Addtional Car loan and Car finance information
The articles below are included to help you find out more about car loan and car finance options. If you have any questions, please contact us.
A car loan by any other name
With so much terminology flying around the car loan industry, it can get confusing. At the end of the day all you want to do is buy a car and you need someone else’s money to do so. Here is an easy reference for some of the more confusing terms when it comes to financing cars.
Bad credit car loan
One example of this is the bad credit car loan. These car loans are also known as a bad debt car loan, a second chance car loan or a default car loan. Basically all these terms mean the same thing – this type of car loan allows people with poor credit histories to get a loan.
Low doc or no doc or self-employed car loan
Another type of car loan that goes by several different names is the low/no-doc car loan product. A low doc car loan refers to when a person has limited documentation. A no-doc car loan c is really just the extreme of a low doc car loan when the person has no documentation such as pay slips etc. A self-employed car loan is really just a subset of the low doc car loan because as self-employed person often lacks information about their earning capacity.
Leasing versus a car loan
Leasing technically isn’t a car loan. A leasing product is much closer to a rental agreement than a traditional car loan. There are several different types of leasing to suit your personal circumstances.
Fixed interest versus variable interest
Because of the short duration of most car loans (often 2 – 5 years), the interest rate on a car loan is usually fixed. Fixed interest means the percentage of interest charged does not change over the life of the car loan. Variable interest is where the interest rate changes according to market fluctuations. It is more often used for long-term loans such as home mortgages, rather than in car loan market.
Car loan broker versus lender
A car loan broker negotiates and arranges a loan on your behalf with a third party lender. The lender or car loan provider is the company that actually finances the car loan.
Rather than getting confused with terms like these, you can opt for the easy option by contacting a reputable car loan broker. They will manage the whole application process and guide at every step towards you car loan. If you come across any terminology that you are unsure of during your car loan application process, ask your car loan broker for clarification.
To get started on your application contact 360 Financial Services on 1300 361 360 today.
Car loan fees and charges explained
Before you apply for a car loan, educate yourself about the possible car loan fees you may be asked to pay. Every lender offers a different mix of fees on their car loans, so you need to have a clear understanding of the fees associated with the car loan you ultimately choose.
Car loan providers take great care in devising a fee schedule for their car loan products and will not waive them because they might seem unreasonable to you. For example, don’t be surprised if you are hit with a substantial break fee if you decide to refinance your car loan or pay out your car loan early. This is a common misunderstanding, but complaining to your car loan company is unlikely to result in a waiver of the car loan fees.
Administration fee – A car loan administration fee basically a regular fee for administering the car loan. Not all lenders charge admin fees on their car loan products.
Application fee – similar to an establishment fee, it is payable in the early days of the car loan process, however whilst an establishment fee is payable when the actual car loan documents are drafted or signed, the car loan application fee can apply even if the applicant doesn’t get an approval.
Break fees – These are the most painful car loan fees to come to terms with as they are only incurred when you have decided to pay out the car loan prior to the full term. Basically this fee is charged for early repayment of your car loan.
Broker’s fee – in many cases, a car loan broker will not charge the car loan applicant, any fees and charges.
Early payout fee - a fee charged for early repayment of your car loan. See Break fees.
Encumbrance fee (REVS fee) – This is a fee associated with your car loan to cover the searching of the relevant state register of encumbered vehicles. These registers holds information about cars that have been used as security for a car loan.
Establishment fee – this is a fee for setting up the car loan. It can be included in the principal of the loan (incidentally, this means you are paying fees on your fees!) or it can be paid for as an out-of-pocket expense up front. Not all lenders have an establishment fee on their car loan products or it can be called something else.
Interest – most of us are familiar with interest because we hear the interest rates quoted on the nightly news and/or we have a mortgage. Interest is a percentage charge applicable to all car loans in some shape or form. Car loan interest is calculated on the outstanding amount of your car loan. A car loan can have a fixed or a variable rate. Car loan interest is compounding interest usually calculated daily, but payable according to your car loan repayment schedule.
Late fee - This is a fee charged if you have not made your scheduled car loan repayment.
Monthly fee – see admin fee.
Prepayment penalty – a fee charged for early repayment of your car loan. See Break fees.
Stamp Duty – Stamp duty is a government charge on car sales. In most states stamp duty is payable, but the amount charged varies.
Statement Fee – when you take out a car loan, you will receive a regular statement (monthly on most car loans. Check to make sure it is monthly on your car loan.) This is usually included for free by the financier providing the car loan. If you require customised or replacement car loan statements, you will usually be charged.
To get started on your car loan application talk to a 360 Financial Services car loan consultant on 1300 361 360 today.
Business car finance for sales professionals
Time for a new business car? Need business car finance? Looking to upgrade your sales fleet? If you business means being on the road everyday, you understand how important a comfortable, practical business car is, and how business car finance can impact your bottom line.
Depending on your needs, your broker will help you choose the right business car finance to benefit your business. Business car finance fix monthly costs or provide tax and cashflow benefits. Business car finance such as novated leasing can even form an employee benefit scheme.
As a sales professional, the perfect business car finance can depend on whether you are selfemployed, a business owner or an employee. Business car finance for the self employed salesperson could include a no financials loan. As an employee salesperson, a novated lease might be the perfect business car finance solution. As a business owner you might choose any of the business car finance options below for your salespeople.
Business car finance options
Finance Lease
A form of business car finance where a business to you enjoy full benefit of the car in return for regular repayments, while the financier retains ownership. Finance leasing is suitable as business car finance or can be used by individuals who largely use their personal car for business purposes.
Commercial Hire Purchase (CHP)
Commercial Hire Purchase is business car finance where a business "hires" a car from the financier for a fixed monthly repayment over a term, and has the option to purchase the car at the end of the term.
Chattel Mortgage
A chattel mortgage is a popular form of business car finance that allows the borrower to take ownership of the car at the outset. Despite being most‐commonly business car finance, business equipment can be financed with a chattel mortgage.
Novated Lease
When used as business car finance, a novated lease can enable your business to offer salary packaging as an incentive to staff at no cost to the business. Because the novated lease is paid off using the employee’s pre‐tax salary, this is really a form of personal car finance, rather than business car finance. However businesses often refer to this as business car finance as it can be used as an incentive to staff at no cost to the business.
Full maintained novated lease
This form of novated lease isn’t strictly business car finance, however it can be encouraged by the business as an incentive to staff at no cost to the business. The car and operating costs are paid off using the employee’s pre‐tax salary.
No Financials Car Loan
A No Financials Loan is the perfect business car finance for those who are unable or unwilling to provide financial information to prove their ability to repay the loan. The “no financials” business car finance is also referred to as a low doc/no doc car loan.
Business car finance – the tax implications
When taking out business car finance you should speak to your accountant or financial advisor as there are tax benefits available to you in most instances. Your broker can provide general advice regarding possible tax benefits of business car finance.