Not sure if anybody has done the math,
But is it worth buying a car outright vs finance/chattel mortgage?
Assuming you have the cash and no other loans.
Most loans I think for a car would be higher than anything you could get on a safe investment? (Bank account)
Maybe better return on stocks/etf vs car loan?
Any tips fellow bargainers?
Sleeping
Lol…
No, makes more sense to put money into a loan for a depreciating asset… why not just double down on your losses.
From a cash flow perspective it can be more lucrative - ie 40k cash into car vs car loan with 40k now left to invest into an ETF/Stocks/Bank account.
Tax benefits from purchasing the vehicle also come into play as well, its not quite that straight forward.
Interest and fees on a car loan will be higher than what you can make with investments, otherwise why not just take out lots of loans and invest that money
Tax, no guarantee of return and huge interest rates all quickly negate any perceived benefits.
Just wanted to confirm this, perhaps a few years ago might have been a different story.
General OzB rule for buying cars:
IF buying for personal use,
IF you cant afford to to buy outright with cash,
THEN you shouldn't be buying
Business use.
Cash ready.
Business loans are even more expensive than when it is for personal use
Cheers, wasn't aware of this
@m0tyrider: I could be wrong. But my partner was going to buy a car using his business thinking it was going to save money. But then found out it would cost a fair bit more. I don't know the specifics of what cost more, it might just be tax and things like that rather than the loan
@Quantumcat: Its one of those things - where if you buy an asset (stocks/property/etf/super) with cash and use loans to buy liabilities.
Putting your money into the asset might compound more than the liability.
@m0tyrider: Surely using loans to buy appreciating assets is better, as you can claim the interest and fees as part of the costs of making money with that asset. Interest on a depreciating asset is just lost.
@Quantumcat: The only tax deduction I know of that reduces your tax is property (on the interest portion and upkeep) and super.
Don't really want to invest in either of those right now, but also want to minimize my tax.
@m0tyrider: You can always claim the costs of making money. The only thing special with property, is that you can claim costs that are above what the property is making, off your other income
What does your business tax adviser say?
Same as my business tax adviser I'm guessing.
Ask Australia's bargain hunting community, where hot deals, coupon codes, vouchers, special promotions and freebies are shared everyday.
Friends don't let friends take out car loans.
You'd be surprised the number of Euro trashwagons that are financed on business accounts, its pretty high.
Any chance to reduce tax on a depreciating asset.
The directors and Ceo's i work with all drive Mazdas, hyundais etc because they don't see the value in throwing money away and mid range cars these days are pretty damn nice. Admittedly they turn them over every couple of years.
And yes they've bought them outright.
Good advice, appreciate it.
40k is still a large purchase, and my gut is telling me to just buy one a few years old and call it a day, but considering GST is credited when you run a business it makes for an interesting debate/discussion.
You'll be paying more in insurance, and possibly registration by having it be business use.
Also are you GST registered already? If not, don't become GST registered voluntarily thinking you'll do better being able to claim GST off things you buy for the business. Since you have to add GST to everything you sell, the only way you benefit is by buying more than you sell, ie making a loss
Based on the posts above, spend some money and see your accountant.
Unless you have somewhere else to invest that cash that pays more than the interest on the car loan/lease, then you should just pay cash if you have spare cash.
Where have you been for the last 13 years?