, and interest rate.
The lender (bank, finance company etc) provides finance for the purchase of a car and secures the loan against that car.
Benefits:
· A stable interest rate that guarantees your repayments remain the same throughout the term of the loan
· Option to finance 100% of the total cost of the car – No deposit
· Or option to pay a deposit (cash or trade-in) to lower loan repayments
· Flexibility to choose the type of car that suits your lifestyle
· Ability to use the car for 100% private use
More Questions?
Email us or call a LoanLocator specialist on 1300 790 955 between 8:30am and 6:30 pm Monday to Friday
Variable rate car loan
With a variable rate car loan the interest rate may rise and fall throughout the entire loan term. Repayments can be tailored to suit your budget depending on the total amount financed, term, and interest rate.
The lender (bank, finance company etc) provides finance for the purchase of a car and secures the loan against that car.
Benefits
· The interest rate changes with market interest rate movements – if the market lowers interest rates, your loan repayments may also decrease
· Option to finance 100% of the total cost of the car – No deposit
· Or option to pay a deposit (cash or trade-in) to lower loan repayments
· Flexibility to choose the type of car that suits your lifestyle
· Ability to use the car for 100% private use
More Questions?
Email us or call a LoanLocator specialist on 1300 790 955 between 8:30am and 6:30 pm Monday to Friday
Novated Lease
A Novated Lease is an agreement between your employer, the lender (bank, finance company etc) and you (the employee). The lease payments are deducted from your pre-tax income and are paid by your employer.
A Novated Lease may be available to if your employer offers salary packaging.
Repayments can be structured flexibly depending on the amount financed, term, interest rate and residual value.
Benefits of a Novated Lease may include:
A Novated Lease can be favourable for both the employer and employee. Some benefits to the employee may include:
· No deposit required – lets you hold onto your cash for other purposes
· The option to lower your regular lease payments with a residual
· The flexibility to choose the type of car that suits your lifestyle
· The ability to keep the car even if you change jobs
· The ability to use the car for 100% private use
· Tax advantages through lease payments being made with pre-tax income
More Questions?
Email us or call a LoanLocator specialist on 1300 790 955 between 8:30am and 6:30 pm Monday to Friday
Commercial Hire Purchase
A Commercial Hire Purchase is designed for people that use the car mainly for business purposes and ultimately wish to own the car. Regular payments are made over the contract term. Full ownership of the car is transferred to you when all repayments have been made.
Repayments are tailored to suit your budget depending on the total amount financed, term, interest rate and whether a balloon (sometimes referred to as a residual or final instalment) has been set. You can even use the GST refund to contribute towards paying off the loan, thereby reducing the amount financed and the interest paid over the term of the loan.
A Commercial Hire Purchase (CHP) is also known as a Hire Purchase (HP), Offer to Hire or Corporate Hire Purchase.
Benefits of a Commercial Hire Purchase may include:
· The option to finance 100% of the total cost of the car – lets you hold onto your cash for other purposes
· If preferred, the option to use a deposit (cash or trade-in) to lower your repayments
· The option to lower your regular repayments with a balloon
· An interest rate that stays fixed and therefore your repayments will also remain the same throughout the entire contract term
· A flexible contract term of between12 and 60 months
Potential tax implications of a Commercial Hire Purchase:
Are you registered for GST? Do you use the accrual method of accounting? You may be able to claim the GST on the purchase price of the car as a lump sum when your next BAS (Business Activity Statement) is lodged with the ATO – if you use the accrual accounting method.
· The ability to manage the impact of GST, which is not payable on individual repayments or a balloon
· The ability to claim depreciation, running costs and interest paid against your business income
More Questions?
Email us or call a LoanLocator specialist on 1300 790 955 between 8:30am and 6:30 pm Monday to Friday
Chattel Mortgage
A Chattel Mortgage is designed for people that use the car mainly for business purposes. A Chattel Mortgage is considered a cash sale so you immediately own the car (chattel) on purchase. However the financier takes security over it until the contract is paid in full when the mortgage is removed.
Repayments are tailored to suit your budget depending on the total amount financed, term, interest rate and whether a balloon (sometimes referred to as a residual or final instalment) has been set.
Benefits of a Chattel Mortgage may include:
· The option to finance 100% of the total cost of the car – lets you hold onto your cash for other purposes
· If preferred, the option to use a deposit (cash or trade-in) to lower your repayments
· The option to lower your regular repayments with a balloon
· An interest rate that stays fixed and therefore your repayments will also remain the same throughout the entire contract term
· A flexible contract term of between12 and 60 months
Potential tax implications of a Chattel Mortgage:
· Are you registered for GST? Do you use the accrual method of accounting? You may be able to fund the GST portion on the purchase price of the car as part of the loan. The facility can be structured so you can claim input tax credit when your next BAS return is lodged with the ATO
· The ability to manage the impact of GST, which is not payable on individual repayments
· The ability to claim depreciation, running costs and interest paid against your business income
More Questions?
Email us or call a LoanLocator specialist on 1300 790 955 between 8:30am and 6:30 pm Monday to Friday
Finance Lease
A Finance Lease is type of lease for people that use the car mainly for business purposes. Payments are fixed for the term of the lease, providing you with the security of knowing exactly how much to budget for.
For added flexibility, at the end of the lease you have several options which may include refinancing the car, trading it in or purchasing it for the residual value.
A Finance Lease is also known as a Car Lease.
Benefits of a Finance Lease may include:
· The option to finance 100% of the total cost of the car – lets you hold onto your cash for other purposes
· The option to lower your regular repayments with a residual or balloon
· A Fixed interest rate so your lease payments remain the same throughout the entire contract term
· A flexible contract term of between12 and 60 months
Potential tax implications of a Finance Lease:
· Are you registered for GST? You may be able to include the GST portion of the car’s purchase price as part of the lease and have the facility structured to allow you to claim the input tax credit when your next BAS return is lodged with the ATO
· The ability to claim running costs and lease payments against your business income
More Questions?
Email us or call a LoanLocator specialist on 1300 790 955 between 8:30am and 6:30 pm Monday to Friday
*The information above is intended to be only a guide and is not financial advice. The right finance product for you will depend on your circumstnaces and you should seek professional advice to assist making your decision.
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