We sat down with co-founder of Better Finance Sam Cavanagh to talk about all things vehicle financing. Better might not be the oldest firm in the game, but they are shaking things up, and as we found out, offer some unique products we didn’t know existed.
Hey Sam, thanks for taking the time to speak with us. Can we kick things off by asking if I can finance any vehicle, or are there specific criteria?
Sam: Most vehicles are acceptable to finance as long as they are road legal with WOF
and Registration. The only areas that become challenging is when a car has been modified, but this comes down to the profile of the customer, and we do finance many modified cars.
So financing something that is either a project or race car that isn’t road legal is going to be a challenge?
We require a client to have a WOF and Rego to use the vehicle as security, but when this is an issue sometimes the client has other assets, and we just use the other security to raise funds to help with the needs of the client. We can also use bikes, caravans, jet skis, and property as well.
How about if I find something in another country, say the USA. Is it possible to finance something like that?
We can only finance a vehicle when it has been registered here in New Zealand with our current facilities, but we do have relationships with another specialist in financing assets.
The car I want to buy is a limited edition and has an eye-watering price tag of $240k. Is that going to be an issue?
Getting an approval for a car is generally dependent on your ability to make the payments based on your current income. If you can afford it, then you can finance it. Last week we financed a 3.3M plane.
How much deposit do I need to cough up?
Almost all of our loans are currently financed with zero deposit, but from time to time it might be required. This is due to either uniqueness of the asset, or maybe the client profile, but it is not the norm.
How are the rates worked out — will I pay more to finance an older car?
The rate is determined based on a range of factors, and mostly it is based around a client’s credit rating, more than the age of the vehicle, but it does play a small part. Our application process is quick, and once we know the asset, we can easily come back and quote a rate before anyone agrees to move forward.
What types of security are accepted. Is it always attached to the car I’m buying?
We finance cars, trucks, boats, bikes, caravans, motorhomes — really anything that has a VIN number can be used as security over finance.
What pros are there to choosing vehicle financing over putting it on the mortgage?
About 35 per cent of the business we settle each month has a client who owns a property with a mortgage. The number one factor is speed and ease of use. I am sure we all remember how hard it was to get a mortgage, and it’s a similar experience to top it up. We make it simple and fast, which is what is often needed. Additionally, if you add it to the current loan you have, the term is often 25 to 30 years. This is a poor way to structure a loan for assets like this and potentially will cost you more in the long run. Our rates are extremely competitive with mortgage rates. Our rates start from 6.95 per cent, with mortgage rates floating up in the 5 per cent range.
Clients often use our finance to get the asset loan, and then maybe in the review of their mortgage a year or two down the track, choose to refinance into the mortgage or structure it correctly into the loan. We are about to launch a zero termination fee into the market which is unique to us.
We understand there is something called ‘cashraise’. What does that mean exactly, and how does it work?
Often a client needs cash for any number or reasons, to fix the deck, fix the car, new paint job, whatever the reason. We use the asset they already own and lend against it, so rather than financing to purchase the asset, we use existing assets to raise money.
So I could leverage the cars in my shed to buy more cars for my shed?
Yes, up to potentially 100 per cent of the value of the cars and this is done often.
How much is it going to cost me to sort finance?
There is no cost to the client to get pre-approved, so they can shop with confidence or determine if it’s the best course of action for what they need. But once they want to agree to finance, there are establishment fees between $300-$500, and then an interest rate starting from 6.95 per cent. If you do the loan in your personal name, interest is only calculated on a daily basis, so at any stage if you want to settle the loan early, you’re only charged interest on that period, so those costs can be reduced if you have the opportunity to do so.
If I find a car I like, how long does it take to get finance sorted and paid out?
If you applied for finance in the morning, we could have the funds with the vendor that night with a confirmation letter that day — so usually 24 hours. If we get the application at the end of the day, the funds will go into the client’s account within 48 hours, and that’s just due to funds always being paid out overnight.
Is this usually paid into my bank account, or direct to the seller?
Always direct to the seller. We settle over 1000 loans a month, so we understand how to work with the vendor and organise what we need. Often it’s a dealer, but we often deal with private sales situations as well
What are some of the typical roadblocks that slow the process down and how can I help the process run smoothly?
With recent regulation changes, we now require bank statements a lot of the time, however it appears that soon might not always be the case. We have a tool we use to speed up this process, so it’s not a hassle. But with that information and chatting to our staff, the process is pretty seamless. Often the process [is slow] only as the customer has still not determined what they want.
If I’m thinking about selling a car, can I pre organise finance on it for prospective buyers?
100 per cent — if you have a client looking and you want to help streamline the process. We often get clients referring us names to call. If you have a listing online, we can also add our website link and are happy to share the steps to make it easy to offer finance. If this is a regular occurrence as well, we have agreements with a lot of people where we pay commissions for referring us clients.
How is the value determined — is it book value, a valuation, or what I set it as?
Most lenders use tools like Redbooks or TradeMe to determine values of assets when refinancing, however if the asset is for sale online, very rarely do we question the listed price.
Thanks for your time Sam, if our readers wanted to find out more about your services, where should they head?
You can jump online to better.co.nz or give us a call on 0800 666 065.