TYPES OF LOANS 

There are many types of loans offered by lenders. Below we will describe the more common types of loans and a brief explanation. Rock Solid FS specialises more in the business and mortgage areas. We are still happy to assist with any questions.

 

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Business and Commercial Finance

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Rock Sold FS has specialist business loan brokers/ advisers that can assist you to guide you in comparing and applying for  business operating and commercial loan products from a diverse spreader of lenders. 

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• Cost-saving restructuring and consolidations

• Equipment and vehicle fiannce 

• Secured and unsecured lending

• Commercial property finance

• Cash flow lending

• Working capital solutions

• Business acquisition or expansion

• Overdrafts 

• Once of costs 

• Lending with ATO debt

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A part of the business is the identification and securing of opportunities and cost-saving planning. in most cases, businesses need capital to harness these ambitions. 

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Car loans

Don't get rushed into a loan or get sold on an interest rate when you are looking to buy a car. Here are some quick points why:

• We offer a free consultation or simply a chat which will give you peace of mind.

• Interest rate is commonly used as a marketing tool to get you in through the door not to save you money we can offer you a free quote and also happily educate you what you need to look out for.

• We have many clients that have been to a car yard and came to us as they were unsure about the finance they have been offered. We beat car yard finance by far and on an ongoing basis and proud of it. We survive on repeat business and referrals therefore client satisfaction is our upmost imortance.

• We cater for all types of leasing and chattel mortgages

• Fleet finance

• Agribusiness loans

• ​Young purchasers are most welcome as we take the time to explain and take the leg work out of finding and applying for finance

• ​We have a large amount of lenders on our panel

​Below are the different types of vehicle finance (please don't stress about this as it is our job to help you):

 

 

Personal Loan

The financier lends the customer the money to buy a new or used vehicle. It is the simplest of loans but you need to be financially sound and prepared for some extra expenses. It can be secured or unsecured generally the unsecured option attracts higher interest rates.

 

Commercial Hire Purchase

The financier buys the car and then hires it to the consumer over a set period. Can be for individuals and businesses. Monthly payments generally pay out the entire loan in the set period and the vehicle is transferred to the consumer when all payments are complete. CHP are not so common now as chattle mortgages.

 

Finance Lease

The financier/ lender purchases the car and then leases it to the consumer. This offers the immediate use of the car with little or no capital outlay. These leases are available for individuals and businesses where the car is for business purposes. The motorist pays fixed, monthly rental payments and is financially responsible for the maintenance and trade-in residual risk of the car. At the end of the lease period, the motorist is given the option to refinance, return, sell or buy the car for the residual amount.

 

Novated Leasing

A three-way arrangement where the employee's wage is reduced - salary sacrifice - in exchange for an equal value of vehicle benefits. The employee leases the car directly from the financier. The employer has the obligation to pay the financier through a novated deed on the employee's wage. All operating costs of the car - registration, insurance, servicing, tyres, etc - are covered by the motorist. The motorist has sole responsibility for the car on termination of employment.

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Operating Leasing

An agreement where the financier buys the vehicle and rents it to the motorist. The financier retains ownership of the car. The motorist has no risks associated with ownership, including the residual at the end of the period. At the end of the term, the motorist has the option to buy the car, continue to rent it or change to another (usually newer) car.

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Chattel Mortgage

A fixed loan where the financier funds the vehicle purchase. The financier holds a mortgage over the car which is used as security for the loan. Motorists can finance the total purchase price of the car or can make an up-front deposit or can use a trade-in. A residual payment may also be placed at the end of the term if the client wishes to reduce the monthly repayments. this is the more common type of finance undertaken for vehicle purchase.

 

 

 

 

PROPERTY LOANS

 

Fixed or variable home loans

The basic interest rate on a home loan is known as the standard variable rate. This rate is calculated using the interest rate set by the Reserve Bank of Australia, which shifts up or down over the period of the loan according to economic criteria set by the bank. 

Rather than face the uncertainty of a shifting rate, many borrowers prefer to opt for a fixed interest rate. This means that your rate remains the same for a fixed period - usually between one and five years. 

Fixed rates are usually higher than variable rates. You pay more to protect yourself against the possibility of rates rising higher. This provides certainty with your budget - especially in the first years of your mortgage. Generally it's a good idea to choose a fixed interest rate if a rise of 2% or more in interest would blow your budget. 

It's also possible to choose a fixed rate for part of your mortgage and a variable rate for the remainder - thereby splitting your risks - see below. 

Note: a fixed rate usually means that you will pay penalties if you cancel the loan, or pay it off early.

 

Split loans

This loan gives you the benefits of both the fixed and variable loans. It allows you some certainty by having a proportion of your loan at a fixed rate, and some protection against rate rises having the remainder at a variable rate. How you choose to split it is up to you.

 

No deposit home loans

It's possible in some cases to take a no deposit home loan which covers 100% of the property's purchase price. You may need to pay stamp duty and other costs and fees yourself, but if you are a first home buyer the incentives and grants are greatly reduced. Some lenders will even lend more than 100% to covers these fees, but approval is harder and you may also pay a higher interest rate.

 

Basic home loan

A basic home loan has a very low variable interest rate with little or no regular fees and few extra features or flexibility.

 

Low doc home loans

These are ideal for people who don't have regular incomes, such as people who are self-employed, as they remove the need for the usual documentation to prove income. 

Borrowers must make a declaration of their financial position and must show that they can repay the loan without undue hardship. 

Lenders tend to require a substantial amount of equity in the property being offered as security and a clean credit history.

 

Honeymoon loans

These offer you a discounted introductory rate for the first few months or years which may be 2% below the standard variable rate. Your rate will change if interest rates change, but it will always remain lower than the standard variable rate during the honeymoon period. 

If you have the ability to pay off as much of the loan as possible during the honeymoon period you will reap the biggest reward. 

 

 

 

Bridging loans

This loan can be necessary to bridge the gap between purchasing a new home and selling your old one. It's ideal if you find a home you want to buy before you sell your old one. They are generally no longer than six months and are offered at the standard variable rate. 
All lenders will require you to have significant equity in your existing property in order to give you a bridging loan.

 

Redraw facility

These loans allow you to put extra money into your loan when you have it and to draw the money back out again when you need it. 

These loans are ideal for people who may have extra chunks of money coming in now and again that they can pay into their loan, such as bonuses, in the knowledge that if they need it they can withdraw it again. Over time these payments can significantly reduce your interest payments and the life of your loan. 

Some lenders charge a fee to activate this feature and/or a fee each time you redraw, so you need to take these costs into consideration.

 

Deposit bonds

A deposit bond (or deposit guarantee) provides money for you to pay a deposit on a property - which is ideal when buying at auction as it means that you don't need to have cash readily available to pay a deposit over the period of time that you are looking for a home to buy.

 

100% offset loans & accounts

An offset account allows you to pay your income into an account that is linked to your loan. You can use your accounts for all your everyday transactions such as:

• EFTPOS

• Cheque

• Internet banking

• Credit transactions.

The balance in the account is offset against your loan, so the more money you keep in your account the faster your loan is reduced.

These loans are usually charged at the standard variable rate or higher, and may have other fees.


 

Line of credit

This type of loan (sometimes known as an 'all in one' account) lets you pay all your income into your loan account and also use your account as your cheque, credit and savings accounts combined. The more money you keep in the account, the more you reduce your loan amount and your interest payments. 

This method offers you ultimate flexibility as you can access money bit by bit, or all at once. For example, you have the ability to use the money for renovations, or whatever you like - you choose as you go. 

Interest rates tend to be higher and because there is no fixed repayment required each month, this may not be suitable for people who need that discipline.

 

Professional packages

Professional packages offer substantial discounts and special benefits to borrowers who satisfy specific criteria; generally that the home loan be in excess of $150,000, and that you earn more than $50,000 per annum. Benefits vary, but can include interest rate discounts of between 0.50 and 0.75% for the life of the loan, lower fees and discounts on other bank products. 

If you qualify for these loans, they are well worth considering.

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