From 1 July, many wage earners started receiving more in their weekly wages thanks to the latest round of tax cuts. If your plans for your additional income include buying a new boat, car or motorbike with finance, there are steps you can take that may improve your prospects of a better outcome.
As experts in consumer credit, Jade Finance provides tips on how to use extra income from tax cuts to get approved for a better car, boat or motorbike loan.
Use Tax Cuts to Pay Off Current Loans
While a new loan is the objective, many current loan holders may benefit from using any additional income to pay off their current loans. Most consumer loans for goods such as boats, cars and motorbikes allow for additional payments to be made. That is, as well as the scheduled monthly payments.
Paying extra against current commitments may reduce the total interest, have the loan finalised sooner, and build up more collateral in the goods under finance. Collateral that may contribute to a better offer when applying for a new loan.
The additional collateral may allow for more of any trade-in to go towards the new car or boat, rather than finalising the existing finance. A lower loan amount would then be required for the new goods.
Use Tax Cuts to Improve Credit Score
Good credit scores and profiles are critical to being offered the lowest interest rates and higher loan limits. Lenders assess the applicant’s financial position on credit reports to see the current debt levels when setting credit limits and making rate offers.
This position may be improved by paying down any current debts such as credit cards as well as loans. A lower level of debt and with the now higher nett income, improves the overall individual balance sheet. Lenders may be prepared to approve a higher credit limit, allowing a better motorbike, boat or car to be purchased with finance and less required for a deposit.
This action may improve the individual’s credit score which may result in lender’s making lower rate offers. Reducing the total cost of the new finance, the repayments and the goods. To see what you may be able to do to improve your individual credit profile, refer to the information provided on Moneysmart.
Use Tax Cuts to Increase Deposit and Reduce Finance Required
This next tip is more of a medium to longer term action and involves saving that extra income from tax cuts to save for a bigger deposit on the new goods. It may sound boring to some, especially for buyers keen to get to the showroom and start test driving. But being a little more patient may result in a better finance outcome for that new bike, boat or car.
Having funds in savings improves the individual balance sheet as noted above. Those savings may also be used as a downpayment which reduces the amount needed to finance the new goods. This can ultimately result in those new goods costing you less.
A lower loan amount means less interest accrued over the term of the loan, which means that new car, motorcycle or jetski has cost you less. Not to mention lower monthly payments which may allow more of those tax cuts to spend on other treats. Worth thinking about? Use our Finance Calculator to obtain estimates on how different loan amounts change the monthly repayments.
Use Tax Cuts to Upgrade to a Better Model
That increased income may allow buyers to start considering a better model or change plans from buying a used vehicle to buying new. Buying new goods can have potential benefits in reduced servicing costs over the ownership cycle; attracting lower rates on finance for new opposed to used goods; and using the goods under finance as security for the loan. Quality used goods may be accepted by lenders as suitable finance collateral, but this is subject to individual lender decisions.
Loans for new and used goods can differ. Buyers are advised to review the features of our secured and unsecured loan products to see which is best for their individual circumstances.
Services and Resources to Plan Purchases with Financing
To assist buyers with deciding how our tips may potentially benefit their new loan prospects, we provide a handy financing calculator. This tool can be used to calculate repayment estimates based on different loan amounts, different loan terms and at different interest rates.
If generating estimates for loans planned say in a few months’ time, be mindful that applicable rates at the time the application is made may differ from current rates. Lenders can change their rates if the Reserve Bank makes changes to the cash rate.
All buyers requiring the best financing on motor vehicles, motorbikes and boats can use our expert services to source their loan. Our expert brokers source the best rates from across our vast lender market, handle the negotiations, assist with the paperwork and settlement.
If in the market for car, boat or motorbike finance with your new tax cuts, contact Jade Finance on 1300 000 008 for a quick quote or apply online.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.
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