What are my finance options?

Posted on Posted in Car loan, Finance
What are my finance options?

There are various finance options available for different types of borrowers. If you own a business, you can find tax incentives for buying your vehicle through the business and claiming, not only the repayment, but also the depreciation.


Personal Loans

This is probably the most common form of loan for new vehicle buyers. It is simply a loan that is based on your personal circumstances and capacity to repay.

The lender will have regard to your personal wage (after tax) and any liabilities you are exposed to as an individual. The bank will then enter into a loan agreement with you and you will need to give a personal guarantee that the loan amount will be repaid over a period of time, at a particular interest rate.


Chattel Mortgage

This is a loan type geared towards business owners, or even employees who are willing to salary sacrifice. A chattel mortgage is the perfect way for individual business customers to maximise the taxation benefits gained from financing a brand new vehicle.

A Chattel Mortgage is ideal for small to medium sized businesses. A Chattel Mortgage can be used for purchasing a brand new vehicle or upgrading an existing vehicle or fleet of vehicles.


Novated lease

Under a novated lease your employer agrees to take on the monthly repayment obligations of a lease agreement. You get the car, but your employer pays. The money comes out of your wage, pre tax.

This potentially reduces your tax liability. You wont need to do anything different come tax time. This is all taken care of by your employer and our finance team.

If you decide to leave your employment, you take on the repayment obligations under the existing lease. Usually, this can be assigned to your new employer.


GST implications for some finance options

Under both a Chattel Mortgage and Commercial Hire Purchase agreement, the Goods and Services Tax (GST) is contained in the purchase price of the vehicle, but does not apply to the monthly repayment or balloon (final instalment) on the contract.

Normally, business customers who purchase vehicles through Novated Leases or Commercial Hire Purchase Agreements can apply Input Tax Credits (ITCs) to claim back some or all of the GST (up to a maximum amount of $5183) contained in the price of the motor vehicle.

Business clients can usually claim back the GST as soon as they lodge their next Business Activity Statement (BAS). This makes Chattel Mortgages an attractive and well-suited product option for our business clients.


Which finance option is right for me?

This will depend entirely on your personal circumstances. If you have further questions, or you’re still not sure, give our finance ream a call today, or send us an email at approved@bestvehicleloans.com.au and we will help you on your way to becoming a new vehicle owner.