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3 months ago

One Car Group

STOP throwing your money away on Car Ownership

Owning a car with no ability to claim a tax deduction is in essence owing a liability 🙁

Australians have a passion for cars. We have a high number of them on the road and a preference for travelling via car as oppose to other forms of transport (e.g buses and trains).

Our passion for car ownership is where we fall down. Cars are rapidly depreciating assets and unless we rent them out to generate an income they can only be looked at as a liability.

As an example, a Mazda 3 Neo Hatch with a drive away price of $23,490, driven 300 kilometres a week, financed over 3 years has the following costs per YEAR:

-$8,900 for financing on a secured car loan
-$1,450 in fuel
-$850 for registration & CTP
-$1,100 for comprehensive insurance
-$930 for servicing, repairs, tyres and roadside assistance
PLUS add the cost of your road tolls

So around $13,000 of annual costs per YEAR for three years plus your road tolls (hopefully no parking fines or other infringements).

At the end of three years if you decide to trade in the Mazda 3 then you could expect to get back around $13K for a trade-in or if you keep the car then you are up for higher running costs in the form of brake replacements, higher servicing costs and other things that may go wrong.

Leasing – the Americans Love it

Avoiding the pitfalls of car ownership in America is achieved via leasing a car. Leasing has been “a thing” in the land of the free since the 1950’s but very few in Australia understand that we have our own version in Australia.

Leasing a car in the US of A is big business. Around 4.3 MILLION cars (28.7% of new car sales) were leased by Americans in 2016 up from just over 1 million in 2009. One of the key drivers of leasing is that customers don’t want to be left with an outdated car after 3 years, just like they enjoy upgrading their iPhones and Samsung phones. Also with a lease the finance company is the owner. The younger car drivers of America would rather put the depreciation of the car on the finance company rather than carry the cost and risk.

The Aussie version of leasing – Novated Leases!

We have to be similar but different to our friends in North America 🙂

Back in the 1990’s the Novated Lease was born. It is a way of getting a tax deduction on the finance and running costs (e.g. fuel) for your car. Terms can be 1 to 5 years with the most popular term being 3 years.

The tax deductions (GST and income tax) and lower finance repayments achieved via structuring mean the cost of “owning” a car are vastly reduced.

Example – using the same Mazda 3 Neo Hatch
The cost of running a Mazda 3 Neo Hatch (same as the one in the example we provided earlier) would be $8,500 with a novated lease compared to $13,000 using a secured car loan. You save around $4,500 per year.

At the End of A Novated Lease

Using the same example of the Mazda 3 the trade-in value is around $13,000 and the amount owing to the finance company is around $11,000, so when you trade in the car and upgrade you can earn a $2,000 tax free profit.

Overall you save $4,500 per year for 3 years and bank a $2,000 profit on trade-in.

Net result is you have $15,500 more CASH in your bank account using a Novated Lease 🙂

OK to be fair if you use a secured car loan, you own that rapidly depreciating Mazda 3 which you can try and sell on Carsales.com.au along with 200,000 cars that are listed for sale. Have you ever experienced the frustration of trying to sell your used car?

So STOP throwing money away on car ownership and look to get into a car which saves you a ton of CASH.
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3 months ago

One Car Group

Budget ONE and Fuel Cards

All businesses should adopt an approach to the management of their fleet of motor vehicles beyond the controls that are provided by their accounting system. Accounting systems such as Xero, MYOB, Quickbooks and the larger enterprise accounting systems do not have sufficient controls for the management of motor vehicles. Invariably this leads to a lack of control and understand of the costs of each vehicle in their fleet.

Outsourcing the fleet management of motor vehicles is a well worn path with the larger organisations in Australia. A quick search online you will find a significant number of outsourced fleet management providers that take care of:

- Fuel
- Tolls
- Servicing
- Repairs
- Tyres
- Registration
- CTP
- Roadside assistance

The fleet manager also provides monthly reporting of the expenditure on each vehicle to the customer understands what the cost to run their motor vehicles is over the life of each vehicle.

The FIVE top reasons why Budget One with our fuel card(s) is a way to manage from one to 100 motor vehicles:

1. Fuel card(s)

With a choice of one or two fuel cards your fleet drivers will have coverage in all locations that they use your vehicles. Fuel cards eliminate the need to use credit cards and reconcile the credit card statements each month. Saving you tonnes of administration and ensuring that the costs on the fuel cards are only for the nominated vehicle. You can also elect to have roadside assistance added to your fuel card for cars, utes and truck.

2. E-Tags and Tolls

There is no need for a deposit for the e-tag and tolls are charged to One Car Group and then allocated to your business vehicles each month. Our process also avoids you having to process toll company invoices as they are rolled up into the One Car Group invoice with all other costs of your fleet vehicles.

3. Fleet pricing

Through our partner Caltex, your business will enjoy the benefits of pre-approved servicing, repairs and tyre replacements at fleet discounted parts and labour rates. The process of pre-approval ensures that your fleet vehicles are not “over serviced”, claims under warranty are correctly captured and you enjoy the fleet discounts.

4. Removal of Administration

The Budget One product removes a huge amount of monthly administration including processing:

- Reconciling credit card costs for fleet vehicles
- Toll invoices
- Roadside assistance invoices
- Registration renewals
- CTP greenslip renewals
- Servicing, repairs and tyre replacements

The time freed up by removing the administration can be used on more productive tasks.

5. Budgeting – we do the heavy lifting for you

Our Budget One service is budgeted on a weekly, fortnightly or monthly basis. As such we invoice you the budgeted amount as agreed for each vehicle on one invoice and as we incur the costs for running each vehicle they are expensed against the budgets. Each month we provide a report of the costs incurred for each vehicle so that you can understand what the life to date costs of all running expenses for each vehicle.
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3 months ago

One Car Group

Cover the GAP – Guaranteed Asset Protection Insurance

If you have finance on a motor vehicle then you may wish to consider Guaranteed Asset Protection (GAP) insurance.

If your car is written off; arising from an accident, flood, fire or theft then your comprehensive insurance will either replace the vehicle or payout the agreed or market value of the ca
r.
Many comprehensive insurance policies do not have a new for old replacement policy and if this is the case for you then your will get a cash settlement of either the agreed or market value.

If the comprehensive insurance payout is less than the outstanding balance on your finance, then you face a potentially large expense to settle the loan with the financier.

So, what does GAP insurance cover?

GAP insurance is protection helps cover you from a shortfall between your finance payout and insured value of your vehicle if it is written off. The trigger for a claim on GAP insurance is the full payout on your comprehensive insurance policy for a total write-off.

The level of cover depends on what you choose and can range from $7,500 to $30,000.

There is normally no excess on a GAP insurance product.

Example of GAP Insurance cover in the event of a total write-off

A vehicle is a total loss due to an accident, fire or theft.
$25,000 is still owing on the finance borrowed, yet the comprehensive car insurance payout for the agreed or market value is only $20,000.

GAP insurance can cover the $5,000 shortfall owing to the finance company.

How do I get GAP insurance coverage?

By paying a once-off premium, GAP insurance can provide you with peace of mind for the life of your car finance. You have the option of paying the premium as an upfront lump sum or adding it to the finance on your car (only available on commercial finance products).
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3 months ago

One Car Group

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3 months ago

One Car Group

Chattel Mortgage Balloons Explained

If you are financing a car with a chattel mortgage you may choose a balloon structure rather than paying down the loan to zero.

What is a balloon structure?

At the end of the term of the chattel mortgage (12 to 60 months) you can opt for a balloon which is a lump sum due at the end of the financing term.

As an example, lets assume you are purchasing a new Toyota Hilux SR5 ute which has a drive away price of $60,000. Below are examples of the monthly repayments of financing with and without a balloon over a 4-year term assuming an interest rate of 7%:

• No balloon - $1,478
• 40% balloon - $1,002

So, the balloon structure reduces your monthly repayments by $476 or $22,848 lower repayments over the 4-year term.

If I choose a balloon structure what do I do at the end of the financing term?

At the end of the term of the chattel mortgage you have the following options:

• Payout the balloon and there is nothing owing on the vehicle
• Refinance the balloon to pay it down to zero (subject to approval by the financier)
• Sell the vehicle privately and pay the balloon off with the proceeds
• Trade the vehicle in and the dealer will pay off the balloon

Is balloon structuring a smarter way to finance a business vehicle?

Yes. Cash flow is important for a business and using a sensible balloon structure for the vehicle financing will ensure you keep the repayments lower and at the end of the term you have options to quit the vehicle or refinance.

What is a sensible balloon for a chattel mortgage?

The answer is found in the term of the chattel mortgage and the vehicles historical trade in valuation.

As an example:

• 4-year term – financier maximum is 40%
• 4-year old of the same make and model trade-in value is 45%
• Therefore a 40% balloon is probably a sensible balloon structure for a 4-year term

Ultimately the value of your vehicle at the end of the term is heavily dependent upon:

• Make and model – market perception of it being a good vehicle
• Kilometres travelled over the finance term
• Maintenance history
• Damage to the vehicle

If your vehicle has higher kilometre usage and is working in tough conditions, then it is prudent to choose a lower balloon to avoid a gap between its balloon payout and market value at the end of the chattel mortgage term.
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