With loans for property, the loan is secured against the property.
I bought a brand new car last janurary(regret it so bad, so much money i could have saved), hmm, so its worth 13k at the moment, probably 10k when i first begin my property buying. So can i use this car(being tangible) to assist in getting a loan. If so how does this all work??Christopher.
hey draconisv
a car may come in handy to get into property in a couple of ways, some more obvious then others…..
1. sell it – down size, use the difference on property.
2. lease against it – I know one lender that will allow you to use a car, equipment, machinery or other ‘assets’ and lease against them, to make up a certain amount of the deposit needed to purchase the property. Usually this may be used for farm or similar purchases where it is harder to get a high LVR and you can use this method to reduce the deposit required. For residential I can’t really see the practicality in using your car for this.
3. stronger A&L – if you have a unencumbered car it may strengthened you asset and liability statement slightly.Apart from that I can’t really see much other ways that it can assist.
anyone else got any ideas?
Joshua
Investor Finance
[email protected]About the only way a car can assist is by getting you to the properties you are going to buy.
You are best off with the cheapest vehicle possible.
Terryw
Discover Home Loans
Parramatta
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Originally posted by Terryw:About the only way a car can assist is by getting you to the properties you are going to buy.
You are best off with the cheapest vehicle possible.
Hmm, getting me to the properties and cheapest. Well I guess mine fills both of them. As i will be travelling heaps i will use more fuel and my car runs on an oily rag or even on its own fumes so i wont be having to pay as much for fuel. Another plus with my new car is that i take so much care of it(its my pride and joy) and that will prevent me having to fork out money for repairs(lowing my expenses).
Joshadelsa what do you mean by this?, I dont understand it.HOW?
3. stronger A&L – if you have a unencumbered car it may strengthened you asset and liability statement slightly.Christopher.
Hi Draconis. Chalk it up to experience……at least you have a nice car, and if it is economical it is a win- win. By the time you sell it wear the loss, and then by a cheaper one, you will end up having lost money and have a pus-box, as opposed to having lost money and a newer reliable economical car! That’s not a lot to spend on a new, economical car that’s for sure, and with your motoring probs out the way for a few years you can concentrate on the property! With the Assets and Liabilities (or statement of position) if your vehicle is encumbered, or has a charge over it it is not yours essentially, as you have finance owing on it, and it is a liability… If you own it outright/pay it off or get ride of the charge over it, the whole car (or portion you own) is an asset, so it looks good on paper for you when filling out your application for finance, giving you a ‘stronger position.’ [specool]
All the best.Thanks V8 that post helped me heaps.
Yea i guess I learned from my mistakes and my car cost me 17k, I am planning on having it 10+years, so its not all that bad(if i was to buy brand new every 3 years that would be a different story).Well, when i bought it I had 8K saved up(let me just say thats from working at maccas for 19months and i saved up 8K, very disciplined i was) and so i owed 9k, my parents let me borrow the 9k from them interest free(yippie) and so i have been paying it off $400 a month, and so the bill is 1300, almost gone. Then it will be unencumbered,correct?
Christopher.
Hi Chris,
Good on you for that saving. Did’nt have a brain to bless myself with when I was in your position. Anyway, as you obviously did not have your car ‘financed’ as such through a bank or credit provider, it is already unencumbered….or all yours. And of course, while you will be paying your folks back, and have nearly finished doing so, that is obviously ‘unofficial’ so as far as any Assets and liabilitiies go, it is your car is a 100% asset, and you don’t have any liabilities officially. With your cars value, rather than listing it as whatever it is worth according to a dealer, or redbook or elsewhere, if you have it comprehensively insured, you would quote the replacement value the company shows on your insurance policy….always more generous than a ‘wholesale ‘ price, and makes you look better naturally. All the best….you’re well on the way! [thumbsupanim]hey I bought a series of motorbikes.. the last one cost $21,800 in 2002 and I’m still paying it off. Its worth 13,000 now apparantly.. “I will no longer buy depreciating assets with loans.” This should be a mantra taught at schools. If I want something now (like a shiny playstation 3)(or to pay for my wedding in Feb) I save up the cash in ING Direct.
yeah I’m the same I was stupid enough at the age of 18 to get a $15,000 loan for a car. was good at the time but looking back it was the worst thing I could’ve done.
Got rid of it about 2 years late and it had gone down by about a 1/3 and didn’t even cover the loan cost.[glum]
Good work for saving $8,000 originally, thats an effort in itself.
Investor Finance
[email protected]I was just looking at a loan contract for a friend. He is buying a $75,000 car. In 5 years of having the loan he would have paid a total of $91,000 in for it, including interest, and by then it will only be worth $25,000.
We were working it out that he would be paying about $15,000 pa in repayments, plus it would be dropping in value by around $20,000 pa, plus insurance, petrol, tyres etc etc. probably cost him $50,000 pa all up!
I’ve got the oldest and cheapest car I can afford, and am happy with it as it gets me from A to B.
Terryw
Discover Home Loans
Parramatta
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Um, it being unemcumbered. Well its not unemcumbered for me, its unemcumbered for my mum. She purchased it(like on the forms) and i payed her and payed her back(the rest). So its in her name, so is the insurance and rego.
Um, when I finish paying her off, what happens. also what happens with the ownership,insurance and rego when looked at with the assest/liabilities(the whole loan situation).Originally posted by DraconisV:Um, it being unemcumbered. Well its not unemcumbered for me, its unemcumbered for my mum. She purchased it(like on the forms) and i payed her and payed her back(the rest). So its in her name, so is the insurance and rego.
Um, when I finish paying her off, what happens. also what happens with the ownership,insurance and rego when looked at with the assest/liabilities(the whole loan situation).It looks like its your mum’s asset, not yours then.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yea, but how do i go about changing the ownership to me, will it cost anything. WIll i have to have the rego/insurance in my name for the car to be of use on my assests/liabilities sheet(i dont think so, but just to be sure).
Your mum would probably have to sell it to you, = stam duty and changes in insurances, (maybe higher premiums).
In the end, it is nto going to make much difference. Lenders don’t really look at vehicles. They are depreciating assets and everybody exaggerates their worth.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
When my car was stolen (a toyota corolla bought for $2500) I chose not to replace it. I’m still paying a loan for a motorbike bought for 21800 in 2002 that is now worth about 13000. I’m paying 439.06 a month. I’m not using it as a daily commute though… if you want to save petrol money and try to get fit, consider a push bike. I bought a nice mountain bike for 1200 and cycle 50 minutes to work each day. Buy the way the bike will hopefully hold its value at some stage as its reasonably unique.. its a 2001 moto guzzi v11 le mans.
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