Edition 4, 2005 - FBT, GST, CHP... What The?

Stratton Finance - Finance Focus Newsletter #4 2005 - FBT, GST, CHP... What The?
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Finance Focus #4 2005

What The?

As we introduced in the September 'Finance by Design' article we all seem to spend an inordinate amount of time researching our next car but nearly no time on the integral issue of purchasing finance. So as a consumer, how do you approach the complex issue of vehicle finance?

For the next nine editions we will explore in detail the important considerations you must make when researching and determining which finance and insurance products are best suited to your situation. Whether you arrange finance through a dealer, bank/financier or finance broker you will always need to ask the same questions and conduct your research correctly. By research we don't just mean track down the cheapest interest rate.

Time to go back to basics then. Lets start with identifying where most people go astray in the purchasing process - emotion, research and planning.

Emotion. You want that new Audi A3, yeah? Love to have it by the holidays, hmm might just pop into the local dealership on the weekend put a deposit down and organise the finance with them. See any problems?

Research. What about looking at three different finance providers. Seek their advice - are you suitable for a commercial or consumer loan? What sort of residual value can the asset sustain? What term of contract is best? Can the same provider organise insurance? What type of insurance is recommended?

Planning. How much can you afford for monthly payments? Would my employer sign a novated lease with me? Have I got income protection and will I be fully employed across the term of the finance contract?

As your dad always tells you, take you time. The more time you spend learning about what will be your second largest financial commitment the less time you will have to spend paying for mistakes.

Remember, research and plan your finance decisions. Let you emotions run away with the car not your wallet.

Next Month: Simple finance definitions.

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