Finding the best financing solution for your next new car or work vehicle requires careful consideration. Selecting the best funding option will ensure that your effort to negotiate the best possible price for your vehicle is not undone.
With help from your finance specialist, we can drive your dollar further by ensuring your finance structure matches your budget and business goals.
What are your vehicle finance options?
Car loan/chattel mortgage
Money is lent to you to purchase the vehicle. Much like a home mortgage, you take ownership of the vehicle and the lender uses the vehicle as security.
Once the chattel mortgage is paid, the lender provides clear title to the vehicle.
The lender purchases the vehicle on your behalf and leases it back to you. The lender retains ownership of the vehicle. At the end of the lease term, you can pay off the residual value of the loan (a balloon payment) and take ownership of the vehicle OR you can hand the vehicle back to the finance company.
Commercial hire purchase
The financier purchases the car and hires it to you for an agreed period. Although you use the vehicle, the financier retains ownership. At the end of the initial hire term, you can take ownership upon payment of the pre-agreed purchase price.
A novated lease is a three-way agreement between an employer, an employee and a leasing company.
It allows an employee to salary package a vehicle even if the vehicle is entirely for personal use.
An employee can deduct the lease payment using their pre-tax income. The lease payments are taken directly from the employee’s salary, thereby reducing their taxable income. The vehicle may however, attract fringe benefits tax depending on the nature and purpose of use.
A business loan can be used for the purchase of a business vehicle. The business can use a traditional term loan, repaid with principal and interest payments, or a revolving line of credit. Business loans can be secured or unsecured.
As an individual you could also seek a loan extension should you have available equity in your home.
Ideally when using this option, you would create a separate loan account and repay the loan over a shorter period of time than your home loan to reduce the overall cost of the vehicle.
Whatever your vehicle needs, talk to us about your options before you go car shopping.