As financial sector professionals our Jade Caravan Finance team was watching intently to the Treasurer's annual budget announcements, both prior to the official release and in the formal bringing down of the budget in Parliament on 6 October. We swiftly brought our customers an overview of the inclusions relevant to the lending sector with a general article. Now we can focus more on what key elements of the budget may mean to your caravan loan. Whether you have an existing loan, a pre-approved loan, have a loan application being processed or are planning to apply for a caravan loan soon, we’re covering possible scenarios for your general information and to assist you with planning your caravan purchase.
Review and Update
Focussing specifically on personal income aspects, we bring you up to speed on what happened, how it unfolded and where we’re at with the 2020/21 Federal Budget:-
- The Federal Treasurer brought down the Budget on 6 October
- The Budget included bringing forward Stage 2 of the Tax Plan announced in the 2018 Budget from the original 1 July 2022 commencement to 1 July 2020
- Stage 2 includes increases to both the 32.5% and 19% tax brackets which provide approximately 10 million workers with tax cuts
- The Budget Bill was fast-tracked and passed by the Senate on 9 October
- The ATO proceeded to update the relevant tax schedules which were available for businesses to download and access by 13 October
With all the official processes in place, the tax cuts should be flowing to eligible tax payers. As the tax cuts were back-dated, the difference between the tax you actually paid and the lesser amount of what you should have paid with the new rates, covering the 1 July to October period, will be reconciled in your 20/21 income tax return.
So that’s the background, now for the details on how these tax cuts and your resulting increase in net income, if eligible, may play out in relation to your secured caravan finance.
Your Caravan Loan and Your Tax Cut
A tax cut or decrease in the income tax rate results in more money in the pay packets for those eligible and in finance terms that is your net income. Net income is your earnings and that is relevant to lenders when you apply for finance. It is considered in relation to your expenses when your loan application is assessed. Essentially this reflects your ability to service a loan.
The impact on your loan of an increase in net income, that is the result of a decrease in tax payable, will vary across the different phases of a caravan loan. We’ve portrayed a number of typical scenarios to explain possible outcomes and any action required.
- Current caravan finance contacts. If you already have a caravan loan arranged through Jade Caravan Finance, no action is required on your part. We arrange loans for our customers with fixed components – repayments, loan term and interest rate – and an increase in your net income will have no bearing on these. A Secured Caravan Loan does however allow you to make additional payments if you choose. In this case, use your tax cut to pay off your caravan finance faster.
- Pre-arranged caravan loans. If you have not yet proceeded with your caravan purchase with your pre-arranged caravan loan, you may wish to contact your Jade consultant. This is optional. If your increase in net income is significant you may choose to request a higher repayment amount and have the existing pre-arranged offer amended accordingly.
- Caravan finance deals being processed. We offer fast approvals but there may be people that have a loan application currently awaiting an offer/approval based on the income before the new tax cuts came into effect. This increase in your net income may improve your loan application so you may like to contact your Jade consultant and advise of the change.
- Recent finance application rejected. If you recently had a loan application rejected based on income not credit or other issues, you may wish to contact Jade and discuss the possibility of re-applying if your income has significantly increased due to the tax cuts.
Applying for a New Caravan Loan
One of the advantages of receiving a reduction in tax and the resulting increase in our pay packet is the possibility of moving ahead with purchasing something we’ve had in mind for a while. For you, that could be finally buying a caravan, camper trailer, RV, motor home or any other type of recreational vehicle.
As key finance lenders in the leisure lending sector, Jade Caravan Finance can provide better interest rates and cheaper deals on caravan finance for a wide range of both new and used vehicles. With our fast approvals and prompt settlement process, we have the ability to get you organised and hitched up quickly and efficiently.
To discuss your options for caravan finance, speak with a Jade Caravan Finance consultant 1300 000 003
DISCLAIMER: THE DETAILS, INFORMATION, DATA AND MATERIAL PRESENTED IN THIS ARTICLE HAS BEEN SOURCED, IN FOOD FAITH, FROM REPUTABLE SOURCES IN THE PUBLIC DOMAIN. INFORMATION IN RESPECT OF GOVERNMENT ANNOUNCEMENTS, POLICIES, PROGRAMS, MANUFACTURER’S GOODS AND SERVICES AND OTHER SUBJECT MATTER IS OFFERED FOR GENERAL INFORMATIVE PURPOSES ONLY AND NOT IN ANY WAY INTENDED AS A SOLE SOURCE FOR THE PURPOSE OF MAKING FINANCIAL DECISIONS. NO LIABILITY IS ACCEPTABLE FOR ANY ERRORS OR MIS-INTERPRETATION OF FACTS AND MATERIAL. IF A PERSON CONSIDERS THEY REQUIRE FINANCIAL ADVICE IN REGARD TO THEIR SPECIFIC AND INDIVIDUAL CIRCUMSTANCES, THEY SHOULD SEEK INDEPENDENT ADVICE FROM A FINANCIAL ADVISOR.