Calling All Tradies....(finace Questions)

[cooltint]

Hi Jman

I've been using the same finance broker for all our company vehicles for 7yrs now and he gives me whatever is the best deal at the time depending on our current circumstances. He is a qualified accountant who used to be the finance manager for a large dealership so he knows all the tricks of the trade when it comes to both car finance and dealing with dealerships.

We usually take finance over say 5yrs and sell it when the residual equals the payout (around 2-3yrs), that way it doesn't cost you as much for the monthly payments and you can afford to buy a more expensive car.

Give me a PM if you live on the east coast as he services most areas. I've recommended him to a lot of people and never heard a bad word. What have you got to lose?

Big AL

[JBomb3000]

Sounds like you guys need to learn finance...

So why don't you enlighten us then

[XRBloke]

Why not just lease?

That way you payments will be fully deductable and you wont have to worry about depreciation or any of that sh*t.

If I was you id go 3 years 30% residual, you'll easily get out of it then.

[Jman]

I'd consider a lease on perhaps a more expensive car. (but im not in that boat.. yet)

I want to make sure this financial year I make another loss. (only my 3rd year of trading) and aussie cars in australia seem to depreciate like all hell. (depreciation on a high 30k car will ensure of that)

+ ive heard a fair few bad stories with leases especially ending them.

If it was upto me, id go out n buy a 180sx ute. But they dont make em *sigh*

But back onto purchasing with a high balloon. Say 45k purchase with a 40-50% balloon.

Why is this risky business??

Can I not sell the car privately with a balloon on a vehicle?

Also.

I've been chatting to a few of my mates, n they all tell me to lease. saying that "I CAN" claim depreciation on a lease... but my understanding is that you can only do that on a hire purchase IF you buy out the value of the vehicle at the end. Is this correct?

Jarrod.

[cooltint]

From memory you can depriciate the car 30% first year (anytime prior to June 30th), 25% 2nd and 3rd year on a lease and claim all business related running costs. I pretty sure that's how we do it.

You seriously need to speak to my finance broker, he'll set you straight and save you a bunle of money, he's briliant. Send me a pm and I'll hook you up.

Big AL

[tab]

Can't claim depreciation on an asset that is not yours I.e. a leased vehicle. A lease is treated as an operating expense, a hire purchase is capital expenditure which is then depreciated.

Get yourself an appointment with a pro, no point listening to your mates and every other so-called expert. Get on to Al’s mate or even an accountant that will be able to look at your financial position and make the best recommendation based on the full picture.

[Jman]

Heya guys.

Had a meeting with my accountant today.

Had a quick chat about leasing etc. He recons doing finance over 5 years with a mortgage (with no balloon) is most probably the way to go.

Also recommends I go for a 2nd hand instead of new to save coin. (typical accountant lol.)

He passed me onto a bloke who does Motor trade finances and got me a ball park figure around 8.3% on $37,000. - Seems pretty good to me. What do you guys recon?

Straight after that I went back down to Jefferson Ford in mentone to speak about new car prices. It's unbelieveable how quickly they matched that 8.3% on a new car. lol.

I've used some finance calculators and the prices im looking at between new/2nd hand don't seem to add up . Its like $20 a week difference between new/2nd hand :?

On a loan of 37k (no balloon), my repayments over 5 years are around the $730 a month mark.

Yet on a new car of 45k (no balloon), my repayments over 5 years are around the $823 a month mark.

WTF?

Wish me luck...

Jarrod.

[tab]

It's the term of the loan that makes the difference; you pay that much interest an extra few grand on the principle makes bugger all difference.

There's always the excitement of a new car to sway your judgment, but at least you know what you’re getting and other than the apprentices taking it for a spin during pre-delivery you know it hasn’t been flogged and you can get exactly what you want. New cars will lose their value much faster than second hand, but if you can afford it then it’s a no-brainer.

8.3% sounds pretty good.....so good luck

[XR6T8080]

It all depends if your registered for GST, and how much profit your tax return is, I.e. if your GST registered you'll be over $50,000 so you either buy the new one, or give the money to the government.

If your under $50,000 you'd be better with a second hand one, because you would be more concerned with the resale value and less concerned with the tax deduction.

that's my thought anyways, the BF is quicker too.

I'll be getting a BF - T next.

[Jman]

Yea im GST registered.

I'm sitting somewhere around the 75-80k mark.

Just a little nervous a BF might be out of my price range.

I've heard a few people say that a good indication on what car to buy is to take your annual income, then halve it. that's how much you should spend on a vehicle.

Then other people say make repayments around 10% of your turnover.

What do you guys recon, I realise your not all my accountants, am I being too cautious?

(My accountant said to go 2nd hand, but at the end of the day he's a tight ass accountant and prob hasnt been in anything faster than a conformadore. But if I went new he wouldnt spit the dummy)