Business Car Finance

Guidelines in purchasing a car

A sense of freedom, mobility and pleasure are what cars have to offer. So before you take the plunge in purchasing your car, every option should be explored. Here are a couple of helpful tips you need to consider when acquiring a car from new or used, insurance and finance options.

You can purchase a car by

• Utilizing your savings
• Submit an application for a personal loan to cover either all or partial cost of the car.
• Loan money from the seller (also known as “dealer finance” where its usually offered by an external financial institution)
• Private leasing

Arrange your finance first

If it is necessary for you to apply for a loan to purchase the car, it’s best to prioritize this prior to settling on a car where you might not afford in the end. This also prevents you from making hasty decision of agreeing into a car finance offer. Ensure you possess a bargaining power of pre-approved finance when seeking out your ‘dream vehicle’.

Checklist for selecting the right car

• What are the seating capacity and its loading capacity?
• Can it produce sufficient power?
• Will it do all the jobs required?
• Am I capable to cover the expenses needed to run and maintain it?
• Can I afford a comprehensive insurance for this car model?
• Will this model be valuable still at the market after a couple of years?
• Is it going to be reliable?
• Is it safe and environmentally responsible?
• Will I be happy a happy owner of the vehicle?

Examine the whole picture

Purchase of a car entails keen scrutiny of the financial attributes since there are quite a few added cost that needs to be covered aside from the purchase amount of the car. A variety of bills are something you should be expecting immediately or soon after your purchase.

One added cost for new or second-hand cars are government charges. State governments charge stamp duty. A registration fee is also collected by the government or a transfer fee if it is already registered.

The current trend with new cars are pushing towards ‘drive-away’ prices but be wary of of its advertisements since there are still ‘dealer preparation charges’ that are written in small print. So be cautious and make sure that every charges are accounted for and the total expense is covered by your total budget. Flip through the next page for a checklist which will assist you assess the real cost.

A compulsory third part personal insurance and your own insurance needs to be accounted for as well in the payable cost of the vehicle.

For cars that are registered in the name of a business, you need to cover the fringe benefits tax.

What's it worth?

Is the car you’re buying really worth its value? All you have to do is research. Read through car magazines, look into motoring associations and websites that could give you an insight on the average value of the car.

Buying privately

It may generally cost less when you purchase your car privately but it means going without warranty unless the car is currently covered by a transferable new car warranty upon purchase. One downside to this practice is the inability to compare a range of cars side-by-side (except at a car market). You have to scour the city to assess the cars in posted in advertisements which usual does not live up to the set expectation.

‘Car market’ is where a group of buyers and private sellers congregate. If you plan on buying at a ‘car market’, see to it that you deal with purchase the same way you do in a private sale and make sure to do a complete standard check. It’s relatively easier to do comparative shopping and exhaust your haggling skills at the ‘car market’.

Double-checking

Most of the dealers in the market are honest and well-mannered, but you must still double-check everything you are told. If a car is said as a 1990 model, for example, and the paperwork doesn't confirm this, it could have a large influence on the vehicle's value. Also examine the logbooks or service records to confirm the car has been regularly and properly serviced throughout its ownership.

Used car dealers

If you get a car from a used car dealership, it pays to go to a professional, service-oriented company which offers a good selection of stock and has a well set-up workshop to do any repairs which may be required during the course of the warranty. Some car dealers provide NRMA reports. If so, ensure that it is up to date, and then check it carefully to ensure that you understand the condition of the car that you wish to buy.

Auctions

Any purchase made at an auction entails a certain amount of risk. Only if you feel like defying risk or feel extra lucky, better leave auctions to the pros. One of the risk factor in buying at auctions is that the cars are sold as it is, no test drives and no thorough mechanical inspection prior to the purchase. It’s also tricky for new players since there’s pressure to make a hasty purchasing decision, which is not the best way to make it.

Legal ownership

Is the car encumbered, which is to say:

• Is the person selling the car the real owner?
• Is it still the subject of a financing arrangement?
• Has the car been an asset used as security on a loan which has not been properly discharged?
• If so, it can be repossessed, even though you have bought it in good faith?

Ensure you make the proper check through one of the registers of encumbered vehicles (REVS). It may differ depending on the state but, in general, will give out free advice for outstanding loans or other financial hindrances that affects any properly registered motor vehicle.

To search for encumbrances (any money owing on the vehicle) quote the;

• Vehicle registration;
• VIN/chassis number; and
• Engine numbers

Different types of insurance

There are four basic types of automotive insurance.

Comprehensive

This type of insurance is responsible for covering the damages your vehicle suffered during an accident as well as any damages your vehicle has caused to another vehicle or property. A lot of policies provide added benefits wherein a rental car is at your disposal when yours is off the road. Your playing on a great deal of financial risk if the car your driving lacks a comprehensive insurance. This covers the damage caused to your vehicle during an accident and any damage your vehicle may cause to other cars or property. Many policies include additional benefits such as a rental car while yours is off the road. Driving a car which does not have comprehensive insurance is putting yourself at great financial risk.

Third Party Property

For this type of coverage, it only compensates the damage you instigate to other vehicles or property in an accident. Therefore, any damage made on your own vehicle will not be covered. Practically speaking, this would still be a good deal but keep in mind that this exposes your car to undervalue or losing entirely its value. This covers the damage you might cause to other vehicles or property in an accident. Damage to your own vehicle, however, is not included. It's better than nothing but still leaves you exposed to losing the entire value of your car.

Third Party, Fire and Theft

This is the same as the third party property but with an added coverage in tems of fire and theft. It’s a more costly version since coverage to your car will be provided in situations wherein it got stolen or is damaged by fire and as long as it is not involved in an accident. A more expensive version of third party property insurance, this will cover your car if it is stolen or damaged by fire, but not if it is involved in an accident.

Third Party Personal

This type of coverage is otherwise known as Compulsory third Party (CTP). It is mandatory in all states of Australia although there are several variations of payment method. This type of insurance covers the injuries that the victim sustained during an accident. It is unlike comprehensive insurance, it does not cover vehicle and other property damaged during an accident. Nowadays, CTP policies which include ‘at-fault’ drivers are also made available by several companies.

Insurance Arrangement Prior to Claiming your car

To make sure you and your newly purchased vehicle are both protected, get an insurance before driving away.