Cars & Motorbikes Cash or Finance for car?

@SOULFLY3 If all costs are paid by the business then it will be covered off within the business expenses so should have minimal effect on servicing.

 

Thank you

 

Heard a good quote once, "buy the cheapest car your ego can afford". And yes, pay cash. If you can't afford to pay for a car with cash then you shouldn't be buying it!

 

Thats what I was thinking, if loans in a business name and paid for by the business then it shouldn't really come into play on your personal capacity to repay a house loan....

Unless you are guarantor for the business loan.. Would that get assessed and impact your future borrowing capacity?

 

It definitely comes into play...

If you're self employed, when applying for housing finance the banks want to see your personal tax returns as well as the business tax returns. They trace the money made through the business to the individuals applying for the loans.

So yes, borrowing money for anything through a business will affect your individual capacity to borrow.

 

A business is not an entity but a but something an entity does. A company can run a business and so can a person.

If a company a personal guarantee would usually be needed - unless a related party loan perhaps.

If a person is running the business it would be the person borrowing.

 

Always cash and Aways 2nd hand or demo.

 

Damn straight.... too many people live beyond their means & then wonder why finances are so tight....

 

@Terry_w @Peter_Tersteeg
Pardon my use of the word business, i should of been more specific (and correct) and used the word company.
If a company finances a vehicle for itself, and the director of that company gives a personal guarantee. Does the guarantee that he gives impact his capacity to borrow in future?

 

Call it a company or a business, that's just syntax. If you run a business of any type, financials for that business will be required and the income or expenses will have an effect on your borrowing capacity.

Look at it on the bright side. If the business is generating a taxable profitable, that profit will contribute to the owners serviceability.

 

Yes

 

Just to add a question, does novated lease count as a mortgage too?

Thanks.

 

A lease like renting. You'll never actually own the car. Personal loans are not mortgages either.

A novated lease is one of the worst things you can do for your serviceability. The effects are devastating. If you want to invest in property, avoid novated leases.

 

Yep! Demo.with few ks drive down the prices and usually they have options not included in new basic models. And cash.

 

Generally we buy our vehicles cash.
2 work Utes are being upgraded this financial year while the $20k write off in still in place.

However .... I was going to buy my BMW cash in 2012 right up until I saw an ad for 0% finance. Worked through the scenario with my accountant and he said "why wouldn't you finance it". The cash now languishes in a term deposit earring 3%.