Buying a car will often be a necessity for you at some time or other in your life. However if you have a bad credit rating due to a past indiscretion, trying to borrow money, even through a novated lease, could be a challenge. Platinum Car Loans believes in giving people second chances and does give out bad credit car loans - ie: loans to people who have bad credit.
You have bad or poor credit if your borrowing record includes certain annotations such as a complaint from your phone company that you missed a phone payment, credit defaults or even bankruptcy. However, if you have changed your ways, we at Platinum Car Loans don’t believe you should constantly pay for your past mistakes.
It is true that bad credit car loans are charged at a slightly higher interest rate than normal rates because people who have bad credit are known to default on their loans more frequently than people with good credit. However, this at least allows you to get your new car without being left catching the bus because you have no other options.
How a Novated Lease could be equivalent to getting a Pay Rise
In today’s entry, I’m going to explain a novated lease and the potential financial advantages for you if you buy your next car using a novated leasing arrangement. A novated lease is an arrangement between you, your employer and your finance provider. Your employer agrees to meet the vehicle payments and then takes the money out of your pre-tax dollars before then having the tax deducated and giving you the rest.
The big advantage with a novated lease is that you get to save money by buying your vehicle with pre-tax dollars rather that post tax dollars. Let me illustrate.
Assume you earn $1,000 per week before tax and your tax rate is 30%. Therefore, you would now take home $700. Now assume you pay $200 per week for your car. That leaves you with $500 per week for your other expenses.
Now assume that you buy the same car through a novated leasing arrangement. You still earn $1,000 per week and your employer would deduct the $200 car payment leaving you with now $800 of taxable income. Apply the 30% tax means that you now pay $240 tax (as opposed to $300 above) leaving you with $560 for your other expenses. In other words, buying your car through a novated lease rather than a conventional loan is equivalent to giving yourself a pay rise, in this example of over 10%. Nice! For those of us who are visual, I’ve included a table below to explain it.
| Conventional Car Purchase | Novated Lease | ||
|---|---|---|---|
| Weekly Income | $1,000 | Weekly Income | $1,000 |
| Tax rate | 30% | Car Payment | $200 |
| Amount Paid in Tax | $300 | Amount Left | $800 |
| Amount Left After Tax | $700 | Tax Rate | 30% |
| Car Payment | $200 | Amount paid in tax | $240 |
| Net Amount | $500 | Net Amount | $560 |
So as you can see, by simply reversing the order of when you pay tax vs when you deduct your car payments (which is all a novated lease does), you can end up with the equivalent of a pay rise. In this example, the pay rise was over 10% without having to work any harder. Now you know why I’m such a fan of novated leases.
Updated Advice Regarding the Investment Allowance 30% and 10%
Please note: This is a summary of an AELA Advice only and is intended for general information purposes only, and should not be construed as professional advice. Readers should seek professional advice from their accountants.
Eligibility – 30% Investment Allowance:
1. Purchases of new and used, tangible depreciating assets used in carrying on a business.
2. Small businesses turning over $2 m per year or less – minimum cost price excl GST is $1,000.
3. Other businesses turning over $2 m per year or more – minimum cost price excl GST is $10,000.
4. Asset to be acquired between 13th December 2008 and 30th June 2009 and installed by 30th June 2010.
5. Allowance is provided as an additional tax deduction. Clients claim 130% of the cost price with an outright 30% deduction claimable in the income year in which the asset is installed ready for use, and the remaining 100% over the effective life of the asset.
Up to 160 jobs will be lost after a Ford Credit Australia announced it is winding down part of its Australian operation.
The decision, which comes as the Australian car industry faces its worst sales performance in 30 years, means private car buyers will no longer be able to seek finance from the company, Fairfax reported on Thursday.
Prime Minister Kevin Rudd says $4.7 billion will be spent across a range of transport, rail, roads and education infrastructure as part of the Government’s measures to keep growth and productivity strong as the global financial crisis continues to bite.
Dear Sam,
This is a short note to display my gratitude towards Nick for a great deal he worked out for me - through some seemingly impossible odds.
Hi John,
Thanks a bunch for the good news, have spoken to the dealership and will be able to pick it up today itself in time for the weekend. It should be noted that the whole process was quite seamlessly handled by yourself with constant feedback as to where we stood in the process.
Will definitely recommend Platinum Car Loans to others and looking forward to eventually doing business with yourself at a future date.
Thanks again
Regards Nishad
John,
It was a pleasure to deal with you
I will for sure recommend you to family, friends and clients
Best regards
Victoria
A Commercial Hire Purchase is generally suitable for businesses using the “accruals” method of accounting for GST, or for individuals who used their motor vehicle for business related purposes. Under the “accruals” method, the GST component of the purchase price of the motor vehicle (or other asset) can be claimed back on the next BAS, rather than claiming the GST over the term of the finance contract.
Hi John
Thank you for assisting us with our application. it was great pleasure doing business with you. I and Abdul very satisfied with the service you have provided us in such a short time. We look forward again doing business with you in future.
All the best for CHRISTMAS AND A HAPPY NEW YEAR TO YOU AND ALL THE STAFF .
Abdul & Zureen
Our Car Finance Options
Platinum Car Loans offers you all the right car financing options, these include Novated Lease or Novated Leasing, Commercial Hire Purchase, Chattel Mortgage, Car Lease, Finance Lease, Novated Lease, Operating Lease and all Consumer Secured Car Loans.