Tag Archives: purchase
Vehicle Leasing
Some people find it difficult to commit to purchasing a vehicle; when the deal is final, the buyer is obligated to paying on the vehicle for the next 5 to 7 years depending on the terms of the loan. Vehicle leasing is the solution to this; you do not have to be locked into the purchase. Leasing is, in a way, renting something.
When you participate in vehicle leasing, you are borrowing the car for a said amount of time. A car lease is similar to a rent-to-own real-estate deal. You pay monthly on the car and after about 3 years, you have the option to buy the vehicle or a specific sale price. If you decide against purchasing the vehicle, you are not penalized. The dealer will take the car back, and either, sell the vehicle as a used car, or take it back to the auction. You are then free to purchase or lease another vehicle from that same dealership, or a different one.
There are many options available for people wishing to get a car lease. Not all are the same you have to choose the one that is right for you. There are some very great deals sometimes, for instance: lightly used cars, rental cars that have been sold, and fleet vehicle leasing. The price is substantially reduced because the car is used but most are still in tip top shape. In fleet leasing, a company that is upgrading the cars they purchase for mobile employees, sells the old, used cars at a serious bargain. These cars are very lightly used and typically are of very top end models.
Typically, a car lease such as a car lease in Sydney, offers a type called a novated lease wherein there is a great benefit of reduced tax for participants. This is done through a process called “salary packaging” a vehicle. Basically, the lender attaches the monthly leasing payment to the borrowers payroll. The borrower is then vehicle leasing through automatic deductions from their payroll. Also, this is done on a pre-tax basis, therefore reducing the amount of money the employee/borrower is required to pay taxes on. The novated lease is a great opportunity to save a lot of money!
Vehicle leasing is a smart choice for a customer who does not want to be stuck with a car that he/she no longer wants a couple of years down the road. It is great because the participant gets a new car every 2-3 years. This is a very attractive and popular choice for businessmen/businesswomen that travel for work. Some employers will actually pay for the leased vehicle, leaving the employee without payment obligations.
Another great feature about a car lease is that repairs are usually covered. Typical maintenance and light repairs are usually discounted substantially and sometimes no charge depending on the plans available.
Leases can be very convenient and many people worldwide lease, instead of purchase their vehicles. It is always good to weigh the options and get a clear picture of the vehicles total cost. Either way, you will be under contract for a certain amount of time. Therefore, it is best to find a deal you can afford and feel comfortable with paying.
Common Loans Used To Buy Real Estate
For most home buyers, especially first time home buyers, shopping for a home can be stressful and confusing. Many times the most confusing part of the home buying process is understanding the different types of loan options that are available. Here is an overview of the most common loans buyers use to purchase real estate.
Conventional Loans
Conventional loans are loans that use Fannie Mae and Freddie Mac guidelines in order to make the loans conform with respect to Loan to Value (LTV), borrower credit scores, borrower income requirements and minimum down payment amount. Conventional loans allow a minimum down payment of 5% and are generally utilized by home buyers with excellent credit. Mortgage origination fees with conventional loans are less than government insured loans like FHA and VA loans. Conventional loans allow the home buyer to receive a sellers assist ranging from 3% -6% of the purchase price depending on down payment amount.
FHA Loans
FHA Loans are loans backed by The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD). FHA does not lend money but rather insures the loan against default by the borrower. Since the disappearance of the no money down loans FHA loans have become increasingly popular because their 3.5% down payment requirement is the lowest of all loans currently available to most home buyers. FHA loans are generally utilized by home buyers who cannot qualify for conventional mortgages because FHA loans offer more flexibility with respect to down payment amount, credit score, debt to income (DTI) ratio and other important loan qualification variables. FHA loans charge an upfront mortgage insurance premium (MIP) which makes FHA loans origination fees significantly greater than conventional loans.
VA loans
VA Loans are available to borrowers who are serving or served in a branch of the US Military. VA home loans are overseen by the U.S. Department of Veterans Affairs and allow the home buyer the opportunity to purchase a home with no money down (100% financing!) provided 1) the home appraises and 2) the seller pays all closing costs. There is no PMI on VA loans but the VA charges an upfront VA funding fee which can be rolled into the closing costs. Veterans seeking to purchase a home with a VA loan must still prove sufficient income, credit and cash reserves.
ARM
An adjustable rate mortgage or ARM, also called variable rate mortgages, is a loan where the interest rate is not fixed but instead varies periodically. Interest rates on ARMs are usually linked to an index, like the LIBOR, and rates vary to reflect to the cost to the lender of borrowing money in the current credit market.
Home Equity Loan
A home equity loan is a loan where the borrower uses the equity in their home as collateral for repayment of the loan. Home equity loans are often used to finance major expenses like home renovations, unforeseen medical bills or childrens college education. A home equity loan creates a lien against the borrower’s house, and reduces the homeowners equity in the home.
Home Equity Line Of Credit (HELOC)
A home equity line of credit, also called a HELOC, is a loan for a set amount that is secured by the borrowers existing equity in the home. HELOCs differ from home equity loans in that the borrower does not necessarily receive the entire loan amount up front but instead uses a line of credit to borrow amounts that do not exceed the set credit limit. Money can be borrowed using HELOCs during the draw period which can be anywhere from 5 to 25 years and the monthly repayment minimum is usually a small, interest only payment. The full principal amount of the loan, sometimes called a balloon payment, is due at the end of the draw period.