Small Loans Australia :: Articles

7 things you need to know about a Hire Purchase loan

7 things you need to know about a Hire Purchase loan

There are seven things you should know before you ever think of getting a Hire Purchase loan.
Knowing these things will give you control and power in the loan process.
Power and control will will save you money
Most common type of vehicle and goods financing is through a Hire Purchase Loan product. This is for those who do not have the cash at the time or want to conserve their cash. They are able to buy the goods and pay them off over a period of a Hire Purchase Loan. The lender owns the goods until complete payment of the Hire Purchase loan are made &then the title is passed on to the person/s who paid off the loan.

Questions for a financial advisor.

Always make a point to ask your taxation or financial advisor on the effects of tax and cash flow management.
Do the  loan repayments and laon residual balloon payments include goods and services components?
Need Money for a Bike?
We offer fast, free, easy access to the best Bike Loan rates and options in the Australian market. Simply use our 3-minute Bike Loan enquiry form to see if you qualify … and you'll get instant access to our national Bike Loan broker network … for free advice and assistance through the approval process. No charge, no obligation!
For asset depreciation and interest deductibility are the assets effectively owned by me even though the title does not pass until the loan maturity?  
On a cash accounting basis for goods and services tax must I claim the goods and services tax component proportionally across the loan term?  
If I am on a cash accounting basis for goods and services tax are likely to be unsuitable for hire purchase loan? 
Should the goods and services tax I am going to pay be financed through a loan or should I pay cash for it and keep it out of the loan?

Loan term

Generally loans in hire purchase are for 12 to 60months.It is very important that you take into account the life of the goods you are buying compared to the life of the hire purchase loan.
How long will they last? Take a computer for instance.It is unlikely they will last longer than three years. So why would you take out a hire purchase loan for 5 years. Fit the term of the loan around the use by date of the product.
If you are given a 5 year guarantee on the product then you can go for the 5 years Hire Purchase Loan.

Supplier and dealer invoice the lender directly.

It is best that you shop around for the hire purchase and avoid using the retail stores package. 
Contact a Finance Broker for an introduction to the finance package you require.Once you have selected the finance provider,inform the retailer and they will bill the lender directly. That is all you have to do with the retailer.

Deposits and trade-ins can be used.

It is important to see the effect of a deposit or a trade-in on the monthly payments and the term of the Hire Purchase.
When you are buying ensure that you get a trade- in, look at what you can sell it for directly before you go to the seller.

Loan can be fully amortised or balloon payment factored in.

Generally you can either pay the loan out in equal payments.   This is called amortisation.
Alternatively you can make equal payment for all payments except the last one. The last one can be up the 50% of the total loan. This is called a balloon payment.
Be very careful and ensure that you have a good understanding of balloon payments. It is critical that you are can estimate the potential value of the goods you are buying in three or four years time at the time of the purchase.

Other payments structures such as seasonal payments are available.

Discuss your cash flows and have on hand the documents to prove what you saying. In these cases you will be surprised what a lender will be able to do to fit in with your household or business.
The golden rule: ASK!!
While it may state the obvious, many people get into financial difficulties by having multiple Hire Purchase Loan agreements running simultaneously. They are in effect loan financing the house or the business.
While credit cards are the primary destroyers today loans via hire purchase and personal loans are up there. You must be very aware of this and take responsibility to act conservatively when dealing with loans.
So what should you do? Do not take on more Hire Purchase Loans than you can safely repay!
Car Loans - Quick & Easy
If you are in the market for a new or used car, then we're in the market to help you arrange the money. Our car loan & leasing finance service is backed by a national panel of car loan specialists who will establish your eligibility, find lender/s offering the best deals for your situation - and help you through the approval and settlement process. No charge to you - and no obligation to proceed with any recommendations offered.
Compare Business Finance Rates & Options
If you are looking to grow your enterprise with a business loan, we can help you find the best Plant & Equipment loans, Cash Flow Funding, Commercial Property loans, Business Acquisition funding as well as Business Refinance and Consolidation Loans. No charge, no obligation.


Finance Articles
Why did my Credit Score drop - and how can I fix it?
Your Credit Rating (or Credit Score) plays a very important role in determining your eligibility to get a loan. Here we look at the reasons why your credit score may drop and some handy tips to avoid this problem. - read more
Business Loans: Managing interest rate risks
"I want the protection in the current low interest rate environment but I don't want to be locked in for too long a period" - a commonly heard requirement from business borrowers. - read more
Default and Reposession
Most people would assume that a default under a loan contract means that payments haven't been made but, as you are about to learn, there are other reasons why a lender may have the right to repossession. - read more
How to freeze the Plastic Debt Dragon in Your Wallet
Are you scared to open your wallet knowing there is a fire snorting dragon lurking in there? You don't need to be afraid of your credit card, you can make it your friend. Here is a plan to choke the dragon and replace it with a friendly furry critter so you can start creating wealth in your life. - read more
Double your Home Loan Deposit in half the time
Saving is never an easy thing to do and saving for a deposit on a home is twice as hard. However, with the right strategy in place, your savings can grow and grow, cutting the waiting time to your own home in half. - read more
7 things you need to know about a Hire Purchase loan
There are seven things you should know before you ever think of getting a Hire Purchase loan. Knowing these things will give you control and power in the loan process. Power and control will will save you money - read more
Balloon Payment Loans: 6 steps to make the loan profitable
Did you know that you can reduce the monthly payments on a loan to half of what they should be by using a balloon payment? Handled correctly, structuring your loan to include a Balloon Payment will increase your bottom line. Mishandled, a Balloon Payment can cause real headaches. Here are 6 steps to keep it smart. - read more
Credit Card Secret Guarantee
Most people use credit cards in some form or another but few truly appreciate one of the special features of credit cards that make using their credit card to insure their purchases. - read more
Personal Loans And The Consumer Credit Code
Understanding your rights as a consumer is essential in dealing with complex issues like personal loans and other finance. Here we reveal, in simple terms, how the Credit Code works for you. - read more

Finance News

Personal Loans to help Australians in need: FSO
Oct 29 :: As Australia prepares to clean up following devastating fires and floods, Financial Services Online CEO, Andrew Clark, has announced a package of personal finance solutions... read more

Small business loans to help Aussie businesses through tough times
Nov 27 :: Financial Services Online has today announced a new credit facility for Australian business customers who are seeking loans for amounts of up to $10,000 with minimum security... read more

Police issue warning about bank scam
Nov 20 :: Melbourne police are warning people about a scam in which fraudsters pose as bankers and ask for money.They say they cold call customers and tell them they have... read more

ANZ nets solid profit despite wealth management
Oct 26 :: ANZ banking group has reported a solid full-year result with net profit attributable to shareholders up 6 per cent to nearly $5.7 billion - but with its wealth management... read more

Millions lack access to basic financial services
Jun 01 :: Nearly 3 million Australians do not have access to basic financial products such as a credit card, car insurance or even a bank account, according to a private study.... read more

Reserve Bank leaves interest rates steady
Apr 04 :: The board of the Reserve Bank of Australia has left interest rates unchanged at 4.25 per cent at its monthly meeting today, as widely expected.The decision leaves... read more

Big banks not too profitable: RBA
Feb 25 :: The governor of the Reserve Bank says the Australian banking sector is not too profitable.Appearing before the House of Representatives Standing Committee on Economics,... read more

Commonwealth Bank changes ads following ASIC concern
Jan 16 :: The Commonwealth Bank of Australia has agreed to change some of its advertised loan comparison rates after concerns were raised by the Australian Securities and... read more

Inflation fall strengthens case for rate cuts
Dec 06 :: A leading unofficial measure of inflation eased last month due to falling food and fuel prices, strengthening the case for interest rate cuts next year.The TD... read more


Need Help Finding a Loan?
Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Debt Consolidation:
A means empoyed to renegotiate debt. By combining loans and outstanding bills, a person can consolidate debt with a single financial institution resulting in a single monthly repayment.


Quick Links: | Small Loans | Student Loans | Finance Australia | Quick Finance | No Credit Check | Payday Loan | $5000 Loans