Which Car Finance Option Is Best For You?

Will you be taking out finance as a...

Does your employer offer salary packaging?

Will the vehicle be used predominently for business purposes?

Suggested Option: Chattel Mortgage

As your vehicle is going to be used primarily for business purposes, you qualify for a Chattel Mortgage

A Chattel Mortgage gives you access to the low interest rates as well as maximum flexibility to set loan terms and residual values.

Suggested Options: Personal Lease, Car Loan or Personal Loan

A Personal Lease is a highly flexible personal finance option which offers similar options to commercial (business) finance options. A Personal Lease allows flexible loan terms and residuals, and interest rates are generally lower than other personal finance options. Additionally, as with all leases, you gain the extra benefit of financing the purchase price of the car minus GST (up to ATO limitations) which lowers your monthly repayments.

A Car Loan is a personal finance option with flexible loan terms (two to seven years) and the possibility of having a residual value, which can reduce your monthly payments. Car Loans are also secured against the vehicle, which allows lower interest rates.

A Personal Loan also allows flexible loan terms, has simpler approval requirements and lower minimum lends, but suffers from slightly higher interest rates as the loan is not secured against the vehicle.

The choice between these three options will depend on the car your requirements, the car you are buying, your financial situation and the amount you need to borrow.

Suggested Option: Non-maintained Novated Lease or Fully Maintained Novated Lease

A Novated Lease is a salary packaging arrangement where a three-way agreement is signed between you, your employer and the finance company, under which you lease a vehicle and your employer makes the repayments on your behalf. These payments are generally made out of your pre-tax income and exclude GST, which can provide you with significant savings.

Your salary package can either include the Lease repayments only in the case of a Non-maintained Novated Lease, or can include the Lease repayments and the vehicle's operating costs in the case of a or Fully Maintained Novated Lease.

Are you using "cash" or "accrual" accounting?

To find out if you are on cash or accrual accounting, look at the top right-hand corner of your BAS statement - it will either say "Cash" or "Non-cash Accruals".

Suggested Options: Chattel Mortgage or Finance Lease

A Chattel Mortgage gives you access to the low interest rates as well as maximum flexibility to set loan terms and residual values. You can claim back the GST in the vehicle's purchase price as an Input Credit on your next Business Activity Statement, and claim tax deductions for depreciation over the vehicle's life.

A Finance Lease will reduce your loan amount by the amount of GST payable on the vehicle, and allow you to claim the lease payments as a tax deduction over the vehicle's life (subject to the Depreciation Limit).

The choice between these two options will depend on cash-flow considerations, business structure, tax situation, and a range of other factors.

Suggested Options: Chattel Mortgage or Finance Lease

A Chattel Mortgage gives you access to the low interest rates as well as maximum flexibility to set loan terms and residual values. You can claim back the GST in the vehicle's purchase price as an Input Credit on your next Business Activity Statement, and claim tax deductions for depreciation over the vehicle's life.

A Finance Lease will reduce your loan amount by the amount of GST payable on the vehicle, and allow you to claim the lease payments as a tax deduction over the vehicle's life (subject to the Depreciation Limit).

The choice between these two options will depend on cash-flow considerations, business structure, tax situation, and a range of other factors.

Disclaimer: Please note that you should always refer to your accountant or a registered tax agent before taking out finance; this advice is general advice only as we are not aware of your personal circumstances. While we make every attempt to give you the best possible product information, Stratton Finance Pty Ltd, its agents, employees and accredited lenders will accept no responsibility for any loss that may arise.

Next Steps:

• Get an instant online car finance quote.
• Get your finance approved online in less than 60 seconds.
• Send us an online enquiry and one of our Finance Consultants will contact you shortly to discuss in more detail.
• Call us on 1300 STRATTON (1300 787 288).