How to Become Successful in Obtaining Car Finance?

An automobile is not just a means of communication. People are passionate about it and their love for the four-wheeled beauty is eternal. If you want to buy a car of your own, here’s some help. The car financing guide will provide you with information about the entire process. It will aid you in obtaining a successful finance deal. It includes a list of factors that you should consider before making a decision. So, let’s start.

Be Ready

Financing a car is not like buying a new pair of shoes or a shirt. You will have to be ready with a few things.

Borrowing Capacity

Good things come to those who wait and prepare. So, don’t think you can find your favourite car and the perfect loan program in a day. Before you start looking for your new or used car, you must sit and calculate your budget. Know how much you will be able to borrow. Also, ascertain your monthly payments. You can use online calculators for this purpose.

Documents

A. For PAYG Employed Applicants – Copies of recent 2 pay slips and the Group Certificate for last financial year are required

B. For Self-Employed Applicants – Copies of the last 2 years Tax Returns including full financials

Deposit

The car dealer may ask you to pay a deposit so that he can reserve the car for you. Deposit is ten to twenty per cent of the car loan amount. It is not a small amount. So, you should spend some time in getting together the money for it.

What’s available?

Before you start searching for the perfect car loan package, you must have some basic knowledge of the car financing options that are available in the market. There are two main sources of car financing.

1. Car Dealer Finance (i.e. provided by the car dealer)

2. Alternative Car Finance (i.e. provided by banks, credit unions, finance companies, etc.)

After you decide on the source of financing, you will have to choose the car financing product. There are a number of car financing options to consider. To make your decision process easier, here is a list:

Personal Lease

It is an ideal option if you are using the car for personal purposes. The lease term can vary from one to five years. It is available with both fixed and variable interest rate. Its rates are lower than other car finance products. It is possible for you to select the residual value and opt for lower monthly repayment.

Car Loan

A car loan enables the lender/credit provider to take security over the car that you are buying. It helps them in protecting their investment. To get approved for a car loan, you must purchase your vehicle from a licensed car dealer. You have the benefit of choosing a long-term loan (up to seven years) as well as the residual value.

Personal Loan

These loan packages can be secured or unsecured. If you opt for a secured one, it won’t be secured against the car that you are buying. The interest rates are slightly higher but, you get benefits of flexible loan terms and simpler approval requirements.

Chattel Mortgage

It is an ideal option if you are using the car for business purposes. The lender will use your car as a security. Sole traders, partnerships, companies, trusts, and ABN holders use this option.

The loan term ranges from one to five years. It has low-interest rates. The monthly payments on the chattel mortgage option are eligible for tax deduction.

So, these are the available options. Once you choose the car financing option, you can apply with a lender or dealer. But, don’t be in a hurry. Take ample time in deciding on the things mentioned in the car finance guide. It will help you in choosing a profitable and beneficial financing package.

Remember that Rome was not built in a day.

Debt Financing Vs Cash Investment For Real Estate Projects

The financial benefits of leveraging financing versus cash investments are obvious. Your ROI is always much higher with debt financing versus investing cash. Other benefits of financing include reduction of risk, retaining cash reserves, and additional liquidity that can produce added income. The question is not whether you should secure financing, but how to best position your project to effectively secure funding and obtain the best terms.

The following basic example illustrates how the financing approach can generate over 58% greater return than funding the project entirely with cash. I have been involved in projects where the benefits of financing was 126% greater than funding it entirely with cash or securing all funds from cash investors. While it may be obvious that financing is more profitable than cash funding, the disparity between the two is important to keep in mind, and maximum efforts should always be made toward effectively securing debt financing.

Sample Project – Uses and Sources of Funds

Cash Investment Approach

  • Project Cost: $1,000,000
  • Cash Investment: $1,000,000
  • Months: 12
  • Net Revenues (From Sales): $1,300,000
  • Capital Gain: $300,000
  • Percent Return: 30%

Project Financing Approach

  • Project Cost: $1,000,000
  • Bank Loan (LOC): $700,000
  • Cash Investment: $300,000
  • Months 12
  • Net Revenues (From Sales): $1,300,000
  • Bank Loan Payment (P&I): $735,000
  • Capital Gain: $265,000
  • Percent Return: 88%

The cash investment approach shown above required risking $1,000,000 and yielded a 30% net return on the amount invested. The financing approach in the same project required a cash investment of only $300,000 and it rendered a much greater return on investment of 88%. This approach significantly reduced risk and tied up substantially less capital that can be put to work and can generate additional income from other projects.

In order to realize the benefits of project financing, a real estate project must be effectively positioned, structured and presented in a way that makes “financial sense” to lending institutions. The ability to leverage financing for property acquisition, pre-development work, construction, marketing, and/or re-financing a real estate property has a direct impact on your profit margin and on your level of risk and exposure. Obtaining the most advantageous financing terms will also help boost your project and reduce risk. For this reason it is important to appropriately structure your project to effectively secure financing. The key to successfully structure and secure financing for your real estate project will be discussed in my next article.

Planning For Your Construction Equipment Finance

Expanding or establishing a construction business can be a daunting prospect. Not only are there building regulations and rules to consider, insurances and administration, but you will also face the prospect of purchasing expensive equipment needed to conduct your business. While there are a number of equipment finance options available, to make the best use of construction or commercial equipment finance, you need to properly plan.

Determining What You Actually Need:

The first step is to determine what you actually need to buy. Will you be considering brand new, refurbished or used equipment? Will you be using some of your capital or need the whole sum covered by finance. Australia based business owners need to consider what equipment they will need to conduct their everyday activities. You should remember that more specialised equipment, you will only need periodically, may be better sourced from an equipment rental company. However, if a piece of equipment is needed for most of your business services, it would be more economical to own or long term lease it.

You will also need to consider if you need any office based equipment such as computer systems needed to optimise your projects and make your operation more efficient. This cost may also need to be factored into your equipment finance.

Different Forms of Equipment Finance:

The specific deal will depend on your particular equipment finance needs. Most lenders offer more flexible terms for finance. This can include longer loan terms and lowered monthly payments with final balloon payments. Obviously, if you are looking for larger items of construction equipment such as plant equipment, there will be more flexibility in the equipment finance terms. Since cash flow is important, you may wish to consider keeping your monthly repayments as low as possible. This will allow you to keep your operating costs low and manageable. You will also be able to budget accurately, since you will know exactly how much you will be paying each month.

Obtain Pre-Approval:

One of the most sensible options for your equipment finance is to obtain pre-approval. This will allow you shop with confidence, making an offer as soon as you see what you need at the right price, without worrying about whether you can actually finance the purchase. Pre-approval for finance can be arranged to a set level to allow you to plan your purchases and obtain the best deals. You can also shop around for refurbished or used equipment to obtain the best possible equipment at the best possible price.

Choosing Your Equipment Finance Provider:

While the prospect of obtaining multiple quotes for your equipment finance may seem a little daunting, it is possible to make the process easier and smoother by using a reputable broker. A broker specialising in construction finance will have a network of providers and access to the best deals. The broker may even have a particular relationship with some of the lenders which allows access to exclusive deals. This allows you to compare the rates and terms available, without needing to spend days on the phone.

If you are considering equipment finance for your business, contact us. We are a specialist broker and our experienced advisors would be delighted to answer any questions you may have and assist you in finding the deal best suited to your requirements.

Finance Broker – A Helping Hand for Every Home Buyer

Buying a home is a huge financial investment. Not everyone has the financial capacity to buy a home or any other real-estate property in cash. So, home buyers look for home loans.

Now, finding a good and affordable home finance arrangement is a time-consuming and stressful process. If you try to obtain the best home loan on your own, you will have to find the best lender/credit provider and then try to convince him/her for loan approval.

Today, many smart home buyers do not undergo the trouble of finding a lender/credit provider on their own. Instead, they turn to finance brokers for obtaining a home loan. It is because finance brokers are home loan experts. They have the qualifications, knowledge and experience to guide you through the entire process of finance and insurance arrangements.

What do Finance Brokers do?

Finance brokers will work with clients:

>> To determine their borrowing needs and ability;

>> Select a loan suited to their circumstances;

>> Manage the process right through to settlement; and

>> Even beyond (i.e. post-settlement).

Many businesses use finance brokers:

>> To help them with their finance needs (e.g. car and equipment leasing); and

>> To help them when they are looking to expand the businesses.

What are the Benefits of using a Finance Broker?

Here is a list of some benefits:

>> They do all the legwork for you;

>> They have access to a wider range of loans;

>> They are experts in getting you loan approval;

>> They have greater industry experience and knowledge; and

>> They are required to meet strict Educational Standards and Professional Qualifications

What do Finance Brokers specialise in?

Finance brokers can specialise in several areas such as:

>> Residential Loans/Mortgages;

>> Refinance and Equity Releases (i.e. cash outs);

>> Equipment Leasing;

>> Chattel Finance;

>> Car and Personal Loans;

>> Business Loans;

>> Commercial Property Finance;

>> Medico and Pharmacy Loans;

>> Agricultural Loans; and

>> Arrange for your Insurance needs.

What does Panel of Lenders mean?

Brokers can only offer loans from the lenders/credit providers they are accredited with. This is called their panel of lenders. The lenders/credit providers will normally range from the large banks to specialist non-bank lenders and mortgage managers. The size of a panel of lenders will vary from broker to broker.

It is important that before you employ the services of a broker, you consider his/her panel of lenders. Remember that bigger the panel, higher will be your chances of approval.

Truly, having an independent and expert broker on your side is a huge advantage. You will be able to obtain the best finance arrangements that suit your needs without any stress.