Vehicle purchase

[ians]

My van is paid off and i need to upgrade, to a bigger van, the caddy is just tooo small for the construction side of the bussiness. My plan is to keep the caddy for the specialised testing services.

I am considering an H1,2.7 diesel, very difficult to find, or a VW crewcab,2.5 lt both should be VAT deductable. Anyone have any good or bad things to say about these vehicles?

Dont want to get into HP debt again, but for tax and vat reasons it might not be a bad idea to make a purchase.

[Blurock]

One should not pay unnecessary interest, but with interest rates as low as it is, it may be better to go for HP and keep the cash in your business. Your business should be able to generate a higher return than the interest the bank charges. (Opportunity cost). The interest is tax deductible any way.

Once you have spent the cash you can't get it back. We all know how important cash flow is for a business.

[flaker]

Do keep in mind that you may claim vat that has been paid on the purchase price, and when you sell a few years down the line, you would pay back the vat at the selling price.

[ians]

Thanks for reminding me, i think i will just keep the caddy van for fishing.

[Woogie]

Hey guys! I am new to this forum. I just bought a Hyundai i20, their new 1,2 model. I am very proud, I do not have the car yet, I am getting it tomorrow or Thursday. For the first time in my life, I will be driving a brand new car. a 2013 model also! But that aside....

To afford the car, I took a 30 residual. I have never liked a residual but I did it any way. My question is. while that 30% residual is sitting there, does it accumulate interest over and above the total interest that I pay? And can I pay extra a month to reduce the residual?

[Blurock]

To afford the car, I took a 30 residual. I have never liked a residual but I did it any way. My question is. while that 30% residual is sitting there, does it accumulate interest over and above the total interest that I pay? And can I pay extra a month to reduce the residual?

A residual is something that you take when you can't afford the car, but you'll take it any way. You are lucky that the interest rates are currently on a low, but it could be damaging when interest rates rise again.

Interest is calculated on the total outstanding amount, but you only service 70% of the debt. The rest accumulates and you will be sitting with a debt of R43, 470 at the end of the term. You will then have to refinance this amount and pay even more interest.

The difference in repayment is roughly R600 per month, so is it really worth it? Paying more per month will not reduce the interest as the bank will not recalculate the interest on ad hoc payments.

Buying a new car may not be such a good idea after all. You could have bought a 1600 demo with extras and 6500km on the clock for R149k.

[Pap_sak]

My van is paid off and i need to upgrade, to a bigger van, the caddy is just tooo small for the construction side of the bussiness. My plan is to keep the caddy for the specialised testing services.

I am considering an H1,2.7 diesel, very difficult to find, or a VW crewcab,2.5 lt both should be VAT deductable. Anyone have any good or bad things to say about these vehicles?

Dont want to get into HP debt again, but for tax and vat reasons it might not be a bad idea to make a purchase.

Might also be worth looking at the Dahatsui Gran Max - also a one toner with drop sides - but a bit shorter that the H1. The Gran Max has a tiny turning circle, great for parking and think it would make a better inner city delivery van - the H1 would probably be the better "construction" van.

Had my Gran Max for over a year now and very happy with it.

[IanF]

Hi Woogie
My daughter just bought her first new car as well, an i20. What she loved it was on her own with no surety from dad. What we did establish is you can pay in extra on your monthly payment, so when you can pay in extra. As for the residual I would guess interest is factored into the residual so paying off extra should reduce total repayments. But check carefully with the dealership.
Anyway congrats on your new car enjoy it.

[ians]

Well i have decided to go for the VW crewcab, 2.5 diesel, second hand, waiting for finance approval, that could be interesting. I hear i can claim back the vat.

Thought about getting a bakkie, but after owning a caddy panel van, i dont think i will ever buy a bakkie for bussiness use ever again. Since i started my bussiness i have always just bought bakkies, because everyone buys bakkies. I hear if you are involved in an accident with staff in the back of a biakkie or the back of a panel van without seats, it could be rathetrtricky trying to claim from workmans compensation.

H1 has proved to be a challenge trying to find a 2.7 diesel, the other problem apparently is when the service plan is finished.