A common form of financing a car is by way of a car loan. A car loan is similar to a personal loan except it is secured by the car you are financing. A car loan is generally financed between one and five years.

The longer the term the lower the repayments but more interest is accrued. If you take a car loan over a shorter period of time the repayments are higher but the amount of interest accrued is lower.

If you wish to pay your car loan out early you may incur penalty fees so it is wise to check with your car finance broker to see if early termination penalties apply to the car loan you are seeking out. If you default on your car loan the car you are using as security may be repossessed.

Funding Treatments

1. Commercial Loan (CLA)/Chattel Mortgage – There is no impact to CLA facilities as title to the goods is passed to the customer at purchase.

2. Commercial Hire Purchase (CHP) – As the borrower is considered to be the owner for tax depreciation purposes they are entitled to lodge a claim for any IA benefit.

3. Finance Lease – As the owner of the asset the bank currently claims depreciation. The Bill confirms that a financier has the ability to claim the additional Investment Allowance. Where a Finance Lease is requested a benefit will be passed to the customer in the form of a lower interest rate and rentals.

Note: This discount cannot be applied to Luxury Cars over the $57,180 limit or demonstration vehicles as Financiers are unable to claim the benefit.

The ‘Small Business & General Business Tax Break’ Bill was passed by both houses of Parliament on Thursday 14 of May. Eligibility for the Investment Allowance is based on the turnover of the business acquiring the asset.

Businesses with turnover of less than $2 million

Benefit 1: The Investment Allowance enables customers to claim an additional 50% tax deduction on equipment purchased between 13 December 2008 and 31 December 2009 and delivered/installed before 31 December 2010. The Investment Allowance applies to most types of new plant and equipment, including motor vehicles.

Note: Businesses with an annual turnover of less than $2M can only claim on equipment costing $1,000 or above.

Provided all of the eligibility criteria are satisfied, you can claim the Investment Allowance as a tax deduction in your income tax return for the income year in which you start to use an eligible asset or have it installed ready for use. The investment Allowance provides a bonus tax deduction – it is not a rebate or a refundable tax offset.

The ‘Small Business & General Business Tax Break’ Bill was passed by both houses of Parliament on Thursday 14 of May. Eligibility for the Investment Allowance is based on the turnover of the business acquiring the asset.

Businesses with turnover $2 million or greater

Benefit 1: The Investment Allowance enables customers to claim an additional 30% tax deduction on equipment acquired between 13 December 2008 and 30 June 2009 and delivered/installed before 30 June 2010. The Investment Allowance applies to most types of new plant and equipment, including motor vehicles.

Benefit 2: For eligible assets that are acquired from 1 July 2009 to 31 December 2009, businesses can claim an additional 10% deduction where the goods are received by 31 December 2010.

Note: Businesses with an annual turnover of $2M or greater can only claim on equipment costing $10,000 or above.

If you want to compare car loans the best way to do this is on the internet. By utilising the services of an online car loan broker you will have access to a wide range of banks and financial institutions at your fingertips. You will have access to a car loan calculator which will enable you to compare a variety of car loans. You will have the option to choose the car loan product that suits you.

You can also vary the term using the car loan calculator which will give you an indication as to which term and product will provide you with the monthly repayments to suit your budget. Using a car loan calculator is a quick way to compare car loans. You needn’t contact car loan companies directly as this is time consuming and the financiers don’t always offer the same rate that car loan brokers do.