Car Finance

[Dedrei]

Hi Guys

Need to know how financing works in Australia. If I want to buy a new car and would like it financed, but with a residual value/balloon payment. Can I do this or can only businesses do this? Back in SA, Absa gives you the option if you want to have a res value, but can't seem to find a finance company online that specifies if they do do this sort of finance. The vehicle will be used mostly for private use.

Any ideas???

Cheers

Dedrei

[Enrica]

Deidre

I purchased a car on a residual, but this was for business use and got a business (fleet rate) plus the benefit of claiming back the GST. Not sure if you can do this if its purchased in your private capacity. Your best option is to get a quote from the dealer with their finance company if you are purchasing thru a dealer, alternatively try

www.financialservices.toyota.com.au

or www.esanda.com/individuals/finance/carLoan.asp

you can also try your bank and compare their rates

Good Luck

Edited April 28, 2007 by enrica

[WAGeo]

Hi Deidre -

I've been WA for just over 2 months now. Bought a new vehicle a month ago in Perth. If you are on 457 like myself you will need the following -

A letter of employment from your employer stating your annual base salary.

Two forms of photo identification - your passport and drivers licence (even your SA license should do the job - i already had my aussie one)

If you are on a 457 long stay work visa financing will only be done for the maximum duration of the visa - in my case 4 years.

And then the big one - if you are new in the country with no previous credit record you will most likely have to put down a minimum deposit of 20%. I got the new honda crv so on the dept was $6500. Its a quite a bit of money. But if you want something more modest you should get a hyundai getz, corrola or similar for under $20000. So make sure you bring enough forex with you to facilitate this. I had a couple of weeks so just drew $1000 a day from my SA credit cards.

So if all of the above is in order then financing should be no hassle whatsoever. The dealership i worked through did the financing through Esanda fleet which happened to me my bank, ANZ's vehicle financing arm (similar to what westbank is FNB's).

Making a decision on a car for me was the most difficult part. So many more models and brands and the way things are priced are very different from SA. Have fun trying to figure it out :-)

cars are a lot cheaper here than in SA but also insurance. Oh yea - you pay for insurance a year in advance. on my crv it was about $750 for the year which equates to roughly R400pm. Trust me for an SUV in SA you'd pay lot more.

Another pleasant surprise was the way they calculate vehicle loans out here. Personally i would not go for residual etc type loan. Unless if you are on a work vehicle scheme and planning to do a minimum of 25000km per year it just aint worth it. Car loans here a calculate in the same way as house bond in SA. Interest is calculated daily and any additional funds paid reduces the capital amount which in turn will reduce the interest and period of down payment. Not like in SA where the interest is calculated over the entire period and slapped onto the capital amount and you pay it off over the agreed period. There is hardly any penalties for paying a vehicle off earlier. Aloso remember that debt out here is a lot cheaper than in SA because interest rates are a lot lower. I got a very good rate apparently for newcomer. 9.75%. Dont know how they did it but yea they did.

in conclusion - buying vehicle out here will be the least of your worries. If anything it made me realise how the consumer is being ripped off by the motor vehicle industry.

meant that the consumer is being ripped of big time in SA by the motor industry.

[Dedrei]

WAGeo thanks for all the info. I have been in Aus for over a year now and already have a car on finance through Esanda.

Car loans here a calculate in the same way as house bond in SA. Interest is calculated daily and any additional funds paid reduces the capital amount which in turn will reduce the interest and period of down payment. Not like in SA where the interest is calculated over the entire period and slapped onto the capital amount and you pay it off over the agreed period. There is hardly any penalties for paying a vehicle off earlier.

I however have to disagree with this statement. This is not the case in most car loans. In fact the penalities for settling a loan early can be pretty costly. Doesn't not work like a mortgage bond in SA at all. Doesn't help at all for the interest to pay off extra a month. It will be money wasted. All depends what your contracts states. Mine with Esanda is like this, like a normal HP from SA. Sometimes the penalties are so high if you trade in your vehicle and you sit with a negative equity, which they just add on to your new car's loan. Which means you will be paying more for your new car, than originally thought.

I am just running through some options, as I want to get rid of this car as we were charged ridiculous interest rates. So once we get PR, I would like to swing the car and get another, for basically the same monthly payment only a better car. And hubby working Toyota helps tremendously on that front.

Cheers

Dedrei