how to finance a new car

[tobe]

Id like to get some feedback and suggestions on a little scheme Im trying to hatch. We have 3 kids, and the family car, a 7 seat Zafira is on its last legs. We would like to get a new car (or nearly new), but Id really like to avoid paying for it! At least with after tax dollars.

Had a bit of a hiccup in my career last year, we are back on track now, and managed to hold onto the portfolio, and keep the kids fed. I was lucky enough to borrow some money when we didnt need it which has helped us smooth the transistion to my new job. We have $30k in a LOC which we now feel comfortable enough letting go of, perhaps to buy a new car. we have some other savings we will hold onto for a rainy day.

Anyway, my scheme is to buy something with this $30k whose income is enough to pay off a new car loan. I was thinking of buying an ATM machine

http://www.ownyourownatm.com.au/thank-you-for-your-enquiry-2012.html

The boss thinks its a bit complicated a scheme, but I really like the idea. I thought Id get some feedback and suggestions on what is likely a risky move for me away from my core investing skill set.

 

[Aaron Sice]

how to finance a car?

dont.

buy it with cash, or walk away.

 

[Aaron Sice]

Id like to get some feedback and suggestions on a little scheme Im trying to hatch. We have 3 kids, and the family car, a 7 seat Zafira is on its last legs. We would like to get a new car (or nearly new), but Id really like to avoid paying for it! At least with after tax dollars.

Had a bit of a hiccup in my career last year, we are back on track now, and managed to hold onto the portfolio, and keep the kids fed. I was lucky enough to borrow some money when we didnt need it which has helped us smooth the transistion to my new job. We have $30k in a LOC which we now feel comfortable enough letting go of, perhaps to buy a new car. we have some other savings we will hold onto for a rainy day.

Anyway, my scheme is to buy something with this $30k whose income is enough to pay off a new car loan. I was thinking of buying an ATM machine

http://www.ownyourownatm.com.au/thank-you-for-your-enquiry-2012.html

The boss thinks its a bit complicated a scheme, but I really like the idea. I thought Id get some feedback and suggestions on what is likely a risky move for me away from my core investing skill set.

ATM machines need to be placed correctly in order to be a good investment.

i know someone who puts a lot of effort into his business, and has done so for a few years, and is only just reaping the benefits now with many many multiples of machines statewide.

 

[Ideo]

how to finance a car?

dont.

buy it with cash, or walk away.

Unless it is for primarily business usage in which case leasing can make sense.

 

[Rob Williams]

http://www.eurekareport.com.au/article/2010/9/8/there-money-atms

This is an extract of an interview I did regarding ATM's as a cash flow investment. The full article (published in API) was once available on the Own Your Own ATM website, but I think they have withdrawn it as the arguments against them far outweighed the arguments in favour. They just didn't realise that at the time

 

[tobe]

thanks Rob,
Interesting. the article is a bit old now? One of the companies referred to has since listed on the ASX. My limited understanding of the draft contract seemed to cover off on a lot of the unexpected costs you outlined in the article.

I guess what Id really like opinions on is the process of buying doodads (the family car) with the income from a specific investment. Has anyone done this? Do you think its a good idea? What other alternatives are there? Cashbonds? perhaps a carspace?

the downside for the ATM is obviously if the company I lease it to goes out of business, and I have to line up with the other creditors. The plus side is I have an income producing aset and therefore tax deductable borrowings, depreciation etc. Even if the investment went belly up in a year or two, the leftover depreciation and deductions on the outstanding borrowings would compensate a long way.

I know its not as good as buying with cash, unfortunately I dont have that option, and the options are either get the family a new car someway or sell an investment property and do it....

 

[weg]

how to finance a car?

dont.

buy it with cash, or walk away.

Agree.

I would keep that 30K just in case of another hiccup - it could come from somewhere other than your job!

If you can't save cash for another (cheaper) vehicle then you definately need that LOC.

 

[Aaron Sice]

Unless it is for primarily business usage in which case leasing can make sense.

can, but kills business serviceability.

i know - i currently have a lease arrangement in place and would rather take the capital hit instead.

 

[Aaron Sice]

I know its not as good as buying with cash, unfortunately I dont have that option, and the options are either get the family a new car someway or sell an investment property and do it....

i bought my wife a little sirion runaround.

get 6L/100km, cost me what i sold my ute for. fits her and 3 kids just fine, car seats et al because the oldest is now 7+ can sit in the front.

cost? $3k cash. costs $2500 a year to run. no finance. will max depreciate $300-500 pa.

cant beat that.

 

[Rolf Latham]

i bought my wife a little sirion runaround.

get 6L/100km, cost me what i sold my ute for. fits her and 3 kids just fine, car seats et al because the oldest is now 7+ can sit in the front.

cost? $3k cash. costs $2500 a year to run. no finance. will max depreciate $300-500 pa.

cant beat that.

not for me

I have in recent times seen the value of side airbags and a bit of mass to compensate for some of the poor and sometimes reckless driving by others

ta


rolf

 

[tobe]

ok, lets run with the buy it for cash argument.

If I bought a car for cash, the cash is gone. Some might be available when I eventually sell, or trade in, but basically its gone.

if I were to buy an investment which pays for the use of the car (the investment income covers the car payments), then after the car is paid off (and most likely worth very little too), I still have the investment. Along the way I also have tax benifits and the car hasnt cost be either the oportunity cost of what else I could have spent that hard earned, after tax money on.

BTW, Im not gen y here trying to have a maserati before buying my second investment property. I have 6 which started with 1 bought with a 5% deposit about 10 years ago. Ive always been on a pretty average income, and I have a pretty good handle on budgeting and expenses.

 

[tobe]

Agree.

I would keep that 30K just in case of another hiccup - it could come from somewhere other than your job!

If you can't save cash for another (cheaper) vehicle then you definately need that LOC.

Cheers, we do have 6 months income stashed away over and above the money Im tallking about here.

 

[Indifference]

ok, lets run with the buy it for cash argument.

If I bought a car for cash, the cash is gone. Some might be available when I eventually sell, or trade in, but basically its gone.

if I were to buy an investment which pays for the use of the car (the investment income covers the car payments), then after the car is paid off (and most likely worth very little too), I still have the investment. Along the way I also have tax benifits and the car hasnt cost be either the oportunity cost of what else I could have spent that hard earned, after tax money on.

BTW, Im not gen y here trying to have a maserati before buying my second investment property. I have 6 which started with 1 bought with a 5% deposit about 10 years ago. Ive always been on a pretty average income, and I have a pretty good handle on budgeting and expenses.

Ah, yeah, nahh.... You would need to be getting about a 20% (after tax) return on the 30K investment to cover $500 /month payment AND that is after any investment holding costs. If such investments are so plentiful, why have you chosen the slow steady property accummulation path?

If it were that easy, we would all be retired, sipping pina coladas in the Bahamas.... whilst reaping 20+% YOY returns.....

You might get lucky 1 or 2 years in a row, but other than that it is fantasia....

 

[tobe]

So, back to living in a hole in the ground covered by a sheet of tarpaulin, squirriling away the pennies till the magical day my investment income surpasses my monthly expenses.

 

[Bigtone]

So, back to living in a hole in the ground covered by a sheet of tarpaulin, squirriling away the pennies till the magical day my investment income surpasses my monthly expenses.

you gotta enjoy urself along the journey or what is the point, if you can't buy the missus a standard car for $30k and have 6 ip's it's not right

 

[Aaron Sice]

ok, lets run with the buy it for cash argument.

If I bought a car for cash, the cash is gone. Some might be available when I eventually sell, or trade in, but basically its gone.

if I were to buy an investment which pays for the use of the car (the investment income covers the car payments), then after the car is paid off (and most likely worth very little too), I still have the investment. Along the way I also have tax benifits and the car hasnt cost be either the oportunity cost of what else I could have spent that hard earned, after tax money on.

BTW, Im not gen y here trying to have a maserati before buying my second investment property. I have 6 which started with 1 bought with a 5% deposit about 10 years ago. Ive always been on a pretty average income, and I have a pretty good handle on budgeting and expenses.

IMO that's an old argument tied to the old "deductible debt is good debt"

i'm of the opinion than "no debt is good debt" and "if you can pay cash, then do so".

it's not the status quo on a property forum, i'm sure.

if you think no one cares that you'd be dead, try missing a car repayment.

 

[Pa1nter]

IMO that's an old argument tied to the old "deductible debt is good debt"

i'm of the opinion than "no debt is good debt" and "if you can pay cash, then do so".

it's not the status quo on a property forum, i'm sure.

if you think no one cares that you'd be dead, try missing a car repayment.

I agree with you,if you have the money sitting there,this is a great bargaining tool.
You just need to apply the buying "under market value" strategy the same as a house.

It is possible to buy a good quality second hand car "smartly" now with cash and sell that car after two years and get all your money back except running costs.

If you have 20K available, I would start looking at cars on the market for 30k+,

I have done it several times,one was advertised for 34K,I paid 20K cause the bloke was on the end of the lease.I watched this one when he dropped it to 30K on the trading post.

Another I paid 26K for and market value with RACQ was in the 40's and that was a low ball at a car yard.

 

[BMan]

how about using NRAS ?

 

[Dylan33]

I dont understand Why you would have 6 months salary in anything other than your LOC? Is there another angle I've been missing?

What about leasing a car through your employer on a Novated lease scheme?

 

[james55]

Use the 30k to convert the garage on one of your properties into a granny flat and rent it for $200 per week. That should cover your car payments and running costs too