CAR FINANCING OPTIONS:
There are many ways of financing a motor vehicle in addition to the outright purchase of the motor vehicle with cash. You can chose from hire purchase, finance lease, operating lease, novated lease, car loan or a line of credit against your home.
In many instances these finance facilities can be arranged as part of your salary packaging with your employer, through your own business or personally.
In addition, if you purchase a new motor vehicle through a business you are able to claim the GST in your BAS statement.
Under each finance method you are generally able to finance 100% of the motor vehicle purchase price, however each of these financing options do have their own advantages and considerations.
There are numerous reasons why you would finance the purchase of a motor vehicle. The number one reason is because you utilise your vehicle for business purposes and are therefore entitled to a tax deduction for the operating costs of the vehicle, including the associated borrowing/interest costs. Therefore any surplus cash available may be applied against those loans where the interest is not tax deductible, (i.e. on the family home) thereby improving your financial position.
Once you have decided that the most appropriate way to purchase a motor vehicle is by way of finance, you then need to determine the most appropriate type of finance for your individual situation.