Purchasing car impact on borrowing capacity

Hi All,

Long time lurker, first time poster.

I'm currently self employed, currently earning around 70 - 80k per annum on my company.

Looking to purchase a vehicle under the company name, how would that impact my borrowing capacity?

Plan to purchase them cash around 55k, not looking to finance them.

Regards,

PropQMan

 

It is an additional expense which reduces company profit so adversely affects borrowing capacity.

 

If there's no debts then you'll be fine.

 

Thanks @Terry_w - what is the best way to structure it, to minimize impact on borrowing capacity?

@Tony Xia - seems to contradict what terry is saying, can you elaborate more?

 

From the last thread people may know that I'm not in favour of splashing out until you've finalised your accumulation phase.
Spending almost an entire year's post tax salary on a car seems excessive to me (even if you can deduct it as a cost).
However, will an expensive car enable you to earn more money than a cheap one (or no car)? If so, it may be a prudent decission.

As I said in the other thread, I'd assess it with how this helps or hinders me from reaching my financial goals and assess accordingly.

 

@spludgey - it's more of a need to replace current vehicle and with ever increasing prices thought it's a good time to lock it up and use it for the next 5 - 7 years

 

Is this a new vehicle or replacement vehicle ?

 

@Tony Xia - replacement vehicle

 

I disagree, but that's fine.

 

What Terry was Implying ( taking a guess) is if it was a new car then you would have new expenses, eg insurance, rego, petrol which would eat up some of your profits, hence income decreases and your borrowing decreases.

But since its a replacement then the expenses will be the same.

 

I assume the op is self employed through a company that he solely owns. If the company borrows to buy a car it will reduce profits so this will affect servicing. If it is a replacement car with same costs as before servicing might not be affected too much