In 2010, the Australian automotive industry had its second biggest year in auto sales. The Federal Chamber of Automotive Industries stated that a total of 1,035,574 cars were sold.
This could be in part due to the attractive financing options that are available to Australians. Low interest rates and new types of consumer loans have proven to be hard for consumers to resist. There are many of different options for consumers when it comes to obtaining a car, including low rate consumer loans, Commercial Hire Purchase, leasing options, Chattel Mortgages, and more.
A vehicle may be financed through traditional banks, with varying interest rates dependent upon the consumer’s credit, and the loan can be paid back over time up to usually six years. Lease options are also available; the consumer makes ‘lease payments’ (essentially renting the vehicle) and usually there are mileage and usage limits in place, and usually there is an option to buy at the end of the lease, where a consumer can buy the vehicle outright.
Commercial Hire Purchase, generally referred to as “CHP”s, is a financing offer where a finance company buys a vehicle for a customer and then allows the customer to have custody of the vehicle based on a contractual payment plan. The client owns the vehicle immediately after making the last payment , and this offer is attractive because of this combined with its usually low financing rates which are due to the loan being secured by the vehicle itself. Payment plans are flexible, ranging from two to five years. Another attractive feature is that the payment amounts are set for the future of the loan. In order to qualify for this type of loan, consumers generally must use the vehicle in order to generate income. There are also tax benefits.
Similar to CHPs, Chattel mortgages are for businesses, from sole proprietors to large corporations, to finance one vehicle or several, granted the vehicle will be used at least fifty percent of the time for business purposes. Different from CHP’s, the vehicle is owned from the beginning by the consumer, and payments are spread out over the vehicle’s future. This option is attractive because of the payment options and no large deposit is required when purchasing. Also, decisions are made quickly, and there are no ‘early termination’ fees. This option also has tax benefits.
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