Secured Car Loan vs Personal Loan? Recommend any lenders?

Unfortunately I have to get another car as mine was written off in November hail storm (and I can't keep borrowing other people's cars!). Mine was getting older but had low k's and was reliable so I was really sad to see it go....and insurance money won't cover the cost of something in similar condition, so I'm going to have to borrow a bit to get myself something to replace it.

I have looked at novated lease options but don't think my income and k's are high enough to bother and I don't want to be tied to a lease, so am now looking at personal loans or secured car loans. Have always paid cash for cars before, so the secured car loans in particular are unfamiliar territory....are there any caveats I should be aware of, are they worth it for the lower interest rate? I would prefer one that allowed extra payments/early payout without penalty (or minimum penalty) too.

I found Suncorp have 7.79% secured with only $300 early repayment fee if paid out in first year, or they have 10.99% unsecured PLoan. CBA whom I have 2 home loans and all my banking with have told me theirs is 7.99% rate for secured and 13.9% unsecured PLoan. Am I likely to do better elsewhere, or with either of these lenders?
 
Not an option at the moment - both properties are investment so think that to borrow for personal would have tax implications and I don't really want to complicate it if I can avoid it.
 
Secured is better than not, when it comes to judging serviceability for IPs later on. Secured will generally have better rate too.
 
I use and refer clients to a speciality firm, Corporate Finance and Leasing.
While they are based in Melbourne, they cover Australia and source from all lenders, so with volume can get attractive rates for leasing. They are far better that what you are indicating.

Corporate Finance & Leasing ABN - 44 139 875 882
18 Concorde Drive, Keilor Park VIC 3042 | PO Box 25, Keilor VIC 3036
Office Tel +61 3 9377 7000 | Fax: +61 3 9377 7001 | Mob: 0409 217 002 | E: jeff@corpfin.com.au | Website: www.corpfin.com.au

Give Jeff Messer a call and ask the question. I am not associated with the company in any way.

For most, novated leasing is not particularly tax effective depending on FBT and if you use a car for work a lot, costs or a portion of are deductible anyway.
If you own real property, that is sufficient, it does not normally need to be a PPOR.
 
Not an option at the moment - both properties are investment so think that to borrow for personal would have tax implications and I don't really want to complicate it if I can avoid it.

If you have equity in one of your IPs is just a matter of creating a new split to access that equity. It's nice and clean and keeps the non deductible part totally seperate.

If you do a LOC, once you've totally paid off the car you can reuse the debt for investment purposes down the track and still have it fully deductible.
 
Not an option at the moment - both properties are investment so think that to borrow for personal would have tax implications and I don't really want to complicate it if I can avoid it.

If you get a separate top-up loan, then your only tax implications should be that the new loan is not deductible. Exactly the same as getting a car loan.
Unless I've gone wrong with my logic somewhere.:confused:
 
Not an option at the moment - both properties are investment so think that to borrow for personal would have tax implications and I don't really want to complicate it if I can avoid it.

If you setup the loan as a separate split from the existing investment loans there won't be any tax implications.

If you did go down this pathway it would be prudent to match the repayment term as if you were using a personal loan/car loan - otherwise a 30yr loan term will equate to far more interest being accrued than a personal loan otherwise would on 5-7 years.
 
As others have said, set up as a separate split loan against your IP.

Depending on your servicing/property goals, adding a 30k (assumed figure) car loan at personal/car loan finance rates can be crippling.

You'd be adding between 5-7k to your expense column per you - which is a fair bit (can add up to 60k+ in borrowing power) and that can do serious harm if you want to borrow more and servicing is tight. It may also hurt your ability to withdraw equity to fund future IPs.

Whereas adding a split personal loan using your IP as security and keeping contracted repayments over 30 years - you'll only be adding ~$1500 to your expense column for servicing. In terms of borrowing power, this is a pretty big difference and can be the difference between you drawing out equity/purchasing more and not.

As Corey said, of all your debt, pay it down first. Its also a good idea to knock if of early (depending on your goals and return on money elsewhere).

Cheers,
Redom
 
Before doing anything, have a chat to your accountant. They will be able to advise whether utilising the ip as security will contaminate your existing loans and whether you would be better off having a novated lease given your current situation.

Sure the lower interest rate might be attractive but if you lose deductibility of the loans it will be a costly mistake.
 
Try a broker like Stratton

Companies like Alphera Finance do high 5s % for car loans. Not far off home loans (ie 1% difference not huge) with less stuffing about and offer residuals which allow decent cashflow mgt.
 
Before doing anything, have a chat to your accountant. They will be able to advise whether utilising the ip as security will contaminate your existing loans and whether you would be better off having a novated lease given your current situation.

Sure the lower interest rate might be attractive but if you lose deductibility of the loans it will be a costly mistake.

Purpose, not security, governs deductibility
 
Unfortunately I have to get another car as mine was written off in November hail storm (and I can't keep borrowing other people's cars!). Mine was getting older but had low k's and was reliable so I was really sad to see it go....and insurance money won't cover the cost of something in similar condition, so I'm going to have to borrow a bit to get myself something to replace it.

How come insurance money isn't enough to buy something similar?
If the difference isn't a lot then just borrow the amount to get something similar - if this is only a few thousand then get a small unsecured loan from your bank etc that you can pay off asap
 
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