FPV Ownership - How to buy one?

[Full Noise]

Originally Posted by Stefan

Good luck paying cash!

At least I’ve got the cash, sweetheart.

I might remind you that we’re talking about FPV cars here, not a refrigerator from Harvey Norman.

[Stefan]

Originally Posted by Full Noise

At least I’ve got the cash, sweetheart.

Well done...I'm sure mummy is proud too..

[WASP]

Equity maaaate! Not for everybody and you'll need discipline (or a wife/partner with some) to keep things in check. As others have mentioned that tax benefits are very good, assuming you have a tax issue to work with in the first place. Interest rates are usually very low and the repayment terms are longer usually if you get yourself into a pickle. Using equity is also much like using cash to the dealer. You are not subject to finance and can bargain accordingly.

I wouldn’t go down this route if you:

• Are bad with managing money
• Don’t have a mortgage or have only paid off a small amount off it
• Can’t comfortably afford to make repayment as if you had to own it with in 3 to 5 years
• Can’t accept that these cars are in fact a liability and not an asset
• Don’t need to depreciate the car to offset your tax bill
• Can’t afford the ongoing insurance, fuel, speeding fines and modification fees

If you are really stretching yourself to pay for one and don't have any use for the depreciation benefits I would recommend looking at the used market. You can get yourself into a used FPV in $30k-$40k range now. Even buying new, try not to pay retail if you’re financing it as the money you loose in the first 12 months will hurt. The resale value stabilises somewhat after the initial 12month period. If you can save yourself $5k-10k upfront that will make a lot of difference long term.

[QIK006]

Originally Posted by nods

and how much is the insurance alone for a 20yr old
driving a GTP
Cheer Nod

Nope, My girl is 23, and she had to be added as a driver, not a part owner, otherwise they would not have insured us, seeing as she is 23, our premiums jumped up around $450 as well.

[GTPete]

I went this way, business use mainly,I wouldnt have bought an FPV otherwise.

Heres the details on a chattel mortgage.

A Chattel Mortgage is a particular type of finance used by businesses for the purpose of purchasing a new or used vehicle or other business equipment.

Chattel Mortgage is essentially a Mortgage over goods to be financed. Chattel Mortgage is classed as a cash sale in that the goods automatically become yours on purchase and the finance company takes a mortgage over the chattels. However for tax purposes you can claim depreciation, running costs and interest paid, against your business income. The Chattel Mortgage allows businesses to claim the full input tax credit from GST incurred expenses immediately (next BAS statement). Always seek advice from your accountant in regard to this.

The Chattel mortgage is a very flexible finance option, in that, you have the ability to either finance the full purchase price or alternatively, you can include an upfront deposit or trade-in to reduce your rental commitment, while a Residual payment may also be placed at the end of the term (much like a lease residual) to represent the vehicles end value. Alternatively, you may choose to structure your rentals to clear the debt in full over the term of your agreement (fully amortised).

Chattel Mortgage - Benefits

Interest charged and depreciation of the vehicle are tax deductible
No capital outlay is required and cashflow protected
Terms can be flexible and fixed repayments make for easy future budgeting
After full payment of the chattel mortgage agreement, ownership of the goods is transferred to you.
You have the option to make payments with or without a ballon payment at the end of the term.

[Deadman]

Originally Posted by Stefan

Good luck paying cash!

Yeah I agree with you Stefan. I don't buy FPV's cause cars are just not a big enough passion of mine and I have other passions I prefer to spend money on.

But on the idea of buying cars, I prefer to use my cash toward buying houses and investments, and use the government's cash (via lease arrangements) towards buying cars ;)

I can conceed that there would be situations where Cash would be the best way to purchase a car (i.e if you had a large bank account and weren't working or earning a sizeable income, and I'm sure there are others to).

But for the "average" joe who has an income sizeable enough to look at FPV vehicles, I'd strongly suggest talking to your accountant about your options - I highly doubt cash would be one at the top of the list. There will be tonnes of varied responses here based on induvidual situations, but your accountant can (hopefully) tell you the one that suits your situation.

[GT0132]

Originally Posted by MITCHAY

Depends how good you are at saving up though. The only time I want to give the bank the pleasure is when I buy a house.

Granted I don't have that much money now as I already bought a car but if I wanted one bad enough I'd save up the money. I would have spent the better part of $100k already and I'm 20 :

That's great at 20 mate. At 20 I was driving a $3,000 shitbox and renting an apartment....I agree you not only have to be a good saver but an exceptional one. ....Now I'm not what you'd call a bad saver by any stretch but even on my salary of around $170k it would still take me around 3-4 years to save $70,000 with all lifes other expenses to consider and I'm 44.

Even if I could save $70,000 I'd be loathe to spend it all on a car. Thats a nice sum for a deposit on a weekender on the beach

[GT0132]

Originally Posted by Deadman

Yeah I agree with you Stefan. I don't buy FPV's cause cars are just not a big enough passion of mine and I have other passions I prefer to spend money on.

But on the idea of buying cars, I prefer to use my cash toward buying houses and investments, and use the government's cash (via lease arrangements) towards buying cars ;)

I can conceed that there would be situations where Cash would be the best way to purchase a car (i.e if you had a large bank account and weren't working or earning a sizeable income, and I'm sure there are others to) but for the "average" joe who has an income sizeable enough to look at FPV vehicles, I'd strongly suggest talking to your accountant about your options - I highly doubt cash would be one at the top of the list.

You should do it the other way around. You should borrow for investments as the interest on the borrowings is fully tax deductible provided the investment is income producing.

With car leases the lease cost is only deductible for tax purposes to the extent the car is used for business purposes. A lot of people are under a misconception that, just because a car is leased, the lease payments are tax deductible. Nothing could be further from the truth. Further you must be able to substantiate your motor vehicle tax claim by keeping log books, receipts etc to prove your claim and that the car has in fact been used for business purposes. If it used for part business and part personal use then the claim must be apportioned.

Apart from the log book method there are 3 other methods of claiming business related car expenses in your tax return, the most common method being the "cents per km" method based on the engine size of your car although the annual claim is capped at $5,000 so wouldn't suit those who do excessive business related travel. Upside is you don't need to keep any substantiation except maybe diary notes

The claimable business component under the log book method not only includes a pro rata of the lease payments but also running costs (fuel, maintenence, rego and insurance)

Business use does not include the daily return trip travelling from your home to work either, the car must be used throughout the day, i.e to visit customers etc and not sit in the company's car park unused from 9 to 5, or otherwise used after hours for work related purposes.

Different ball game if you're an employee provided with a company car, say as part of a novated lease. In this case the lease payments are fully tax deductible to the employer as a cost of employing you. However the company is obliged to pay Fringe Benenfits Tax (FBT) based on the cars cost price and the amount of kms you travel each year irrespective of whether those klms are for business or private use. 99% of companies pass the FBT cost on to their employees so therefore negates the benefit of the tax deductibility to the employer.

[Smoke Pursuit]

Never paid cash for a car yet, always lease them, always buy brand new and only keep them 12 - 18 months it seems (from prior history).

In saying that however I have just bought my second investment property, which for me is a much much smarter option.

Each to their own, but if I didn't have a tax problem and a hefty car allowance / 90% business use on my logbook then you wouldn't see me driving an expensive FPV, id be happy driving a much lessor car e.g. an XR6 or Futura...

[Deadman]

Originally Posted by ozmale42

You should do it the other way around. You should borrow for investments as the interest on the borrowings is fully tax deductible provided the investment is income producing.

[edit] I really don't want to get drawn in to this as it's a circle that won't end. It is very dangerous to assume things about someone's financial status/investments etc.

Advice to OP - see your account re: your situation.

In my situation - I've always leased.

[Smoke Pursuit]

Originally Posted by Full Noise

At least I’ve got the cash, sweetheart.

I might remind you that we’re talking about FPV cars here, not a refrigerator from Harvey Norman.

Omg you seem to have an opinion of yourself don't you just. Im sure you work hard for your cash like the rest of us here but seriously, who cares if you can pay cash for a GTP... Its not something you really need to justify to us nor do you need to rub it in peoples faces considering there are alot people on here that will never be able to afford such a car in the first place, let alone pay cash.

At the end of the day we live and we die, we make of life what we want and how each of us achieve our goals is really our own business.. Ive still got a Super Pursuit ute sitting in my driveway, just because I didn't pay cash for it doesnt mean i cant enjoy it...

[GT0132]

Originally Posted by Deadman

[edit] I really don't want to get drawn in to this as it's a circle that won't end. It is very dangerous to assume things about someone's financial status/investments etc.

Advice to OP - see your account re: your situation.

In my situation - I've always leased.

Sorry mate, I in no way intended to mislead you. However I stand by my original comemnts as they do apply in a general sense. I agree everyone's circumstances are different. I don't think i'm your accountant unless you happen to be a lawyer based in the Sydney CBD. My client base is 99% lawyers.

[GT0132]

Originally Posted by LSTerritoryGhia

At the end of the day we live and we die, we make of life what we want and how each of us achieve our goals is really our own business.. Ive still got a Super Pursuit ute sitting in my driveway, just because I didn't pay cash for it doesnt mean i cant enjoy it...

This sums it up magnificently. Well done champ

[BPXR6T]

Cash is obviously best but there are ways to make buying a new car on a loan cheaper. i.e. package the car and the loan payments reduce your taxable income, buy a ute and make it FBT free, bla bla bla...

When it comes to resale time and I've lost 2/3rds of the cars value it kind of feels better with the tax man sharing some of that hit.

[WASP]

I think the original poster was after some advise and feedback. What I'm reading sounds more like a ****ing match. Relax guys, everybody has different circumstances. No surprises there.

[JAJH]

If I had the $75k cash when I bought my GTP, there's no way I would have gobbled up all my cash reserves. I have always bought cars on HP, never owned one outright and that's cool by me. I take the opinion if I waited to save up till I had the cash I would probably never get what I want. At the risk of challenging a few here, I bet almost none of us paid cash for our houses...we are happy to pay them off for up to 25 years and end up paying many hundreds of thousands in interest, yet when it comes to financing cars over 4-5 years some of us get all defensive about the amount of interest we have to pay.

[GTpilot]

hardly an FPV, but for my XR8 I have a novated lease ovr 4 yrs. I never paid a cent up front, except about 300 setup fee and the first payment. I have calculated the out of pocket amount every month ( not the actual repayment amount, witch is paid out of my wage before tax. so $755 payment, $550 out of my take home pay) x 48 + the residual actually equals $1500 less than what I actually paid for the car.
Then I finance the residual payment, sell the car for easily 5k more than that, pay the finance out and walk away with 5K+ in my pocket. Thanks Little Johnny for kicking in.

[I FluXx I]

anyone know of any good lease company's? do lease companys ever do second hand cars?

cheers

[BPXR6T]

Originally Posted by I FluXx I

anyone know of any good lease company's? do lease companys ever do second hand cars?

cheers

Maquarie leasing were good to me. Yep, they do second hand cars.

[I FluXx I]

what about fuel. I was reading up on leasing and saw they supply fuel(fuel card or something). Can you opt to not have a fuel card and buy your own fuel?

[Tles]

[QUOTE=GTPete]I went this way, business use mainly,I wouldnt have bought an FPV otherwise.

Heres the details on a chattel mortgage.

A Chattel Mortgage is a particular type of finance used by businesses for ....QUOTE]

Glad you posted up the Chattel Mortgage info GTPete, and well explained.
If you are in business or operating one enough to run a vehicle through it then this is the best way.
If you are purely a wage/salary earner then the Novated lease is better.
Big Km requirements are the only real hassle with Novating, 25000 plus to get real tax benefits which affects resale - especially as FPVs tend to have lower average kms travelled per annum. I'd NL over 3 years and keep it for 6 at least to spread the averages back under 20,000k per year. Or you could start on the up to 15,000 bracket then switch up to do 35,000 over 24 months.
Cash we use as emergency reserves for opportunity grabbing. It's parked in offset where it can be accessed but while parked we are not paying interest on an equivalent portion of the main mortgage. If we see a chance to make or save a quid then we can just go and get the readies out and then build them back up again.

There is an old adage that you should only borrow money when you don't have to - so you can increase your equity position and increase your gains.

[GT0132]

Originally Posted by JAJH

If I had the $75k cash when I bought my GTP, there's no way I would have gobbled up all my cash reserves. I have always bought cars on HP, never owned one outright and that's cool by me. I take the opinion if I waited to save up till I had the cash I would probably never get what I want. At the risk of challenging a few here, I bet almost none of us paid cash for our houses...we are happy to pay them off for up to 25 years and end up paying many hundreds of thousands in interest, yet when it comes to financing cars over 4-5 years some of us get all defensive about the amount of interest we have to pay.

I agree mate and although the ideal is to pay cash , not many of us have the cash to part with. I used finance to buy my car but would have used cash had i had it . Although I did a redraw from my house loan rather than a personal loan.

Borrowing to buy real estate is a different ball game though. With real estate you're buying an asset that will double in value in 7 years (based on recent history) wheras a car will only be worth 1/7th of its value in 7 years so borrowing to buy houses is a win win situation. Houses generally go up in value faster than you could save the money to pay cash for them, so if you don't borrow you get left behind.

[Scott]

Originally Posted by I FluXx I

anyone know of any good lease company's? do lease companys ever do second hand cars?

cheers

I use BMW Finance and am very happy with them. I could get better rates but the ease of dealing with them is fair compensation IMO. Yes they do second hand cars too - up to 5 or 7 years I think.

[irlewy86]

Originally Posted by nods

and how much is the insurance alone for a 20yr old
driving a GTP



Cheer Nod

An arm and a leg.

[Sam_Boss260]

Originally Posted by GTP006

I use BMW Finance and am very happy with them. I could get better rates but the ease of dealing with them is fair compensation IMO. Yes they do second hand cars too - up to 5 or 7 years I think.

I'm with Bank of Queensland finance, and they are pretty good to me as we have everything else with them also.

I have a CHP finance arrangement on my XR. Although it is not an FPV, I wouls like to get one in about 18 months time when this lease runs out.

A few points for me. I will never buy a brand new car again, the dpreciation / loss is far too great for me. I buy near new or demos, and let someone else cop the loss.

I also to a few km's for my work (sales), so financing is the smartest option for me, as I claim expenses, deprec and interest on tax which offsets the mileage allowance which I get from work. So at the end of the day, the car doesn't cost me too much out of my own pocket at the end of the year.

If I had $70k cash, from saving or whatever means, I would put half on a car and finance the rest and half on an investment property....

[EviLkarL]

I had some spare cash hanging around so I just paid half cash and the other half Equity maaaate!. I have been keeping my Home loan alive for the past few years with $20 oweing so I continue receiving the benefits I got with the home loan deal (Fee free personal account, low interest fixed term, cash back facility over the counter). If I've ever needed cash for anything no worries. This left me bargining power when i purchased my GT and I got a good deal. I repay the loan in dribs and drabs and no worries about cash flow.

[xm_coupe]

It doesnt matter if you cant afford it, as long as you can make the repayments. And also theres no towbar on a hearse.