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One for the finance gurus!!!

Discussion in 'The Pub' started by bambam_101, Jul 30, 2009.

  1. Hey all,

    Im after car loan advice!

    Dont worry its not a "who is the best lender" or anything like that.

    My situation is this.

    Want to purchase a new or near new Holden VE SSV ute. Now my trade is audio visual installation and sales. Has been for many years. Earn good money so the repayments arent an issue.

    Currently I am employed by a company, full time, but I do also have my own ABN and business name to which at the moment, earns me about an extra $20-25k per year as an on the side thing. Ultimately, I would like to go out on my own and grow that considerably, but all in good time.

    In speaking to RACV, who i want to do the finance for me, I was told that if I was an ABN holder and the car was for business purposes, I could do a business car loan which would be much cheaper for me. Interest rate of about 8.5% as opposed to about 12% for private. I would be using the car about 90% for work. Both for my employer and my own business.

    My question is this (I havent been able to get in touch with the guy at RACV yet)

    Would the fact that i am only trading a small amount under my ABN still qualify me for a business loan? My tax guy recently told me that due to the fact that im only earning a small amount(in my own business), I may find it hard to qualify for the 50% government rebate thing being advertised everywhere at the moment. Not that im too stressed about that cos really its worth very little. But based on that, what would RACV be looking for to qualify me for a business car loan?

    Also, im LONG overdue for a payrise at work and give what other people in the industry earn and my experience etc etc, I should be hitting work up for a 10k payrise. At least. And put it this way, Ive got a lot of pull at the moment with my employer so I dont think 10k more is out of the question. Not bignoting myself but they would be FARKED if i left. lol

    Is there anything I could do with my employer to finance this car in terms of salary sacrifice or car allowance etc? Not sure how it all works when packaging a car in to your salary.

    Sorry for the long post but im a little confused and just want to try and get a few things straight before I set my heart to this new car.
  2. Mr Bambam,

    GIven the type of vehicle that you are looking to purchase, I think that it may be excluded from a Fringe Benefits Tax point of view. If it is, then that could bring dow nthe overall cost of the potential vehicle.

    What you could look at doing, is produce a business plan from you own business showing cashflows, etc on how you believe your business can finance the vehicle.

    Then there is an agreement where your company can enter into a deed of novation type of arrangement (I cant quite remember the exact term for it) where your current employer essentailly pays your company the lease ofthe vehicle from your before tax income. This will mean that you will pay less income tax as your income tax wil lbe calculated on your Gross income less car payment.

    This should allow you to be in a win/win situation.

    This is just an idea of what oyu could do, but i would speak to your accountant, if oyu have one, as they will know you particular financial details better and could give more accurate advice.
  3. just be carefull with salary sacrificing. a friend of mine bought an SS ute 18months ago on a 3 or 5 year salary sacrificing plan and another job came up that he had to take and its been a big hassle for him and cost a few K financially.
  4. It's called a novated lease.
    Any car leasing mob can do one.
    As has been said correctly, the repayments come out of pre-tax income.
    See a good accountant.
  5. Bambam, a word of advice, if it is anything like it was when we first released them, the insurance on these things was astronomical, and in some cases, customers were turned away from certain insurers.

    The reason for this was that the sides of the utes are pressed as a whole side, they aren't done in welded sections like they used to be anymore. So a dent in the side that couldn't be pulled, resulted in the entire side of the vehicle needing to be replaced. The cost involved meant that the ute was a write-off, from damage that would have been a 2-3k repair in the past.

    Some insurance companies were jacking up premiums according to this level of risk, and I have personally seen quotes in excess of $4k a year. I have no doubt you have probably checked it out already, but just a heads up in case you hadn't.
  6. Loan or lease?

    You seem to be talking about buying, but leasing has been mentioned as well.

    As a business related thing you should do some homework on the leasing option to see if it might be more suitable for your situation, as it may well be.
  7. That's only for utes with a resgistered carrying capacity of one tonne or more (see ATO website). No VE utes have that capacity nor have it as a factory option. About 750 kg is their maximum from all of the research I've done. Ford utes have that option (1 tonne pack).

    As for novated leases, I haven't yet heard of anyone come out ahead by doing it that way. Like TheTramp said, see an accountant.

    Isn't the govt one-off tax deduction based on the total cost of the vehicle? That's a substantial amount. However, your business would have to pay at least that much tax to get that rebate. I could be wrong but the impression I got from the little reading I did about that would mean that it could effectively turn a $34,000 SV6 into a $22,000 vehicle. Again, probably a question for an accountant or the ATO.
  8. +1

    Novated leasing is a good way to go but def. speak to an accountant. Also haggle with the lenders (novated lease or otherwise) and play them off against each other. My boss saved a couple of % p.a. by playing Subura finance off against another mob...
  9. Doesnt quite work that way unfortunately. All the advertising is VERY misleading. Realistically, most would be luck to see a few grand via the "50%" rebate! lol Thats what my accountant said anyway.

    Thanks for the advice guys. Just trying to get a heads up before i sit down with the accountant again.

    Cheers :beer:
  10. Its reasonable for the SV6 now. I was quoted $750 per year for one and that compares to the $675 I'm up for my 2007 Liberty.
  11. Yeah I was quoted $1200 full comp at the first place I called. Havent had a chance to shop around as yet but its certainly cheaper than insuring the ZX10! And worth a shite load more too!