Suncorp Experience

[Got Boost?]

there'd have to be a monthly fee, admin fee, early termination or something

no banks are giving out free credit......especially not in this worsening gfc

Had quite a good experience with BMW lease. Six months interest free, no early termination fee's and a $200 application fee to commence with a rate of 8.2%.

[Kujotk]

there'd have to be a monthly fee, admin fee, early termination or something

no banks are giving out free credit......especially not in this worsening gfc

The prob with "No Interest" loans is that they just factor the interest into the purchase price. Guaranteed if you negotiated and then settled on the basis of cash then hit them with the can I have the No Interest Finance they would pull out of the contract.....

Just looked into it more, 0% interest. 50% now and 50% in two years time, explicitly says " You pay 50% of the purchase price + full on road costs, government charges and finance costs of $200. You pay the remaining 50% in two years time without any interest".

Then says * Offer applies to new passenger vehicles (excl AMG, G-Class and Viano). Finance to approved customers of Mercedes-Benz Financial Services Australia PTY LTD"

It is being done here to boost sales, apparently it boosted sales in the US over the last two years as Mercedes Makes the money out of the car instead of the finance. Toyota/Lexus used something similar to boost sales after their cars kept killing people. Looks like the dealer gets the same money, the buyer saves quite a bit, and the finance section breaks even (which is part of Mercedes Australia). Overall makes sense. Too bad the new CLS doesn't arrive here untill August. For someone who is cashed up or expects to be able to cover it in two years it is fine. In my case if I was going to buy a new merc, i'd use this offer even though I don't like finance because I am not out of pocket to those stupid finance interest fees and in the mean time I can still use 50% of the cars value to keep investing instead of it being tied up in a car.

[domino_z]

leasing only works imo if your assett is appreciating in value to cover (or at least break even) on the interest charged. Cars are toys, buy them outright. Save the interest repayments and jumping through loan application hurdles for property

my $0.02

Edited April 13, 2011 by domino_z

[Cowboy1600]

leasing only works imo if your assett is appreciating in value to cover (or at least break even) on the interest charged. Cars are toys, buy them outright. Save the interest repayments and jumping through loan application hurdles for property

my $0.02

I concur. And there's no better way to deflate the excitement balloon than get fcuked around for 3 weeks all the while itching to get your car.

By the time you finally get it home you hate it cause of all the crap which came along with it. I've seen people go through exactly that before.

[Kujotk]

Take cash, buy car, enjoy car? You could become poor.... get wrong finance with the wrong car and not have enough tax to counteract it and you can end up with no car and still be poor

I edited it for you.

I take cash to buy a car, I wouldn't say i'm hard done by...

Finance may work for you, and it may work for a lot of other buyers, but it is no way any better than cash for the rest of us, not to mention walking into a dealer with a bag of cash, you end up getting the best price each and every time. Prices that you can't get with finance. You know exactly how much the car will cost you, there are no surprises, and no one can take it away from you.

Finance generally seems to work with people who earn a wage and have to answer to a boss of some sort and can not hide some of their income.

The most expensive thing with high priced cars is depreciation. If you have to finance a car to afford it or think it will end up in your favor, then buy something cheaper because you can't absorb the depreciation.

I was always taught NEVER to borrow on anything that will not MAKE you money. That advice seems to be doing me well despite what so called experts and advisors say. A good acountant and lawyer are the only advisors anyone will need.

What works for one person does not work for another. And when you get into real cars, (Australian) finance doesn't want to touch them anyway, even if they are a collectors item and increasing in value.

[Kujotk]

leasing only works imo if your assett is appreciating in value to cover (or at least break even) on the interest charged. Cars are toys, buy them outright. Save the interest repayments and jumping through loan application hurdles for property

my $0.02

Spot on

[fungoolie]

These views show a serious amount of naivety. All interest is is the fee you pay for the privelege of using someone else's money instead of yours. If you choose to use your "own" savings instead, guess what? It's still costing you because that money could be in the bank or invested doing something more productive such as EARNING you money! It's called opportunity cost and whether you like it or not its as high (usually higher when you invest) than the interest you pay when you borrow. What's is most important is that your interest is tax deductible! It doesn't matter one bit if the money is used for depreciating or appreciating assets. The interest (or opportunity cost as the case may be), is just that, a cost....!

If you have any loans at all and you buy a car using "cash" (loosely coined term here), that money could have been used to pay off that loan. Therefore you have effectively BORROWED to buy that car however you like to look at it to make yourself feel better. If you do not have any loans at all and just have cash sitting in the bank, good luck to you but again as you've already indicated it more prudent to borrow money to make yourself money. It's called gearing and EVERY significant corporation in Australia has borrowings. If the loan is undeductible such as a home loan then you would be better off using that cash to pay off that loan and take out a deductible car lease instead.

And as for the "you get a better price when you use cash" comment, since when does your dealer care where you're sourcing your money from when you sign a contract? Long as you arrive on the day of delivery with a shiny new cheque they don't give a toss! Unless of course you're at Sam's klassic used kars and you've asked him to find you some Custom Credit or GE finance at 35% because no bank will touch you......Then he may just jack up the price a bit because he knows you're never gonna make the repayments because you are just a loser anyway and wants to get what he can out of you ASAP.

Forget all those stupid old adages that many a dad has passed on such as he who goes a borrowing goes a sorrowing.

So if any of you have any form of borrowing AT ALL for real estate or whatever and you purchase a car and use money to pay for it that alternatively could have been used to pay off that loan, guess what... you've borrowed to buy that car... or that holiday you took, or those groceries you bought......

If your loan is not deductible and you've used savings to buy that car, what the hell did you have savings for anyway when you had an undeductible loan? You're just plain dumb. See an accountant.

If it is a deductible loan for some real estate say....... again, what the hell did you have savings for when you had a loan of any sort? When EVER does a bank pay more on a term deposit than what you pay in interest on a loan? That's why interest offset and flexible lines of credit were invented! Even so, a properly structured lease will allow you to pay off some PRINCIPAL with pre tax dollars and recoup it tax free when you sell that car. These leases have an effective NEGATIVE interest rate. Better than what you would get with that investment loan for the same real estate.

Seriously if anyone "saves up" and then has $200K sitting in the bank (or under the bed) just as savings (especially when they have a loan of any type), just waiting for the new GT-R to arrive then they are either a drug trafficker or they seriously need to see someone that actually understands something about money to help then readjust their financial strategies.

It is naive in the extreme to think that using "savings" to buy a car is the cheapest way to own one. And please get off your high horse about asserting that if someone endeavours to make their purchase as cost effective as possible then they are in some way unable to afford that purchase. They are not financing their car "To afford it" as you so plainly put it. Again that shows a complete arrogance that somehow people with money should just blow it because they have it......

Edited April 13, 2011 by fungoolie

[fungoolie]

Just looked into it more, 0% interest. 50% now and 50% in two years time, explicitly says " You pay 50% of the purchase price + full on road costs, government charges and finance costs of $200. You pay the remaining 50% in two years time without any interest".

Then says * Offer applies to new passenger vehicles (excl AMG, G-Class and Viano). Finance to approved customers of Mercedes-Benz Financial Services Australia PTY LTD"

It is being done here to boost sales, apparently it boosted sales in the US over the last two years as Mercedes Makes the money out of the car instead of the finance. Toyota/Lexus used something similar to boost sales after their cars kept killing people. Looks like the dealer gets the same money, the buyer saves quite a bit, and the finance section breaks even (which is part of Mercedes Australia). Overall makes sense. Too bad the new CLS doesn't arrive here untill August. For someone who is cashed up or expects to be able to cover it in two years it is fine. In my case if I was going to buy a new merc, i'd use this offer even though I don't like finance because I am not out of pocket to those stupid finance interest fees and in the mean time I can still use 50% of the cars value to keep investing instead of it being tied up in a car.

Again, if you're happy to walk in and pay sticker anyway then this is a serious saving......However if you had any intention of actually haggling down to a price then I GUARANTEE that Mercedes will ask you if you wish to use their finance company before they finalise any negotiation. And guess what, Mr Interest free will walk out with a higher price than the guy who found his money elsewhere. How on earth does the finance department break even? They've just lent you 50% of the value of a new Merc for no interest? Did they source this money from the magical interest free fairy? I'm telling you straight out that Mercedes will use this strategy to lure people into the showrooms just as Mr Harvey Norman does with his interest free periods. They work out that interest free on 50% of the car over two years equates to 3.5% needed to be added onto the purchase price to break even. Well it doesnt take much imagination to see that it wouldn't be hard for MB to fail to come down that last 3.5% on the negotiation when hes already established that you're using his finance. Even if he did, he breaks even and hes sold a car that perhaps he wouldn't have if he didnt attract you in with his "too good to be true" offer of zero% finance because interest is this terrible little troll that will make you broke.

And it's good to see you admit that you would use 50% of the value of the car to keep invested. Why not 100% and lease the full amount? I'm sure the fully deductible 7% you pay in interest would be more than compensated by the 20% or 30% an astute investor should get on an investment...surely.....

Edited April 13, 2011 by fungoolie

[Speedah]

These views show a serious amount of naivety. All interest is is the fee you pay for the privelege of using someone else's money instead of yours. If you choose to use your "own" savings instead, guess what? It's still costing you because that money could be in the bank or invested doing something more productive such as EARNING you money! It's called opportunity cost and whether you like it or not its as high (usually higher when you invest) than the interest you pay when you borrow. What's is most important is that your interest is tax deductible! It doesn't matter one bit if the money is used for depreciating or appreciating assets. The interest (or opportunity cost as the case may be), is just that, a cost....!

If you have any loans at all and you buy a car using "cash" (loosely coined term here), that money could have been used to pay off that loan. Therefore you have effectively BORROWED to buy that car however you like to look at it to make yourself feel better. If you do not have any loans at all and just have cash sitting in the bank, good luck to you but again as you've already indicated it more prudent to borrow money to make yourself money. It's called gearing and EVERY significant corporation in Australia has borrowings. If the loan is undeductible such as a home loan then you would be better off using that cash to pay off that loan and take out a deductible car lease instead.

And as for the "you get a better price when you use cash" comment, since when does your dealer care where you're sourcing your money from when you sign a contract? Long as you arrive on the day of delivery with a shiny new cheque they don't give a toss! Unless of course you're at Sam's klassic used kars and you've asked him to find you some Custom Credit or GE finance at 35% because no bank will touch you......Then he may just jack up the price a bit because he knows you're never gonna make the repayments because you are just a loser anyway and wants to get what he can out of you ASAP.

Forget all those stupid old adages that many a dad has passed on such as he who goes a borrowing goes a sorrowing.

So if any of you have any form of borrowing AT ALL for real estate or whatever and you purchase a car and use money to pay for it that alternatively could have been used to pay off that loan, guess what... you've borrowed to buy that car... or that holiday you took, or those groceries you bought......

If your loan is not deductible and you've used savings to buy that car, what the hell did you have savings for anyway when you had an undeductible loan? You're just plain dumb. See an accountant.

If it is a deductible loan for some real estate say....... again, what the hell did you have savings for when you had a loan of any sort? When EVER does a bank pay more on a term deposit than what you pay in interest on a loan? That's why interest offset and flexible lines of credit were invented! Even so, a properly structured lease will allow you to pay off some PRINCIPAL with pre tax dollars and recoup it tax free when you sell that car. These leases have an effective NEGATIVE interest rate. Better than what you would get with that investment loan for the same real estate.

Seriously if anyone "saves up" and then has $200K sitting in the bank (or under the bed) just as savings (especially when they have a loan of any type), just waiting for the new GT-R to arrive then they are either a drug trafficker or they seriously need to see someone that actually understands something about money to help then readjust their financial strategies.

It is naive in the extreme to think that using "savings" to buy a car is the cheapest way to own one. And please get off your high horse about asserting that if someone endeavours to make their purchase as cost effective as possible then they are in some way unable to afford that purchase. They are not financing their car "To afford it" as you so plainly put it. Again that shows a complete arrogance that somehow people with money should just blow it because they have it......

exactly

I think there are a few guys around here sailing on the tailwind of the old mans business with silver spoons in their mouth who have no idea in the real world.

[Cowboy1600]

exactly

I think there are a few guys around here sailing on the tailwind of the old mans business with silver spoons in their mouth who have no idea in the real world.

That's gotta be the single dumbest thing I've ever seen written here.

[LSX-438]

Jesus guys, finance or cash, who cares. Horses for courses.. Damn look at how much cars depeciate, a car of this value is probably depreciating about 2k a month as it is. Just decide how much per month/year/whatever you are prepared to pay and get what you want. Fark, the cost to run a car at regular events makes finance and depreciation look ike play money anyway. Love that, in the face of all this, quasi accountants get their calculators into a tizz working about the optimal approach, makes me laugh. Wish it was that easy.

[domino_z]

Jesus guys, finance or cash, who cares. Horses for courses.. Damn look at how much cars depeciate, a car of this value is probably depreciating about 2k a month as it is. Just decide how much per month/year/whatever you are prepared to pay and get what you want. Fark, the cost to run a car at regular events makes finance and depreciation look ike play money anyway. Love that, in the face of all this, quasi accountants get their calculators into a tizz working about the optimal approach, makes me laugh. Wish it was that easy.

hahaha very true. When i was working as a fleet manager i thought i knew all the angles, leased a car, and while making those repayments the GFC hit and the value took a dive. My payout after 4 years of repayments ended up being pretty much what the car is worth. Hence my pov

i agree horses for courses, and personal experiences shape how each individual treats a decision like this. The OP was looking for options, hence the suggestion to buy outright and avoid said hassles of loan app which as highlighted could put a serious damper on what should be a great new car experience, and that triggered the subsequent replies

Edited April 14, 2011 by domino_z

[bcl]

Ultimately, each to their own, and why there are so many opinions here.

The financing facility I have set up would probably surprisemost, but I do what suits me best.

I think a lot of the views expressed here are from a lot ofguys that don't run their own business, nor into financing arrangements, nor have any experience with financial creativity.

I won't go into the full saga with Suncorp, but they did subsequentlyoffer me a loan, and wanted security as well as a fixed and floating charge ofmy company assets. And that was after offering to pay 30% upfront. They arereally an incompetent company. That was enough.

Went back to the dealer. Nissan would not offer me thefacility I wanted , even though their loan rate was low, and it would have togo to Japan for approval. The dealer sorted out the finance I wanted through StGeorge, no security required, no fuss, and all within 48 hours.

Picked the new MY11 up on Friday, done 1500km in 3 days, with some good driving around the high country in N.E Victoria;awesome car.

Brian

Edited April 19, 2011 by bcl

[Speedah]

I think a lot of the views expressed here are from a lot of guys that don't run their own business, nor into financing arrangements, nor have any experience with financial creativity.

Brian

100% spot on.

Good to see you now have the car and are enjoying it.

If you are back in town come to WSID tomorrow night (Wed 20th)...gunna have a hit in my GTR

Kev

[eastes]

If you choose to use your "own" savings instead, guess what? It's still costing you because that money could be in the bank or invested doing something more productive such as EARNING you money!

I agree with this if you're smart enough to use that money to invest in something that will reliably make more than the interest rate. If you are, congrats. Can I give you some money to invest for me? :-) Unfortunately, we aren't all that financially smart.

What's is most important is that your interest is tax deductible!

As far as I know, this is only true if you're willing to lie in your tax return and say that the vehicle is used for work. Driving between home and work is personal use unfortunately.

What % do you tell tax man is for work and % for personal?

[fungoolie]

I agree with this if you're smart enough to use that money to invest in something that will reliably make more than the interest rate. If you are, congrats. Can I give you some money to invest for me? :-) Unfortunately, we aren't all that financially smart.

As far as I know, this is only true if you're willing to lie in your tax return and say that the vehicle is used for work. Driving between home and work is personal use unfortunately.

What % do you tell tax man is for work and % for personal?

It really isn't that hard to find investments that earn more than the cost of capital generally speaking. If it was, there would be no viable businesses and there would be no growth in the economy. Shares and real estate historically had compound earnings around the 13% per annum mark since records have been kept. Lets face it, how could a secured mortgage earn more than an equity investment given that it's risk is significantly less than ownership of property or a business. I'm quite sure that the house you live in has appreciated more than what the funds to purchase it have cost you even if the loan isn't deductible. Why would you borrow to buy a house if this wasn't the case? You would just save up for one instead. What's most important is the judicious use of gearing to maintain your risk at a manageable level and to ensure that your cashflow's can be maintained even when interest rates and asset vales fluctuate.

As far as the tax deductibility of a car lease goes. There is no dodginess to it and you don't have to lie about anything. In fact until 7:30PM last Tuesday night, if you novated a lease on a vehicle, the only tax anyone travelling more than 25000 kms per annum paid on their car was levied at their own marginal rate on 11% of the purchase value of their vehicle. So in a nutshell if the cost of running your car (including lease payments, petrol, rego etc) was more than 11% of the purchase price of the vehicle then you were effectively getting the running costs over that 11% fully tax deductible no matter how many of those kms were for travelling to or from work or private purposes. Mr Swan or Brown or whoever is running this government has now decided to make that figure 20% no matter how far you travel which is the same as if you travelled between 15000 and 25000 kms annually before the budget. You'll find it's still better to lease than own privately because I've yet to find a car that costs less than 20% of its value to run but it's clearly not as good a wicket as it was before last Tuesday night if you travel more than 25,000 per annum.

And the context of that reference to making sure your interest is deductible was not specifically directed just at a car lease's payments. It was in reference to all of your borrowings. What I was trying to impart was the concept that your financial life is a balance sheet. You have assets on one side and liabilities on the other. Whatever your assets may be whether they be cars, boats, real estate, shares or combinations thereof, there will be liabilities on the other side and all I was saying was that if you have loans in your life you need to ensure you maximise the amount of those liabilities that are tax deductible over the non deductible ones...

Edited May 12, 2011 by fungoolie

[1q2w3e4r]

The kicker to that is not everyone has liabilities, everyone's circumstances are different though which is great.

If you can run it through a business or some other entity then leasing to me makes sense to me. But again, everyone's circumstances and structure is different. If your paying out of your own pocket, I agree with Sam your better off putting money in appreciating assets than borrowing against depreciating ones, but that's just me. The beauty of it is everyone does what suits them.

Real estate and the share market doesn't double every 5.5 years either.

[fungoolie]

The kicker to that is not everyone has liabilities, everyone's circumstances are different though which is great.

If you can run it through a business or some other entity then leasing to me makes sense to me. But again, everyone's circumstances and structure is different. If your paying out of your own pocket, I agree with Sam your better off putting money in appreciating assets than borrowing against depreciating ones, but that's just me. The beauty of it is everyone does what suits them.

Real estate and the share market doesn't double every 5.5 years either.

I didn't say the markets double every 5.5 years. I said that shares and real estate markets have "earnings" around 13% per annum on average. This is the sum total of dividends/rents PLUS capital growth. So for example if the gross rental yield/dividend is 8% then the balance of the 13% is made up of 5% capital growth. Applying the rule of 72 as you have done means the market capitalisation values double every 14 years. Does that seem more reasonable?

Agreed everyone's circumstances are different. All I'm saying is this, if you are buying a car or any other asset (depreciating or appreciating, this is irrelevant) then you WILL be better off if you can claim some of the expenses/costs of owning it against your tax compared with if you dont. This is true whatever your circumstances are. And pretty much anyone who works or runs a business either through a novated or chattel lease can do so. If you don't you are only kidding yourself that you are better off. The seed of this whole discussion was the completely misguided view that you can pay "cash" for a car and this is the cheapest way of owning said car. Owning a car completely for private use will cost you more than if you lease it and get the tax benefit afforded to you by using a lease. And any employee can use salary sacrifice to novate the lease on their car and get this benefit. The ONLY people who cannot obtain this benefit are people who are not employed or own a business. If you do not come under this category best get off your bum and learn what alternative options are available to you for owning a vehicle and making it cheaper to own than if you just go out and buy it without considering these options.... I sense theres a lot of people out there who haven't looked at these alternative methods of owning their car and are trying their darndest to justify that decision by lumping themselves into the "I can't use this because of (insert reason here)" category.

And finally, when did anyone ever even remotely imply that owning appreciating investments isn't better than buying a car when it comes to making money? Yet somehow we seem to have people stating the bleeding obvious like this fact was ever in dispute! Trust me on this, it's not just you that believes this. Were talking about buying GT-Rs here people. And when you're buying one it WILL cost you money. Not make you money....

Edited May 14, 2011 by fungoolie

[Matt1972]

These views show a serious amount of naivety. All interest is is the fee you pay for the privelege of using someone else's money instead of yours. If you choose to use your "own" savings instead, guess what? It's still costing you because that money could be in the bank or invested doing something more productive such as EARNING you money! It's called opportunity cost and whether you like it or not its as high (usually higher when you invest) than the interest you pay when you borrow. What's is most important is that your interest is tax deductible! It doesn't matter one bit if the money is used for depreciating or appreciating assets. The interest (or opportunity cost as the case may be), is just that, a cost....!

If you have any loans at all and you buy a car using "cash" (loosely coined term here), that money could have been used to pay off that loan. Therefore you have effectively BORROWED to buy that car however you like to look at it to make yourself feel better. If you do not have any loans at all and just have cash sitting in the bank, good luck to you but again as you've already indicated it more prudent to borrow money to make yourself money. It's called gearing and EVERY significant corporation in Australia has borrowings. If the loan is undeductible such as a home loan then you would be better off using that cash to pay off that loan and take out a deductible car lease instead.

And as for the "you get a better price when you use cash" comment, since when does your dealer care where you're sourcing your money from when you sign a contract? Long as you arrive on the day of delivery with a shiny new cheque they don't give a toss! Unless of course you're at Sam's klassic used kars and you've asked him to find you some Custom Credit or GE finance at 35% because no bank will touch you......Then he may just jack up the price a bit because he knows you're never gonna make the repayments because you are just a loser anyway and wants to get what he can out of you ASAP.

Forget all those stupid old adages that many a dad has passed on such as he who goes a borrowing goes a sorrowing.

So if any of you have any form of borrowing AT ALL for real estate or whatever and you purchase a car and use money to pay for it that alternatively could have been used to pay off that loan, guess what... you've borrowed to buy that car... or that holiday you took, or those groceries you bought......

If your loan is not deductible and you've used savings to buy that car, what the hell did you have savings for anyway when you had an undeductible loan? You're just plain dumb. See an accountant.

If it is a deductible loan for some real estate say....... again, what the hell did you have savings for when you had a loan of any sort? When EVER does a bank pay more on a term deposit than what you pay in interest on a loan? That's why interest offset and flexible lines of credit were invented! Even so, a properly structured lease will allow you to pay off some PRINCIPAL with pre tax dollars and recoup it tax free when you sell that car. These leases have an effective NEGATIVE interest rate. Better than what you would get with that investment loan for the same real estate.

Seriously if anyone "saves up" and then has $200K sitting in the bank (or under the bed) just as savings (especially when they have a loan of any type), just waiting for the new GT-R to arrive then they are either a drug trafficker or they seriously need to see someone that actually understands something about money to help then readjust their financial strategies.

It is naive in the extreme to think that using "savings" to buy a car is the cheapest way to own one. And please get off your high horse about asserting that if someone endeavours to make their purchase as cost effective as possible then they are in some way unable to afford that purchase. They are not financing their car "To afford it" as you so plainly put it. Again that shows a complete arrogance that somehow people with money should just blow it because they have it......

Always nice to see someone else who uses knowledge of investment AND taxation to their advantage.... I was once like you, trying to explain this stuff to people for their own benefit. It is always an exercise in futility... Save yourself the energy.

[james111]

If you got the cash to buy it outright your nuts financing it mate, if you buy it outright you can claim depreciation, gst etc etc finanicing it your spending $1 to get 30 cents back???