The car sales and motor vehicle lending sectors are both big and highly competitive. Businesses want your business and they spend a lot on advertising to attract buyers to their products. Most car dealers and vehicle manufacturers have an arrangement with a finance company so they can offer both cars and loans to buy them. (We refer to this as ‘dealer finance’ and have addressed it in several articles. Tip: Ask Jade for a quote before committing)
One of the popular headlines used in motor vehicle advertising is NO DEPOSIT CAR FINANCE. Mmm, that sounds great. You can buy a car without having to dip into your cash reserves if you have any. For businesses, it represents the opportunity to retain their cash flow and receive the full taxation benefits on the full purchase price via the finance deal.
To many, this may appear a big deal. Is it a special deal or is it no biggie? Jade Car Loans is a significant operator in the motor vehicle lending sector and for us, the answer is – it depends. We avoid using fully encompassing wording as all car finance applications are treated on an individual basis. But in general, we can achieve no deposit finance for the majority of our customers.
Let’s dig deeper so you have a full understanding of what you may or may not be receiving.
Deposit v Deposit: Definition
By definition, no deposit finance means being able to get a personal car loan or business car loan for 100% of the purchase price of the vehicle. The differentiation, however, between a deposit to the seller and a deposit to the lender needs to be established
It is quite normal practice for a seller to request a deposit from the buyer when the decision is made to purchase a vehicle. If you’re at a dealership, new or used cars, the salesperson very often will ask you to pay a holding deposit so they can take that car off their books and give you time to arrange your finances. In the case of new cars, the dealers have to prepare the car with a pre-delivery process. In these instances, that deposit can returned to the buyer if the finance company covers 100% of the purchase price in your car loan.
Lenders, on the other hand, don’t request borrowers to pay them a deposit as such. With business vehicle finance and some personal car loans, the first loan repayment is required to be paid at the commencement of the contract, essentially upfront.
But there are exceptions and every application is assessed individually.
Personal Car Loans
- Secured Car Loans on new cars can very often cover 100% of the purchase price of the vehicle for borrowers with a good quality application.
- If you have a trade-in, this would automatically reduce the amount of the loan to less than 100% of the purchase price of the car and represent a deposit.
- Where individual lenders assess the application at a higher risk they may request the total loan amount be reduced by the borrower paying a deposit to the seller.
- With Unsecured Personal Loans for the purchase of motor vehicles, it can be expected that the lender would be unlikely to offer a 100% purchase price loan.
- Used cars are assessed based on price to value ratio and it would not be unusual for our lenders to ask for a deposit to reduce the loan from 100% of the purchase price.
- If you are offered a no deposit car loan by say a dealer, we advise studying the fine print to ensure there are no higher fees or charges or it has been priced at a higher interest rate to cover the lender for any risk issues. You can always request a quick quote from Jade!
Jade Car Loans is accredited with multiple banks and lenders so when we source your loan, we cover a lot of ground to ensure we’ve achieved the best and cheapest interest rate car loan available, especially when it comes to business car loan interest rates.
Business Vehicle Finance
- Most standard, fully documented business vehicle finance contracts arranged through Jade Car Loans will be for 100% of the purchase price of the vehicle. This would be concerning Chattel Mortgage, Car Leases and Car Hire Purchase.
- This allows the business to realise the taxation benefits of either the fully deductible lease payments or the depreciation of the vehicle, on the full vehicle loan contract.
- With Low Docs and No Doc Car Loans, it could be expected that individual lenders may request the borrower reduce the total loan from 100% of the purchase price of the motor vehicle. This would involve paying a deposit as such to the seller or dealer. If you have a vehicle to trade in, this would reduce the loan amount to less than 100% of the purchase price which may satisfy the lender’s request.
- Businesses also have the option of the residual or balloon element to reduce their monthly repayments.
Securing a No Deposit Car Loan
Jade Car Loans consultants work to achieve car finance deals, including sole trader car finance, that best suit our customer’s requirements. If your preference is for a 100% purchase price loan, then that is what we will seek to achieve for you. At Jade, no deposit finance is not a big deal, it is fairly much standard procedure.
Take-out: When you’re attracted to what sounds like great offers and special deals in finance, look closely at the fine print and always give Jade Car Loans a call for a quick quote to compare.
To discuss finance options for your new car, contact Jade Car Loans at 1300 000 003
DISCLAIMER: THE INFORMATION WHICH HAS BEEN PREPARED AND PRESENTED IN THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIVE PURPOSES ONLY. IT IS NOT IN ANY WAY MEANT TO BE USED AS THE ONLY SOURCE OF INFORMATION OR ADVICE IN REGARD TO FINANCIAL DECISIONS. IF YOU CONSIDER YOU NEED GUIDANCE, WE RECOMMEND YOU SEEK OUT A PROFESSIONAL FINANCIAL ADVISOR. THE DATA, DETAILS, SPECS AND OTHER MATERIAL PRESENTED ARE SOURCED FROM VARIOUS SOURCES AND NO LIABILITY IS ACCEPTED FOR ERRORS AND MISINTERPRETATIONS IN PRESENTING THIS INFORMATION.