Car loans and Leasing

Buying your dream car is a very excited time in your life. Many have dreamed since their childhood of owning their own car.

There are many ways for you to purchase your dream car. There is a variety of loan products available from many different lenders to choose from. It can seem quiet overwhelming when bombarded with choice and different processes.

We are here to provide you with the information and tools necessary to lock down the best lending product for the purchase of your car. We tailor the perfect loan deal for you by taking into consideration your financial situation, goals and lifestyle.

Secured

A secured loan is when the vehicle is used as security against the loan. Therefore if you unable to make the loan repayments, the lender can then take ownership of the vehicle, and sell it in order to service the remainder of the loan.

Unsecured

An unsecured loan is when the vehicle or any asset is not secured against the loan. Therefore, a higher interest rate will be charged due to the increased risk the lender is taking on. This type of loan is quiet hard to obtain as you need to convince lenders that your credit rating and financial position are good enough without using an asset to protect the loan from a default.

There is many different car loan structures available for you. At Bamboo Wealth we are dedicated to finding you the right car loan for your personal and financial situation.

 

Standard loan

  • The lender will lend the borrower (you) money to buy a new or used vehicle. The loan can be secured or unsecured.

Hire purchase loan

  • The lender owns the vehicle and the borrower (you) will “hire” the vehicle off them until all the repayments are made. Once the loan period has ended the vehicle will be transferred to the borrower (you).

Finance lease loan

  • The lender will purchase the vehicle and then lease it to you. Once the lease period is over, you have the option to purchase the vehicle outright. However the total residual value remaining on the vehicle must be paid.

Novated lease loan

  • This is a very common loan used for a company car. The employer owns the vehicle, and borrows the money on half of the employee. The employee will then have to make repayments on the vehicle through salary sacrifice or the vehicle will be included in their remuneration package.

Chattel mortgage loan

  • The lenders will lend the borrower (you) money for a vehicle, however the vehicle is held against a mortgage. Therefore it is a secured loan.

Operating lease loan

  • This is a lease agreement to finance a vehicle for less than its useful life. Once the lease period is over the vehicle can be returned without any further financial obligations.

Standard loans

  • Can include on-road costs
  • Can receive a low interest rate when it is a secured loan
  • Flexible repayment terms

Hire purchase loan

  • Repayments and interest rates are fixed
  • No GST on repayments
  • Loan amount can be financed by different means, such as through a deposit, trade-in or a balloon payment.

Finance lease loan

  • Repayments are usually tax deductible, but GST must be paid
  • Interest is fixed and usually low, as the loan is secured
  • The vehicle can be used immediately

 

 

Novate lease loan

  • Vehicle can be purchased at the end of the period
  • Employees can salary sacrifice with pre-tax income
  • Allows for employees to chose their preferred vehicle
  • Allows an employer to increase a remuneration package

Chattel mortgage loan

  • Vehicle ownership occurs at the time of purchase
  • Flexible loan terms
  • No GST on repayments
  • Interest is fixed and usually low, as the loan is secured

Operating lease loan

  • Fixed repayments
  • Rent is tax deductible
  • Debt ratios are affected as an operating lease is not listed on a balance sheet

Car loans can be a convenient way to purchase your dream car, however there is some risks which must be taken into consideration.

Car loans can be end up being more expensive overall compared to a cash purchase of vehicles. When borrowing money to purchase your vehicle, interest is charged on each repayment. This interest over time can outweigh the amount of the vehicle, if the whole vehicle amount is purchased by cash.

A car loan can also limit your car choices. A car loan can allow you to afford a greater range of vehicle models and options, however the terms of your loan and financial situation can limit you to certain cars.

Many different car loans use your vehicle as a security against the loan. Therefore if repayments are not fulfilled or you default on your loan, the lender will repossess and sell your vehicle to cover the remaining loan balance. If you were to lose your vehicle due to this situation it can make it extremely difficult to meet personal, family and work commitments.

  • Loan repayment costs
  • Balloon payment depending on the loan
  • Deposit
  • Loan protection insurance can be added

There is also the ongoing costs involved with owing a car:

  • Maintenance and fuel costs
  • Insurance costs
  • Annual registration cost
  • Tollway costs
  • Optional extended warranty