Consumer Loan

A Consumer Loan is a finance arrangement where an individual borrows funds to purchase an asset and the financier secures the loan against that asset.

How does a Consumer Loan work?

Under a Consumer Loan, the financier provides funds to purchase an asset and the customer takes ownership of the asset from the time of purchase. The asset it used as security against the funds borrowed. Once the loan is fully repaid, the financier removes the security hold over the asset and provides the customer with clear title over the asset.

Benefits of a Consumer Loan

• Flexible loan terms (from 12 to 84 months depending on the asset)
• Deposit is optional (via cash or trade-in asset) but is not required
• Repayments are fixed over the term of the loan
• Fixed interest rate
• Structure with/without a balloon payment at the end of the loan term to suit your budget
• Lower interest rates than a Personal Loan as the finance is secured against the asset
• Compared to adding the vehicle to an existing mortgage loan, a Consumer Loan ensures you make regular payments over a period of 12-84 months, instead of spreading your vehicle repayments over the life of a home loan (for a period as long as 30 years). Avoiding this can save you many thousands of dollars and stop you paying many times the asset’s purchase price in interest payments.

Is a Consumer Loan suitable for me?

A Consumer Loan is typically suitable for individuals where there is little or no business use of the asset and it does not form part of a salary packaging arrangement.

Individuals with majority business use of the asset may also consider a Chattel Mortgage or Commercial Hire Purchase (CHP). Alternatively, a Novated Lease may be suitable where the individual’s employer offers a salary packaging program.

Tax Implications of a Consumer Loan

Where the asset is used solely for private purposes, there are no tax implications related to a Consumer Loan.

Where the asset is used for business purposes, tax deductions for asset depreciation and running costs may be claimable according to the customer’s percentage of business use or chosen method of claiming a deduction.

Disclaimer: We recommend that prior to entering any finance arrangement that you seek independent financial advice. The information contained herein is of a general nature only and does not take into account your personal circumstances. Southgate Financial Services Pty Ltd, its agents, employees and lenders accept no responsibility for any loss that may arise.