Lisa Shepherd November 11, 2019 No Comments

Mortgage versus Vehicle or Equipment Finance….

On the face of it, the cheapest form of finance is your mortgage, with standard variable rates averaging 3 to 3.5%. These days, most home loans come with an offset or redraw facility that allows you to make extra repayments whilst still having access to money if you need it.

How easy is this? Redraw $30,000, pay cash for the car (perhaps even after negotiating a discount) then drive off into the sunset!

But there’s a catch. Whilst vehicle and equipment loans (also known as asset finance loans) have one to seven-year terms, your mortgage may have 20 years left to run. And the longer you owe money on your car or plant and machinery, the more it costs you.

Sure the rate of the home loan is lower than an asset finance loan, but let’s have a look at the impact on a mortgage with a balance of $250,000 and 20 years left to run.

At an interest rate of 3.5%, repayments on $250,000 over the next 20 years will be $1,446 per month. Once you borrow the additional $30,000, if you don’t extend the term of your loan, the repayments will be $1,619 per month – an increase of $173. Over the next 20 years, if you are like the majority of Australians and only make the minimum repayments the total you will pay back is $41,520 – a total of $11,520 in interest. Congratulations you’ve just turned a family sedan into a prestige convertible vehicle!

In comparison, an asset finance loan at 5.00% would only cost around $3,833 in interest over five years.

You don’t want to spread the cost of your vehicle or plant and machinery over 20 years – just because you do that with your home loan doesn’t mean that you should do that with your vehicle or equipment. Also, by dipping into the extra repayments you’ve made on your home loan, you’re undoing all those years of hard work making additional repayments and you’re also diminishing the equity in your home.

Another downside can be the fees. Sometimes an additional lend on a mortgage can cost over $600 in establishment fees alone. The bank may also need a property valuation done by one of their valuers. This is often around $200. Then there are legal fees for preparing the new mortgage documents.

Finally, how close are you to borrowing over 80% of the property value? Note the value you think that your home is worth, but what the bank’s valuer thinks its worth? If it’s over 80%, you need to pay for mortgage insurance as well.

Unless your money is sitting in re-draw, the new lend will take on average 4 weeks to complete. This is fine if you have to wait for a car or truck to come in for example, not so much if you’re buying something readily available or require the car or truck to fulfil your work commitments. In comparison an asset finance loan can take on average 5 working days to complete.

Finally using asset finance to purchase a vehicle or equipment for business purposes can offer several tax advantages. Depending on what type of finance you get (i.e. chattel mortgage, finance lease, rental etc.), you may be able to claim your interest or rental repayments or depreciation on the asset – these business expenses can be brought forward so they can be deducted from this year’s taxable income.

If you want to find out more how I can help with your vehicle and equipment finance needs, please contact me.

Lisa Shepherd March 24, 2020 No Comments

COVID-19: Client Information for Asset Finance Hardship Applications

With the unprecedented impact of Covid-19 on many of my business clients as well as those who have been referred to me for car loans, I understand this is a stressful and turbulent time for you all. I have been working tirelessly in the background collating information, links and contact numbers for the bank’s hardship process for my lending panel.

Most are offering 3 months now with an option to extend for another 3 months, some are deferring automatically with the option to opt-in to make repayments if you are not affected. So please review which lender you are with below and act accordingly.  

Please reach out via email if you require any assistance as I am your broker, I am here for you not just when times are good, but also through these rough patches. Together we will get through this and come out the other end and I look forward to sharing a wine with you all when this is over!

Stay Strong and Please Be Safe!   

Commonwealth  

Hardship assistance contact number -1300 720 814

Automatically defer BetterBusiness Loan and Asset Finance Equipment Loan principal and interest repayments for eligible small business customers with total lending limits with CBA up to $3 million in April, May and June 2020. From July, customers will be able to opt-in to receive a further three month deferral if needed in line with the ABA loan deferral arrangements.

We’ll communicate with our customers about how they can make repayments if they do not wish to be covered by the auto-enrolment.

Please be patient whilst they work in the background to set this up as it’s a massive task and their IT have been working in the background 24/7 to implement the deferment.

Please see below links for more details.

Link for CBA Covid updates. Coronavirus support for business customers

Westpac

Hardship assistance contact number -1800 067 497

Link to deferring repayments automatically for 6mths click here .

Please refer to your bank statement for your account number (this can be located on your bank statement where you are debited your monthly installments) it will start with 012 etc, do not use the -dashes -, the system wont process if you do. Please read the “Things you should Know” thoroughly as it explains how interest is deferred and capitalized and loan terms extended.

If you have any problems, please give me a call.   

Pepper Asset Finance  

Hardship assistance contact number-1800 356 383

Email From Pepper this morning, please note, this is their position and doesn’t reflect other lenders policies:  

As you can appreciate in the current environment information is being disseminated constantly and Pepper will endeavor to pass on any relevant and useful information.

Please find some questions and answers that have been coming into our Hardship team that may be helpful to you and our mutual clients: –

Q – Can the request for financial hardship be made by us on behalf of the customer or does that need to be directly from customer to Pepper?

A – An email can be sent to assist@pepper.com.au , noting they will want to speak directly with the client at some point.  You are able to request hardship assistance on behalf of the customer via email and are required to provide the assist team with the email trail from the client that you are on forwarding. Please indicate to the assist team whether the client would prefer us to liaise with you and if so, they will require confirmation in writing of this.

Q – Will those customers that take up the moratorium on loan repayments be impacted by adverse credit references for future borrowings once we pass through this financial crisis?

A – Whilst under this agreement we will not report the Repayment History Information to the Credit Bureau and any agreement entered into will not impact future borrowings however they must understand that any future borrowings are assessed under the usual credit criteria and if approved/declined it is not because of the assistance period offered but another underlying factor

Q – Will interest accrue whilst payments are deferred?

A – Interest on the outstanding loan balance will continue to accrue on your loan during this period of assistance and will be added onto the principal balance on the date the payments are due.

Q – What happens to the payments that are deferred?

A – Any missed payments will be added to the balance of the loan (capitalised) and the repayments adjusted (re-amortised) to ensure the loan balance is repaid within the term remaining. In cases where extreme hardship exists, the assist team may consider another form of loan variation which may include extending loan terms however additional interest charges would apply for the months it is extended by.

Metro Finance  

Hardship assistance contact number 1300 362 627

Metro is continuing to assist our customers with COVID19 relief requests and are working through high call volumes.  We appreciate your support and patience during these unprecedented times.

How you best can assist your customers?
Metro has introduced a streamlined process to assist affected customers, including up to 3 months’ payment deferral which can be further reviewed and extended if required.
This process is conducted over the phone so please continue to encourage your clients to call Metro Finance Customer Service on 1300 362 627 (select option 2 and then 4). Customers have a call-back option to avoid waiting on hold.

There are long queues so please be patient, if prompted request the call back option and someone will call you to run through your options. You will be asked a series of questions regarding your current financial circumstances and then presented with the following options:

  • Defer monthly
  • Defer for 3 months now
  • After 3 months review your current financial situation and call back to extend further if necessary.

If you have any problems, please give me a call.

ANZ

Hardship assistance contact number – 1800 252 845

Business Customer Covid support here  

Financial hardship apply-online

Probably best to request a call back as the lines are flooded. You may also fill in their Apply Online forms however due to high volumes you may experience delays in downloading and submitting the form

Now Finance

Hardship assistance contact number – 1300 761 711

Now finance have an Accounts Management Team that will assess each customer separately, we’ve been told to simply refer the clients to the team, and they will work through all the options.  

Macquarie Leasing

An easy online form to complete, just make sure you have your account number handy or car registration number.

Payment pause application form

*Please note, any Macquarie Leasing contracts are captured under ‘car loans’, they are seeking to adjust the language to make it clear it includes all our Plant & Equipment Deals.

Your Macquarie Questions Answered 

Will a client’s credit score be negatively impacted if they take a payment pause?
No. During your client’s payment pause, we won’t report to credit bureau that they are missing their obligations on their loan. This means their credit score will not be negatively impacted during this period.
Please note this is the approach being adopted by Macquarie but it’s important your client checks with any other lenders they may have products with to confirm their approach.
It’s also important to let your clients know that if they are impacted by coronavirus, it’s best to get in touch with us as soon as possible so that we can help them. They can do so via the online form that’s located on our dedicated coronavirus support landing page.

Can a broker complete the payment pause application on behalf of their client?
No. Your client will need to complete the form themselves as they are required to acknowledge that this is a change to their loan.

Will my client need to provide any documents to complete the payment pause application?
No. Your client is not required to provide any documents for the payment pause.

Does the 6-month payment pause apply to contracts where a balloon is due within that period?
Yes. Your client won’t be required to make a balloon payment until after the 6-month pause period.

If my client doesn’t want a 6-month payment pause but wants an alternate form of assistance, what is available?
We are offering a 6-month payment pause at this time, however, clients are able to make ad hoc or reduced payments over this time if their cashflow allows. They also have the option to request a payment pause to their home loan or credit card repayment with Macquarie.

If my client takes a payment pause, what happens at the end of this pause period?
Before the payment pause expires, we’ll be in touch with your client with more information around next steps and any impact to their loan. During the payment pause period, interest will continue to accrue on their consumer loan. Interest will not accrue on a chattel mortgage, finance lease, or commercial hire purchase.

Firstmac 

Hardship assistance contact number 13 12 20

Hardship Policy

As a group, we will continue to monitor this unfolding situation with a focus on what support we can offer to our customers who are experiencing job loss and hardship. We are putting the customers most impacted by this crisis at the front of all that we are doing and the decisions we make.

Our existing hardship policy is well suited to the current crisis, offering:

  • a repayments holiday for three months
  • the option to extend for a further three months

In response to the COVID-19 crisis, we have assigned additional local staff to our Hardship Team so we can speak to each customer personally and work through a solution to their individual circumstances.

If your customer is experiencing hardship, please have them call us directly on 13 12 20 and one of our Hardship Consultants will help them with consideration and empathy.

QV Easy Service Ramps Up for Runout Sales

It was a slow start to the year for the New Car Buyer clearly because everyone was on holidays. Come the last few weeks of January and it’s all systems go.

Quantum’s QV Easy has already saved its clients on average a $7,620 off retail pricing in the last month and not one of our clients had to step foot in the yard! This could be your saving if you are in the market for a brand new car, I mean seriously, who wants to do the running around when you can let the experts do it for you.

Today we priced up the New 2018 Toyota Landcruiser Prado which now has 3 tonne towing capacity! This has excited some potential purchasers so tenders are going out across the dealer network for some amazing savings. So Let Quantum do the leg work for your next new car purchase, it’s so much easier and guaranteed to save you thousands $$ and no stress!

 

What’s the best rate I can get on my car finance?

This is generally the first question we get asked by clients and rightly so. We all want the best rate on our car loan as it’s either the largest debt we have or second largest next to our home loan. In answering this question, we’ll need to ask you a variety of qualifying questions as our lending panel is quite diverse and each individual bank/financier has different lending criteria.

Certain things like the age of the car, the amount you are borrowing, if you are a home owner or renting and is the car for business or private use will all determine the rate. It’s complex, but our role as a broker is to narrow down the lender that best suits your profile and will offer you the best rate for your purchase. Some of our lenders include WPAC, ANZ, CBA, Macquarie, Pepper Asset Finance, Capital Finance and Metro Finance just to name a few.

Are you cheaper than going to the banks directly?

In most instances, yes we are as we specialise in vehicle & equipment lending and have access to a large panel of lenders who compete with each other for your business. Banks often charge higher car loan interest rates because they don’t specialise in car finance. Additionally, some banks won’t fund private sales unless you take out an unsecured loan which means a higher interest rate for you. We also provide very fast turnaround times and work with you to finalise the application to make the process and paperwork easy.

Need help tracking down the best car loan? Call us on 1300 759 870 or email info@quantumfswa.com.au

Things to consider when buying a company car

What name should I purchase the vehicle in?

If the car is in your personal name you can claim a tax deduction on the car expenses where the car has been used for business purposes. If the car is purchased by the company, the company should be able to claim 100% of the annual running costs, depreciation, and interest cost. However, fringe benefits tax will need to be factored in.

Should I buy new, used or certified?

Buying new means higher prices, better reliability, newer features and up to 20% depreciation once you buy. Used means lower initial cost, questionable reliability, low residual value and cheaper insurance premiums. Certified used is the best of both worlds. These are dealer-refurbished cars with low kilometres, one prior driver and reasonably high residual value.

The decisive factor here is determined by your car’s primary use and how long you intend to keep it. If your business needs a vehicle for the long-term then it makes sense to buy a vehicle with high residual value, at the top of its lifespan. If your business only uses a car occasionally, then a used car that won’t gather much wear and tear makes more sense.

Cost of car

Small businesses with turnover of less than $2m are entitled to claim 100% accelerated depreciation on the car cost providing the cost is less than $20,000 (GST inclusive). This is only available until June 2017.

Luxury car tax

If the car you purchased is more than the current luxury car limit (approx $57,500), your tax deduction and GST credit will be capped at this value. Therefore the maximum car depreciation you can ever claim on the car will be capped at $57,466 and the maximum GST credit allowed is $5,224. Therefore, there is no great tax or GST benefit in buying a car over the luxury car limit.

Fuel Economy

If you are paying for your employees fuel as well as the car, you’ll want to choose a car that is relatively economical to run.

Don’t forget, it’s always a good idea to consult a financial professional before making any purchases.

 

Get an instant $30K deduction in your tax return this year

Now is a great time to purchase a company car if you’re a small business. The government brought in some great tax benefits for small businesses a few years ago and they’re about to run out.

If you purchase a car (or any asset for that matter) that costs under $30,000, you can reduce your taxable income by that amount immediately, instead of depreciating it over time.

Previously, you were only able to depreciate 15% of the cost of a new asset in the first year (and 30% in subsequent years). This means if you purchased a car for $30,000 you could only deduct $4,500 off your taxable income in the first year. At the moment you can deduct the full $30,000.

But not for long! These incentives are set to run out in June 2020.

Of course if you do decide to purchase a new company car, we can help you finance it with low rates and great loan features.

You can read more about this on the ATO website:

Link Instant Tax Write Off ATO 

Beware of low interest rate offers on new cars

While the interest rate on a new car loan is a good indication of whether you’re getting a good deal or not, there are other factors to look out for.

Some deals are sharp and can save you thousands of dollars, whereas some offers, especially those around end of year sales, can lock customers into a big lump-sum payment at the end of the life of the loan. This is equivalent to more than half the original purchase price of the car.

This residual payment is known as a balloon payment and typically should be around 20 per cent of the purchase price, so buyers are not caught out owing more than the car is worth at the end of the loan.

As a new car buyer you need to read the fine print of special offers and make sure there are no hidden extra costs. If you can’t afford the balloon payment at the end of your loan you may have to take out another loan to pay the remaining portion.

Other things you might want to look out for include the loan term i.e. the length of the loan and break clauses within the loan as this will affect the total amount of interest you end up paying.

If you’re not confident you understand the terms and conditions of a new loan, make sure you speak to someone who does. You don’t want to commit to something that you can’t afford.

Always shop around and get more than one quote, and that applies to the purchase price of the vehicle as well as the loan.

Buying a Car Privately or through a Dealer…The Pros and Cons

Considering buying from a dealer or a private sale and confused about which option is better?

Having worked in car yards for 18 years before going it alone as Quantum Vehicle & Equipment Finance I feel I am quite experienced in offering advice to my clients. There are pros and cons with both options and ultimately it’s up to you, the client, as to what you feel comfortable with, but I will do my best to guide you through the maze. If you feel uncomfortable negotiating with a dealer for a brand new car, you should consider utilising my new car buying service where pricing is sourced from various dealers and negotiated on your behalf saving you time and money!

Buying through a dealer Pros:

  • The car comes with a statutory warranty
  • You can trade your car in against the new car
  • The car has a guaranteed clear title which means there is no money owing on it.
  • Dealers have a variety of cars in one location

Cons:

  • Dealer margins mean you can sometimes pay top price as they have to pay advertising, rent, administration and salespersons commission.
  • The aftercare person will try and sell you a heap of extras at inflated prices. Before you know it you have spent thousands more than you budgeted and more than the car is worth.
  • High pressure sales tactics = Impulse buying that can create anxiety after the purchase.

Buying Privately Pros:

  • No dealer margin or overheads saving you more $$$
  • Typically more flexible on pricing as they are keen to move on to their next car
  • No games or high pressure selling techniques

Cons:

  • The car may have money owing on it – so you need to do your PPSR checks
  • There is no warranty
  • You may need to pay for a mechanical inspection for peace of mind
  • No trade in options

If you are looking at purchasing privately, I can assist with Car History reports that show if the car has money owing to a bank, been written off, stolen, had the speedo wound back and the owner history which can provide peace of mind. I can also offer warranties whether they are manufacturer extended warranties or mechanical breakdown warranties for older cars that are out of warranty.

So in closing, I welcome you to contact me via the form to your right if you require further advice or clarification around purchasing and financing your next car. I have access to numerous lenders and the knowledge and experience to find you the right lender and best interest rates for your situation.

All the best in your search for a new car

Lisa

0% Interest Rates – To good too be true?

If it sounds to good too be true, then it probably is!

It is becoming very common to see manufacturers adverting 0% comparison rates on purchases of brand new cars. It is not until you get into the dealership until you find out of any “catches”. This form of finance is referred to as “sub-vented finance”.

What sub-vented finance means is that the manufacturer ie Ford, Holden, Mazda etc will pay back the interest to the financier from the profit of the sale of the car, which means the manufacturer needs to keep enough profit margins from the sale price to be able to cover the loss of interest. This means the vehicle price may not be negotiable, or it can only be discounted to a certain value if you were taking up the 0% finance offer. The finance term is generally shortened to a 36 months with a hefty deposit ie 10%-30%. The reason for this, is the shorter the term, the less interest that is payable by the manufacturer. This is turn means higher monthly repayments for the customer which means they fall outside the banks qualifying criteria which in turn gives the salespeople the opportunity to sell as they normally would, including the car salesman, the aftermarket consultant and the Finance & Insurance Manager (or referred to as the Business Manager).

Quite often the dealership will openly advise you of the difference in prices if you opted to take up the finance offer, or not. A dealership knows that half the sale is getting people into their dealership and then they need to create the urgency when face to face with a customer and they will do their best to get a commitment from the customer before the customer can get home to do their own research.

You will find that very limited information will be given over the phone, as the salespeople are trained to only give what is needed and if the client requires more information, they will have to go into the dealership and speak to the Business Manager.

The 0% comparison rate advertising campaigns are just another way to get people into their dealerships, creating more opportunity for sales. Some people take up the offer and some don’t, but still buy the car from that dealership without taking up the finance offer. This also gives the dealership the opportunity to attempt to upsell other products, such as insurances, warranties and aftermarket products to increase the overall margins.

You also need to be very cautious if you have a trade in, as often this will be used as a tool to retain profit margins, where the dealership will undervalue your trade to make up any other loss, so it is good to go in armed with what a realistic trade value is or better yet, sell it privately if you have the time and patience.

All in all in my opinion, you are better off negotiating the best price and financing your car elsewhere. And if you really don’t want to do the  negotiating then call or email me @ lisa@quantumfswa.com.au and I will do the negotiating for you!

Hello and Welcome!

Welcome to Quantum Vehicle & Equipment’s web page!

I hope you find it easy to navigate and if you have any queries, please don’t hesitate to contact me as I would love to assist you with your Vehicle or equipment purchases.

Regards Lisa

Director – Quantum Vehicle & Equipment Finance