FAQ'S

YOUR QUESTIONS ANSWERED

  • 7 years is a maximum loan term for both secured and unsecured car loans.

  • leisure products and older cars may attract shorter loan terms – depending on the age of the asset you purchase.

  • business assets often have shorter loan terms and a residual value.

  • A credit guide is a document we need signing upfront along with the credit quote, which outlines the terms of our service

  • a credit quote outlines the fees and remunerations we may charge or be eligible for.

  • and a credit proposal details the proposed loan structure. This will be provided to you before we apply for your loan.

  • With many online finance options nowadays it can be tempting to apply to several lenders online, trying to find the best deal. But unbeknown to you, too many enquiries (regardless of the outcome) can be of detriment to your credit score. Your credit score is partly determined by the activity on your credit file. So be mindful of making multiple online enquiries.

  • It’s also important not to get too focussed with your credit score. It only forms one part of the overall assessment with many lenders.

  • our finance team will pre-qualify your application with our lenders before we submit your application to them. Unlicensed finance operators are likely to be less concerned about your credit file.

  • Every client’s situation is different to the next. And a clients personal situation is different to the next persons. So turnaround times vary depending on your situation.

  • Quite often a vehicle or personal loan can be turned around in 2-3 hours however the upfront work by your finance broker can take a few hours. Licensed finance brokers have to prepare the compliance documents to ensure you are protected.

  • When loan approval is received the settlement process is very quick and can normally be finalised within 24 hours.

  • Always remember to be patient, take your time and not to rush the process. This can often lead to poor outcomes for you.

  • When a vehicle is written off by an Insurer, but is consequently repaired by the Insurer for resale; it is classed as a repairable write-off. These vehicles are repaired to a condition of roadworthiness, because quite often it can be related to panel repairs rather than mechanical or structural.

  • If the vehicle is a RWO then it is lodged on the PPSR, which can be checked prior to purchase.

  • Dealers are not obliged to fess up to it being a RWO, so it is important that you ask the question. If you do, they have to (and should) answer honestly. But always perform a PPSR on a dealer or private sale, to ensure the vehicle is not a RWO.

  • Most lenders will nto secure a vehicle if it is a RWO so you will need to check this prior to purchase.

  • The PPSR is a Government register that provides you with information on the vehicle you are purchasing. It details important information, such as whether the vehicle is secured under finance by a lender or if the vehicle is a Repairable Write off.

  • You can check the PPSR at https://www.ppsr.gov.au/ for a small fee. You will require the registration or chassis number.

  • Firstly to determine either we must perform the “usage” test. Is the vehicle used predominatly (i.e. 51% or more) for business or private purposes. If the vehicle is predominantly for business use, the Contract will be a Chattel Mortgage or Lease; and if it is predominatly for private use, your Contract will be a Consumer Loan.

  • Consumer Loans are regulated by the National Consumer Credit Protection Act (2009) and the Best Interests Duty (2021). Consequently, there are consumer protections in place such as the Responsible lending obligations. Business loans are not. covered under these Acts.

  • Consumer Loans generally have slightly higher interest rates but more favourable terms in relation to early exit fees, ongoing fees and establishment fees.

  • If you are not sure which contract you should opt for, consult your independent financial advisor or speak to one of our finance team for further clarity. And if still in doubt, consider a Consumer loan to receive protections under the Acts described.

  • Low Doc (low documentation) or No Doc (no documentation) loans are simpler verification of income for self-employed applicants.

  • These are only available for Chattel Mortgage or Lease Contracts, which are not regulated by the NCCP.

  • They are simply standard Chattel Mortgage or Lease Contracts with a streamlined way of verifying income. In some cases the Lender will accept your declaration of income, or require no income to be stated at all. Others will require a BAS statement or bank statements.

  • Companies, individual and trust applicants are often eligible.

  • This is a very common question from our clients, and an easy one to answer. Many Business Managers within car dealerships are unlicensed operators i.e. they do not operate under an Australian Credit License and are often exempted under the Point of Sale Exemptions. Despite them offering a similar product to most Brokers, they are not required to adhere to the same rules.

  • Licensed finance brokers must abide by several forms of legislation such as the NCCP (2009) Act and Best Interest Duty. These regulations provide great consumer protection and transparency.

    So why is this important? The recourse back on a dealer for any wrongdoing is limited to their brand image rather than any legislative requirement. Unlike licensed Finance Brokers, they are not required to be members of the Australian Financial Complaints Authority Ombudsman (AFCA) and are not required to have Internal Dispute Resolution processes. So if there is a problem, there is potentially no independence in the outcome. AFCA are an external dispute resolution body, helping to act as an intermediary between the customer and the broker. This process ensures a fair outcome for either party.

  • So why do Licensed Finance brokers require more information? Given the legisalation they are governed by, there are minimum requirements to be met such as Preliminary Assessments to ensure the loan is not unsuitable for you. Credit Proposals need to be provided upfront too, detailing the full loan structure (prior to application). These are all fail safe protections for customers, but can add an extra few hours on to the process. As we detailed in this blog, it is important to remain patient to ensure you receive the best outcome for you.

  • Quite often we get this question and have clients of our own who are receiving pension only income. And it is unfortunate there are not many options available for Pension only income borrowers. A small number of Lenders will entertain this income type in its own capacity but they attract higher interest rates. Often these rates are above 20%.

  • Should you take out a high interest loan? Lenders who consider this sole income source will generally impose caps on loan amounts and loan terms (for example, max $ 8000 and max 3 year term) to ensure the loan is not too onerous at the higher rate. Ultimately, it is your decision whether you proceed with this type of loan. If the broker and Lender have performed their due diligence and feel it appropriate to lend the funds to you, then it is their duty to offer you the loan.

  • Do not rush in to such a loan because this could come with regret in the future, and you will have limited recourse. Take your time, think it through and consider other funding options available.

  • Secured and unsecured loans are defined by the security for the loan. If no asset is offered as security it is an unsecured loan. Conversely, if the loan is secured by an asset then it is a secured loan.

  • But what is the difference in pricing? Secured loans are generally considered lower risk for Lenders therefore they may offer lower interest rates. Secured loans do come with some additional fees, such as registration of security fees. These fees tend to be negligible.

  • If you decide to sell your car in the future and the loan is secured, then you have to consider the sale process. The Buyer will require the loan associated to the security, to be repaid prior to taking possession. A PPSR will be performed and this will reflect the security and the loan details. A Buyer may consider getting a payout letter from the Lender and paying the loan out directly, and paying the difference (between this and the purchase price) to the Seller.

  • There are many visa types in Australia – bridging visa’s, temporary visa’s and working visa’s; to name a few.

  • Certain Visa’s are acceptable to lenders and it is important to consult with our finance team, to ensure they are acceptable.

  • If the Visa’s are acceptable, the Lender would generally require the loan term to not exceed the visa term. And a copy of your passport and visa would be required upfront, at the time the application is submitted.

  • Before you buy/purchase anything you should firstly work out how you are going to pay for it. And whether you can afford it. Buying an asset now and regretting the decision later, is not a good strategy. Our finance team will discuss your budget with you upfront, to ensure you are comfortable with the repayments,before you commit to the purchase.

  • You should perform a budget to ensure the repayments are not going to put you in a position of financial difficulty. Or if you need to make financial sacrifices to make the purchase; then where are these financial sacrifices to be made?

  • This sounds simple, but we see it alot – do not spend more than you earn. A budget will help avoid this common dilemma. If you spend more than you earn, then your savings will diminish and/or you will need further credit to pay for your credit. This is not a good position to be in.

  • If you are at a dealership then do not get emotional about the purchase. Stay rational. Do not increase your budget on your emotions unless you revisit your budget. Again, we see alot of times our customers will exceed their original budget because the sales department at the dealership have upsold you on the asset, or the accessories. And unfortunately when that Contract is signed, there is no cooling off period.

  • Do your budget, speak to our finance team, and stay within your means.

  • A balloon/residual value is a lump sum payment at the end of a loan term. It is often used by Commercial borrowers and less commonly by Consumers.

  • A balloon is only acceptable to a a lender on loan terms up to 5 years. The Value is determined by the age of the asset and the loan term.

  • Closer to the expiry of the loan term your Broker and Lender will contact you to let you know your options – but here are three common options:

    • Repay the balance of the residual value in full with savings.

    • Refinance the residual value for a further 1-3 years.

    • Trade in your vehicle, and the residual value becomes the payout figure on your trade-in. For example, let’s say you trade your vehicle in to the Dealer for $ 15,000.00 and your residual value is $ 12,000.00. There is $ 3,000.00 equity which can be used towards a deposit on your new car. Or you can receive this as a cash back.

      If your vehicle is worth less than the residual value you then you will need to put the balance in from savings.

  • You generally require an ABN to be eligible for a business loan. In some cases, you may use your car predominantely for business/work purposes but not have an ABN. An example of this would be a real estate or sales person whom use their vehicle to visit their clients, but they are employed by their Employer.

  • If you do not have an ABN you will be required to go on a Consumer Loan (private use loan) and verify your income via payslips or alike. You may still be able to claim tax deductions on loan associated costs, however you will be required to consult with your financial or tax advisor.

  • A Novated Lease is generally a facility that is set up between an Employer, Lender and Employee. It is used to salary sacrifice the asset being purchased for employees of a business. To be eligible the Employer needs to consent to these agreements.

  • It is a normal Tax Based Lease (and is a business facility) with a Novation Deed Agreement signed between the Employer, Employee and the Lender.

  • Under this structure the Lease Repayment is generally deducted from your gross salary (before tax) and the Employer makes the repayment to the lender.

  • Important: if you leave your Employer then the responsibility for the Lease repayments lies with you, not the Employer. The Lender may allow a transfer of the Deed to a new Employer if you are eligible for this benefit under your new terms of employment. If not, then you have to continue to fulfill the terms of the Lease Contract until its expiry.

  • Life can often throw us curveballs, it happens. And lenders understand this. If you are struggling to make your repayments then the first thing you should do is make contact with your lender, and advise them of your situation. They will accomodate you and look to come to some arrangement to defer payments or reduce them for a period of time. Under the NCCP this is one of the protections a consumer receives. A lender must work with you to see you through your period of financial difficulty.

  • DO NOT bury your head in the sand. DO NOT, not communicate with the Lender. These two actions will not help the situation. Consider this, if someone owed you money and they didn’t repay; and fell off the face of the Earth. How would you feel? Angry and frustrated? Lenders have the same outlook. They will be more aggressive with their collections and it could consequently affect your credit score.

  • Communicate with your Lender, explain the situation. They have to accomodate your situation under the Regulations they are governed by. Work with them to get a resolution that meets your needs and theirs. You’ll be surprised how helpful they are under these circumstances.

  • We often get asked what a reasonable interest rate is. And it can be a tough one to answer. Lenders risk profile you based on many factors. And therefore we need to ask certain questions upfront to organise a quote.

  • In general though, a property owner will get a better interest rate than a non-property owner. A buyer of a new car will get a better interest rate than a buyer of a 10 year old car. A customer putting in a deposit will get a better interest rate than someone with a lower or no deposit.

  • Work with our finance team to get the lowest rate possible. But also focus on the fees associated to the loan. Sometimes a lower interest rate is financially ineffective if the lenders set-up fees are high. Or if you plan to pay the loan out early and they have high exit fees. Our finance team will ask the right questions, and calculate the fees and the interest rate of the loan; and work out what is best for you,

  • Finance Brokers are professionals in finance and are required to abide by the Regulatory requirements. And to do this they need to spend time preparing compliance documents and loan documents, as well as conferring between the customer and the lender. The Broker Origination Fee is a fee charged to the customer for these services rendered.

  • This fee is generally incorporated in to the loan and will be disclosed upfront on the Credit Proposal.

  • Brokers can receive additional commissions – such as transactional commissions and volume based incentives. If these are ascertainable at the time of applicaiton, they will be disclosed on the Credit Proposal upfront.

  • The deposit required can vary as your situation may be different to someone elses. We will always work with the deposit level you are comfortable with.

Check out some of our blogs before you buy and apply.

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