car by loan or by passive income?

Hi,

Why pay interest on depreciation?

Easiest way or best way?

Thoughts ..

1/ Don’t buy new
2/ Buy 2 years old – depreciated and run-in
3/ Avoid MV finance unless you are buying a classic. As you refer to new, then use home equity finance, LOC % rate. Although it’s for the life of the loan, circumstances change and likelihood of refinacing for investment is probably great anyway.

Phil

I agree with Clithero on this. Imagine how a car loan would hurt your serviceability for getting more property loans. I really want a newish car too, but am trying really hard to resit the urge!

Terryw
Discover Home Loans
North Sydney
[email protected]

You could try this method. You find cars that are an absolute bargain just like some houses. You borrow the money through a lender and then resell the car at a higher price to cover all costs with extra left over. Now you do this 5-6 times and with the extra money you have made you buy yourself a new car.

Does anybody know if you can purchase a car through a trust if you claim that it is only used for trust related concerns?

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Go to any one of the bank web sites and look at their affordability calculator. Type in your numbers including credit cards and loans and see what you can borrow and then take out the cards and the car and you will be staggered how your afordability rises. It’s mindblowing.

What is an assett and what is a liability? Assets put cash into your pocket and liabilities take cash out of your pocket. Unless you have a car rental busines or similiar a car is a liability.

Buy an el cheapo. Tell people it is a “positioning statement”. Save the money for investment and one day you will be able to pay cash for the Mercedes Benz or get the queer looks from the home builder when he says “which bank are you borrowing the money from to build the house” and you look at him and say “no I am paying for this from my own funds”

The comment about two year old cars it very valid. In my business where we do a LOT of KM’s we buy 2 year old Fords for about the 20 – 21 k mark and no more than about 30 – 40 k on them and drive them till 200k (takes about 2 years) and sell them for what we can get (about 5k fully clapped out) We target 10c a kilometer for capital cost.

The line “buy the cheapest car your ego can afford to live with” is a great one. If you want “prestige” take a look at the value of second hand Mercedes Benzes. The A160 (you know the small compact one in the ads) sell for about 16k three years old. Just go to the farifax cars site and type in Mercedez and see how many come up under 10k.

A good friend of mine tells the story of two brothers when they turned 40. The first went and bought a new benz and proudly showed it to all his family modestly announcing that it was only costing him $3000 a month. The older brother, a year older, for his birthday two weeks later announced during lunch that perhaps they would all like to look at his new benz. And after lunch they did. It was 20 years old and the older brother said that he paid $ 3000 cash for the car. Their mutual mother went onto say “Ponce value for the dollar I know who has won”

Hi Wayne – your point about ‘antisnobbery’ made me smile. We have a 6 month old ute (bought new but paid cash) which I drive to work. Not really my choice of transport but we live on acreage and it’s very useful. I take rather a strange delight in parking next to a colleague who owns a flash Mercedes, is married to a lawyer and is rather ‘up herself’!

I own a 1983 VH commodore when I could’ve splashed out and bought whatever I wanted (with help from the bank). Only thing I will say about old cars and commodores in particular is that as well as being chick magnets [] (Wayne) they are also theif magnets! I had two car stereos knocked off in the space of 1 month! [] Having said that I did park it in Frankston (Note to would be property investors!).

Needless to say I have left the gaping big hole in the dash as it is an expensive hobby replacing $700 MP3 players! Only problem now is when I hear a strange noise I can’t drown it out with some blarring punk rock! You do grow to love your old car though and if you do eventually get something better you WILL appreciate it…

Cheers,

Chris.

every car i have purchased has been less than 3k, i just dont like the idea of buying an asset that will depreicate in value over night, though everyone in my family drives a brand new car and all this years model.

Even my 17 yr old sister payed cash for her Holden Cruze which is only about 2 months old and new, I mean im sure her car lost about 5k as soon as she drove it out the doors of were she purchased it, now thats a waste of money.

Fullout, the novated lease means that the car is registered in my name, but the company pays the lease (about 6%) and if I leave the company, I have to take over the lease.
C2, you have to consider what an old bomb would cost me anyway. My 5.3k includes 30,000km pa, which costs in petrol alone 30,000 X 10.8L/100km X 74c = $2397. Rego is $683, insurance is $475, maintenance estimated at $880 pa including two sets of tyres over the four years. That’s $4435 total pa. I get to drive a $38k vehicle for only about $900 pa more than basic expenses, so it’s a pretty good deal.
Jim.

Doogs,

My wife has been offered a novated lease for a vehicle at her work, we’re umming and arg’ing about it- not entirely sure of the setup, but thinking that all normal associated costs etc are covered by them !?

A guy i met who worked at Curtin Uni said it saved him $$ on tax and at the end of 4 years he could either pay it out at a lower ammount or do the same again on a newer model.. does this all depend on your Annual wage etc ( she’s on 4oK) ??

Is it worth enquiring about as we’ve pretty much dropped the idea, going with c2’s philosophy of saving the $’s and having the cars we have ??

[?] HMMM

redwing

“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”