| boat loan, auto loan | 19 Sep 2008 12:00 AM |
| New Car Finance Options by Vicky Edema | |
Dealer finance
If you require new car finance when buying your vehicle from a dealer, you may consider dealer finance to be a convenient and simple solution to the problem. Just be aware that this convenience can cost you.
Dealer finance generally has a higher interest rate that the more competitive products financial institutions offer for new car finance. It can also come with extra terms and conditions, such as a hefty fee for paying out the loan early.
There are many other options available to you so take the time to shop around before signing anything when looking for new car finance.
Commercial Hire Purchase
A Commercial Hire Purchase (CHP) is suitable for companies, partnerships and sole traders who account for GST on an Accruals basis, and individuals using the vehicle for business purposes.
Under a Commercial Hire Purchase (CHP) arrangement the financier agrees to purchase the car on behalf of the customer, and then hire it back to them over a set period of time.
The customer has the use of the vehicle for the term of the contract but is not the owner of the vehicle.
At the end of the contract term when the total price of the vehicle (minus any residual) and the interest charges have been paid in full, the customer takes ownership of the car.
Novated Lease
A Novated Lease will suit any employee who wants to include a motor vehicle as part of their salary package, so long as their employer offers salary packaging as an option for employees.
A Novated Lease is a three way agreement between an employer, employee and finance company whereby the employee enters into a Car Lease (Finance Lease) with the financier and the employer agrees to take on the employee's obligations under the lease.
Under this arrangement, the employer pays the monthly lease rentals on behalf of the employee, and provides the vehicle for the employee to use as part of their salary packaging arrangement.
If employment ceases for any reason, or the lease agreement is finalised, the Novation ceases and the obligations assumed by the employer revert back to the employee.
New Car Loan
A New Car Loan is suitable for individuals who wish to purchase a late model car and do not have significant business use of their vehicle or the option of novated leasing (salary packaging). Under a New Car Loan the financier advances funds to the customer to purchase a car.
The customer takes ownership of the vehicle at the time of purchase, and the financier takes an interest in the vehicle as security for the loan.
Once the contract is completed, the financier lifts their interest in the vehicle, giving the customer clear title.
What to look for in a new car loan
The main thing to remember is not to rush your decision and shop for your new car finance before you start to look at cars.
Some of the variables you need to consider include:
If you require new car finance when buying your vehicle from a dealer, you may consider dealer finance to be a convenient and simple solution to the problem. Just be aware that this convenience can cost you.
Dealer finance generally has a higher interest rate that the more competitive products financial institutions offer for new car finance. It can also come with extra terms and conditions, such as a hefty fee for paying out the loan early.
There are many other options available to you so take the time to shop around before signing anything when looking for new car finance.
Commercial Hire Purchase
A Commercial Hire Purchase (CHP) is suitable for companies, partnerships and sole traders who account for GST on an Accruals basis, and individuals using the vehicle for business purposes.
Under a Commercial Hire Purchase (CHP) arrangement the financier agrees to purchase the car on behalf of the customer, and then hire it back to them over a set period of time.
The customer has the use of the vehicle for the term of the contract but is not the owner of the vehicle.
At the end of the contract term when the total price of the vehicle (minus any residual) and the interest charges have been paid in full, the customer takes ownership of the car.
Novated Lease
A Novated Lease will suit any employee who wants to include a motor vehicle as part of their salary package, so long as their employer offers salary packaging as an option for employees.
A Novated Lease is a three way agreement between an employer, employee and finance company whereby the employee enters into a Car Lease (Finance Lease) with the financier and the employer agrees to take on the employee's obligations under the lease.
Under this arrangement, the employer pays the monthly lease rentals on behalf of the employee, and provides the vehicle for the employee to use as part of their salary packaging arrangement.
If employment ceases for any reason, or the lease agreement is finalised, the Novation ceases and the obligations assumed by the employer revert back to the employee.
New Car Loan
A New Car Loan is suitable for individuals who wish to purchase a late model car and do not have significant business use of their vehicle or the option of novated leasing (salary packaging). Under a New Car Loan the financier advances funds to the customer to purchase a car.
The customer takes ownership of the vehicle at the time of purchase, and the financier takes an interest in the vehicle as security for the loan.
Once the contract is completed, the financier lifts their interest in the vehicle, giving the customer clear title.
What to look for in a new car loan
The main thing to remember is not to rush your decision and shop for your new car finance before you start to look at cars.
Some of the variables you need to consider include:
- Term of the loan – personal or car loans often have a term of between one and five years, although some can run for up to seven years.
- Interest rates – these can vary wildly depending on the term of the loan, financial institution offering the finance, loan amount and whether you want a variable or fixed rate.
- Other fees and charges – check the fine print for establishment fees, annual fees, fees for paying out the loan early and fees for defaulting on a payment.
- Insurance – does the loan require you to take out insurance to cover missed payments?
- Repayments – can you make repayments weekly or fortnightly? This can quite often save money over the term of the loan
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