Affects of vehicle depreciation

[choppa]

gregp,,,,,,,associate leases??????,,or novated leases,,,salary sacrificing is part of the various packages that are available,,, along with standard lease,,maintained lease,,but once more,, be careful of leasing as a finance structured loan,,,, in (most/some) circumstances you don't or can't claim back the full potential of the assett,,,,,(novated lease is an exception to the rule)


poodroo,,,,fuel has a great impact also,,,,figures for past 6 months show our dealerships alone (13 in total) have predominately traded more 4b's than passenger in the retail market,,,
but this can also be a catch 22,,,some small 4 cyl cars have much the same or if not worse fuel consumption han a 4b,,??????????????

choppa

[bidkev]

<snip>. Made me think that when the engine gives up in my old faithful is it really worth spending $6,000 + on having it reconditioned when I can look around and find later models complete and registered for much the same sort of price? HAve we finally reached the throwaway car era? Looks quite possible.

Poodroo

Mate, I have an 89 Pajero and a 99 Prado. The pajero I bought 11 yrs ago with above av mileage for 11 grand. I dropped a recon engine into it 3 yrs ago at a cost of 3200. Disregarding general repairs ie brakes, timing belt etc she stands me at 14200 and with the insurance valuation at 3700 it could be argued that she stands me at 10500. Now I've had her for 11 yrs so that works out at roughly $18. 36 a week and I still have an asset of 3700.......not that she'd fetch that at a dealer. That's cheap motoring....I've never bought new and I never will, and I always pay cash.

The prado stood me at 19 grand with 140000 on the clock and it'll be interesting to see how she devalues compared to the paj. I told the insurance that I paid 20grand and after my first renewal they've still got her valued at 20 grand.

kev

[choppa]

kev,,,just a quick hint here also,,, always check your insurance to see if you have market or agreed value,,

insurance companies (not all,,,but ""some""), are happy to cover your car at a ""price you like"",, and the premium reflects this,, (i'm talking ""market value),, come time to claim,, the assesor quotes in current market value and the payout is adjusted,,

not saying this falls into your cover,,, but it does happen,,,,unfortunately more than we may realise,,

the amount of trades that come through the dealerships,, and the owners ""believe"" that there insurance cover reflects market price is very high,,,the insurer is happy to accept your renewal premium for as long as you send it

[bidkev]

Thanks for that choppa. Yeah, I did wonder at first why my premium was reducing on the paj until I read the "small print" on the back page which showed a reduced value for the paj. I was new to Oz then and a bit lax when settling in. The prado is at "agreed value" and I'll keep my eye open for this ever changing at renewal time.

kev

[FNQCairns]

Finance try getting a loan for a measly 4.5K to add to cash to buy a new outboard motor! The brokers all say it's not worth bothering them -get a dumb money credit card they say, the lack of a credit card is why we have the cash in the first place. Times have changed since I last had credit.

I bought an old dunger MQ for beach work from the auctions because I knew what was goint to be in store for it depreciation wise over the time I would own it, think it cost me around $250 a year in depreciation over the 7 odd years I owned it Certainly worth being looked down upon at the lights by the flash and shiny 4bys.

cheers fnq

[choppa]

fnq,,,understand your plight in regards to a loan for 4 grand,,, but the cost involved in a loan would not warrant this amount over a short term of 6 or 12 months,,,,,

UNLESS,,, you speak to choppa,,,

as posted above,, the structure of loans is the key,,, and not giving to many secrets out,,,(please understand,,i'm paid good $ for this at work,,,and here its free) to obtain a loan under 10k is common,,,whether its secured via the asset or not

most banks charge higher rate if unsecured,,,lower if its secured,, simple math,,its due to risk,,

value of loan is much the same,,,apply for a 10,,20,,or 30 grand loan,,,BUT TELL THE BANK YOU ONLY NEED IT FOR 30 days,,,,loan declined,,,cost versus return

when you look outside the square (to choose a common phrase),, the structure of the loan overcomes this with no penalty to you,,,other than stamp duty cost which is associated with all loans anyway,,, next time your in need of a 10k or lower loan,,,,give me a call,,, i'll explain more

choppa

[Poodroo]

Choppa you sound like a man who is really in the know so to speak. I have often wondered if a lending institution would consider a small loan to get myself a bargain buy in the boat department? I have often seen great value rigs sold by people I know and even people I don't know and thought "Gee if only I had the spare $5,000 cash at the moment!"
I really don't want to go into debt anymore after having just paid out my car loan but my yearning for a boat is almost getting the better of me. I hear Mud Island calling me in the night.

Poodroo

[choppa]

poodroo,, been in finance for past 20 yrs,,, and yet i'm first to admit that i don't know everything,,,i still learn things each day,,,(well nearly,,maybe each month or so,,,or year )

the answer to your question is YES,,, and again my favorite word is ""structure""

okay to all who have been reading this post,,, a quick secret to explain one scenario,, this may be long winded,,, but you'll pick my drift quickly..

1. leading dept store advertises,,, buy,,,buy,,,buy,,, no repayments for x time,,,,,,,,,,OR interest free for x time,,,,,,the clue here is,,the loan is structured for the retailer to sell at FULL RETAIL $,, they in turn get a ""subvention"" cost applied to the amount of $ what you finance from the lender,,, they sell the merchandise under advertising campaign,,,which the lender contributes towards,,, they receive additional bonuses if they reach certain dollar limits etc etc,, the outcome,,, the store sells the product at retail OR BETTER,,, you receive the benefit of no interest or extended payment follow so far??

2. now take away the ""store"" and put yourself in the picture,,,, lets say,, and no pun towards the author,,, but as pinhead for example stated above,,,, ALWAYS PAY CASH,,, LESS HASSLE,,,
if you approached a retailer,, (who offers finance) and enquired on interest free loans,,,most would say NO,, NOT AVAIL,,, (due to subvention),, we,,me on the other hand,, opens a door to allow you to finance the deal over 1-2 yrs,,,, totally interest free,,,the cost to you,,,stamp duty only,,,,,,,,,,this allows you to KEEP your cash,,,invest it,,roll it back into your cashflow etc etc and pay for the purchase at the end of the contract,, follow so far??

3. NOW,, SPEAK TO CHOPPA,,, structure the loan,,, so you return the asset in HALF the loan period,,,, and update it,,, WHY,, cause you can,,,,its obvious,,, spend 30k on a new 4b,,, interest free of 2 yrs,,, update in 12-18 months and your trade pays out the balance of your loan,,, AND you have equity to buy another vehicle ON THE SAME TERMS,,, you beat the depreciation loss due to the age/low k's/and general condition of the asset,,,AND YOU STILL HAVE THE ORIGINAL 30k IN THE BANK,,,,,,,,still following???

4. PRE APPROVED ASSET FINANCE,,, i can approve a loan for you to say 5,,10,,15,,or 20k,, approval now,, to spend when you require,,,,,,normally there is a 60 day update on your Baycorp file required only,,,,first payment falls due when you sign contracts,,,, or have a loan structure as above (interest free) and use when you require

this is just 1 avenue that finance companies have,,,,a lot do not advertise it,,, due to cost,,, but please understand a very important fact,,, i represent to our primary lender a total of 3.5 million on average a month,,,(thats over the entire dealerships),,,to put it plainly,,i call the shots on what we decide to do with the packaging/structuring of our advertising,,,after all,, theres not many (if any ) banking institutions that can make the same claim of monthly writings in car finance per month!!!!!

as a footnote,,, the interest free style structure does have a qualifier,,, (asset backing),,, the pre approved loan doesn't

choppa,,,,,,,,,,,,,,,that'll be 85 dollars thank you

4.

[lippa]

85 bucks................your the cheapest buisness manager around!!!!! ford credit can get stuffed next time!!!!!!!!

[choppa]

rereading my post above,,, part 3 has a bit missing with regard to trade vs payout,,, this wasn't done intentionally,,i've just noticed it,,,, but you get the drift,,,,

this is how ""most"" high users of vehicle buyers ""structure"" there loans,,,, and why ALL business managers have difficulty trying to take over the customers business,,

picture the ABC CAR RENTAL CO,,, purchase 10-20 cars each 12 months,,, most of these businesses dont even worry about servicing the cars to avoid additional costs,,,, and most are on either guarenteed buy back structures or loans as pointed out above,,,

now you know where ""programme"" cars originate that you see advertised!!!!!!!!!!

[lippa]

ummmmm...... program cars=ex renters, that 85% of my trade there uncle chop chop. and ya right, the dealer who buys, cops the reco bill, as the rental companys don't spend one red cent on 'em.

[ShaneC]

Costs a mint to buy new I know, but at least I can get it serviced and look after it properly. If you buy new at the right price, you can minimise the loss (unless you buy a V6 Camry!!). Hilux on Friday apparently, better have a 10/06 plate or I don't want it..... I will post a pic. Everyone give it to me, feel free, but geez its great to have a new one. I will keep this one for 10 yrs (my average is three yrs, I hope Toyota dont go too mad and make em more powerful soon!!), so the mrs is happy. And its an auto so she can drive it. Just waiting for her to fill it with ULP.... not too good for a TD. No hassles, keep it serviced, look after it and still get good dosh for it in two (I mean 10) years......

I know I will lose money on it, I cant write it off business wise, but thems the brakes hey. Will get plenty of family enjoyment out of it, and like they say, thats priceless!!!!

Shane

[Poodroo]

Little did I know that this thread was going to provide me with such great and priceless information. I have learned a lot from you all. Thanks uncle chop chop for sharing your wealth of knowledge with us. Hey I may need to get in touch with you soon if Mud Island keeps whispering my name in the night. I may need to give in and come see you.

Poodroo

[Mr__Bean]

Shane,

It sounds to me like you know what's important.

ENJOY!!!!

- Darren

[Tangles]

Ok Choppa heres my situation.. feel free to advise as i will admit i have read the posts and now suffer from a little 'brain fade/confusion''.

1. I own a business with 3 others. ( i dont touch the finances, only the creative stuff)
2. Looking for a 4WD ( originally a new car which i would prefer)
3. Have pre-approval for up to 65K by Westpac for it (apparently lasts for 90 days)
4. Now seriously looking at 2nd hand market, looks like a lot of nice late model low mileage Patrols/Landys around 30-35K, found a few i like, want to buy soon.
5. I want to spend around 5K fitting it out for camping/touring etc
6. Some-one at work says get a novated lease?
7. Its not a business car, its for me.
8. Also says get the dealer to wack an extra 3-5K on the price and they pay that back to me to get the extra gear, says most dealers will do this. I have cash in bank i dont really want to touch, so i want to finance the accessories as well. Id rather see if i can the finace for the car plus around 5K myself, seems straighter.

So Choppa as a bloke who speaks some sense, what do you reckon? and im not stuck on the idea of Westpac finance if you ge my drift?

cheers
Mike