Put your finances in place first

The New Year always seems to be a good place for great ideas, but many of us fall to the way side too quickly and easily as we discover that the idea was solid, but the intention was not.May we suggest a new plan of attack.

1. Make that list and keep it for a while.

2. Then stage two is to see what you have actually done and cross it out. The rest well, generally you won’t do no matter how hard you mentally kick yourself.

3. Take that list and make another one-but this time of places, institutions, friends, companies that can do it for you!!!

4. Recognise that it is almost March. If you really wanted to make a difference in 2011 then it is almost too late, so get on with it!

Passing on some responsibility for things you really have no idea about can be very liberating. Things such as mortgage reductions, superannuation, life insurance and motor vehicles with salary sacrifice. Most of us need professional help in these areas as we have paid the price too often by listening to friends.

This is especially so nowadays in the highly regulated world in which we live. The rules have changed for just about every category and are continuing to change on a daily basis.

In the world of Motoring there is a lot of interest in turning to Brokers both for the car purchase and the financing, for the ease and peace of mind that comes with handing over the reins of something you really couldn’t care to face on a day-to-day basis. These people are experts and are buying and financing hundreds of cars every month, not once every 3 or 4 years like most of us and they are aware of the pitfalls and the requirements of individual lenders. They are also up to date with the latest new car model releases and where to get the best deals.

Let’s face it; there are far better things to do with our lives than visiting multiple car dealers on the weekend and then ringing round to get the best finance deal.

Surely it makes more sense to get your finances in place first. Tell your broker what your maximum budget is. This is usually determined by what you can afford per month. Then advise how many kilometres you expect (honestly) to travel each year and how many will be business related. How long would you like to keep your car? Bearing in mind that the best resale value is to be had when the car is still under new car warranty and without high kilometres.

Why are these questions so important? Simply because nobody wants to own a car in a couple or three years time that is worth much less than the finance payout at the time. Let your broker provide you with the best mix of term and residual/balloon payment based on your answers to these questions.

Once you determined monthly affordability, kilometres travelled per annum couple with the relevant residual, then this will equate back to a maximum amount financed and consequently the maximum price of the car you can reasonably afford. Then get the finance approved for this amount. Simple really!

Believe me, there is nothing worse than wanting to own a BMW when your monthly budget only stretches to a Holden.

This also stops you being talked up by a car salesman and ensures no buyers remorse after the purchase you cant afford!

Toyota 2.9% Finance Offer

Toyota has released a new finance scheme to move some over stocked vehicles into the market, named- Toyota Advantage. The plan is to offer just 2.9% interest to approved buyers over a four year period using of course, Toyota Finance. It is only available on the Entry level Yaris YR, Prius, Corolla Ascent and Camry Hybrid models bought before January 31, 2011.

This is excellent news for those in need of a finance bargain. You can still negotiate a deal on the vehicle and receive the Finance package if you are approved. The reason is that Toyota is giving you the customer the bonus they would have normally given the dealer for selling the vehicle and is definitely an added incentive to tempt customers into their hybrid offerings for the first time.

David Buttner, Senior Executive Director of Sales and Marketing, Toyota Australia has recently be quoted saying, We are determined to continue offering customers excellent value with these cars, whether by adding features, repositioning prices or through other competitive offers such as finance.

You may choose from a straight 4 year term or add a balloon payment to it which would lower the monthly repayments even further.

This is a great deal with no loopholes but it is only available for the vehicles mentioned. All that said, it may not suit your individual needs and it may be more cost effective to get the car you actually want rather than those on offer. So if you are a private buyer or have and ABN and your own business ask Fincar to compare the deal with other vehicles you have in mind.

ATO Looking at FBT on Salary Packaging

Our office received a call from the Australian Financial Review for comment on the ATO looking into non compliance of FBT reporting.

Our office is seeing no decline in employees looking to take advantage of Salary Packaging a motor vehicle under a Fully Maintained Novated Lease agreement.

The reality is that the average PAYG Tax Payer is more informed today than they were, even 5 years ago. They understand that if they earn less than $180,000 per year, that, in many cases, they can make a genuine tax saving, if they set up their Novated Lease Agrement using the “Employee Contibution Method”. This method removes the need to pay FBT, by paying some of the costs from “Post Tax Income”. Not only do they save money, but it also romoves the onus on the employer to return FBT.

The ATO in our opinion is only looking at the reduction in FBT returns, as they believe that they are not receiving the correct revenue.

The most likely answer however is that there is a lack of education of employers. The employer, as he has not FBT liability, is not submitting an FBT return. The reality is, he should be.

As Roger Timms from Taxpayers Australia said, “it would be a quantum leap to conclude that a decline in returns was solely due to non-compliance”.

Phillip Gruppelaar

An Independent MP’s Salary Packaging and Novated Lease Opinion

Interesting comments from Rob Oakeshott on Salary Packaging and Fully Maintained Novated Leasing prior to his decision to support Labour.

His comment that “It is wrong to encourage people to drive high numbers of kilometres, by giving them F.B.T Tax savings”, is quiet misguided.

Mr Oakeshott has always supported a “greener” Australia, but surely he needs to think things through before making such comments.

Of the many things he hasn’t considered, just look at these two. People who travel in excess on 40,000 kms per year in their motor vehicles don’t do it voluntarily.

Typically these drivers are called “Middle” Australia. The people who, through share economics, are forced, to live distances between work and home in excess of 50 kms each way. The travel time in peak hours is never less than 1 hour.

Due to ongoing inaction from various State and Federal Government’s, public transport in these areas are grossly inadequate to handle their plight.

Consider this! Drive from home to an area around the station – 10 minutes, park and walk to station – 10 minutes, allow sufficient time to ensure train is caught – 5 minutes, Train ride – 1 hour, wait for connection – 5 minutes, bus or train to closest point to work – 10 minutes, walk to work – 10 minutes. Total time 1 hour 50 minutes at best.

Mr Oakeshott’s answer don’t take 2 hours a day for work travel takes 4 hours.

Then the party he has chosen to support (Labour) want to impose a policy to improve the CO2 emmissions from motor vehicles.

Motor Vehicle Manufacturers around the world fully recognise the need for a “greener” world and are making genuine endevours to improve CO2 emmissions.

By removing incentives to buy new motor vehicles , Mr Oakeshott is working against his own policies of a greener Australia.

Maybe Mr Oakeshott should attempt to commute from the NSW Central Coast to Sydney for a few weeks, if he didn’t change his views I would be particually suprised.

Phillip Gruppelaar

General Manager

Welcome to our blog!

Here it is – the very first post on our new blog! The FinCar team is committed to adding more value to this webite through the blog and will endeavour to keep it right up to date with all the latest news, views and articles of interest that are somewhat related to car finance in Australia. We’ll try to skip the boring bits and only deliver the information that’s relevant and of interest to Aussie motorists

It will also give you the chance to give your feedback through the comments system on each of the blog posts and this is important as it helps us to work out what you really want to see.