A Cautionary Tale

Some people who are in the process of buying a new car might be a bit sceptical about the whole thing. They might be coming from the angle that you pay less if you can buy a car for cash and if you don’t have a whole lot of money saved up, you have to be content with buying yourself a more humble car rather than some flash new thing. Well, this idea does have some merit to it. It is certainly that the less you borrow, the less interest you’ll have to pay. And it is also true that if you aren’t rolling in bucks, you are wise not to buy the new flashest car in the sales yard.

But you can go too far in this direction. Sometimes, what you’ll pay in interest when repaying a personal car loan turns out to be less than what you can end up paying if you buy a car that’s too cheap and a bit dodgy. Here is a true cautionary tale that happened to someone this writer knows. Names of people and a few identifying details, such as the make of car, have been changed for privacy reasons, but apart from that, this is a fair dinkum story.

Tony had managed to land a regular job in the building industry and was getting a steady income. Nothing stellar but enough to pay the bills and have a bit left over to pop in the bank. At this point, Tony didn’t have a car but used the good old pushbike to get to work. So far, so good. But Tony wanted to get himself a car, as it was getting a bit much to bike to work and then slog away all day doing physical manual labour and then bike back again when he was tired. Winter was approaching, too, and although biking on a sunny day makes you feel virtuous, healthy and financially savvy, biking in the rain is pretty miserable and sets you up for being soaking wet all day unless you have somewhere to change. So it was time to head down to the second-hand car yards.

Now, Tony could have used the money he had saved up as a deposit and then found a loan package that let him pay off a manageable amount per week. But Tony thought he was far too smart for that and decided to use the amount he had in the bank as his maximum price limit. Now, this would have been OK if he had a bit more tucked away in the bank  you can pick up a reasonable and reliable car for a four-digit price if you shop around. However, Tony didn’t have that much tucked away. It was four digits, but it was in the lower end of the four-digit figures.That was the first snag. The second snag was that Tony had a particular fancy for one particular make of car and wanted to get that sort and no other.

Tony found a car of the type he wanted for the price he wanted and felt very smug for a while. But then the problems started. Now, the sort of car that Tony loved wasn’t a sports car or anything of that sort but good examples of that car tend to cost a bit more than Tony wanted to pay. If you pay what Tony paid for his, you can expect problems. And the problems certainly came. What’s more, the cost of labour and parts at the local garage to fix the darn thing were well beyond what Tony could manage comfortably, and the mechanic wasn’t as flexible about weekly repayments as a loan company would have been. So it was DIY time.

At the time of writing, Tony’s car is up on blocks in his garage getting worked on during the weekend. All the spare money is going towards buying spare parts, and probably costs him as much as the loan repayments would have done if he had taken out a loan and got a better car. And Tony’s still biking to work every morning!

The moral? If you’re on a budget, it sometimes can be wiser in the long run to buy a slightly more expensive car and get a loan out for it than to buy a cheap old banger that falls to bits and costs you more in the long run. Either that or put up with the pushbike for longer until you have the funds to pay cash for it.

Coffee Beans and Counting Beans

Business loans are good things for small start-up businesses and larger outfits alike. Usually, it’s the larger people who come to talk to us about setting up novated leases for vehicles or taking out a business loan to purchase some new equipment. And we know how to handle that. We also know how to handle things if we’re approached by one of the little people (and we don’t mean habbits) about business loans to get a vehicle for a small business.

Now, with a number of small businesses, you can use your usual vehicle for most of the work, and you might need to have a chat to a friendly accountant about what you do regarding claiming expenses back against tax, GST and all that sort of thing. But there’s one small job that offers a lot of flexibility and fun that requires a vehicle to get started: mobile coffee baristas.

Mobile coffee baristas are becoming more and more common, and the job usually requires having a special vehicle set up to do this. Not many of us have a spare car of the right sort sitting around ready to convert into a mobile coffee shop, so if you want to work for yourself, are keen about coffee and like getting out and about in your community, you are probably going to need to borrow a bit of cash so you can buy the car and kit it out with all the bits and bobs needed to make great coffee.

You’re going to need a fairly sizeable vehicle to start up a mobile coffee service. For a start off, you need something that has a fifth door so you can open up the back and make the coffee, but a little hatchback just isn’t going to do the trick. You need something with a bit more space than that. Nor will a ute do the trick, as it’s best to have all your stuff under cover  you’re going to need paper cups, remember. The best thing to look out for is a large MPV, an SUV or a 4×4. You might want to consider getting signage on the side of the car, so don’t forget to include the cost of this when you think about the amount you want to borrow.

You also need the coffee making equipment. Naturally, this means a caf quality espresso machine and probably a small bar fridge as well to keep all the milk in (and maybe the flavourings so you can offer flavoured coffee options). These will need to run on something, so look out for a vehicle that has power outlets sprinkled around the place.Petrol/diesel generators are pretty noisy and are likely to put your customers off, and although we get a lot of sunshine in our part of the world, you probably aren’t going to be able to power your equipment off the size of solar panel that can fit in or on a large car  assuming that you can fit one at all.

After these basics, it’s up to you. You probably need a good supply of paper cups and tops to go on them, ordinary milk, trim milk, soy milk, sugar, chocolate, marshmallows, tea and possibly some herbal tea into the bargain. You might also want to sell biscuits. Don’t forget a chalkboard or whiteboard to advertise your prices!

Where do you go with your mobile coffee machine? Just about anywhere that people gather: sports matches, markets, skate parks, malls Where two or three people are gathered together, somebody probably wants a coffee!