Car Loan Through Your SMSF (2024 Explanation)

Last Updated on August 2, 2023 by John Robinson

SMSFs (Self-Managed Super Funds) allow you to pool your superannuation with up to 3 other people. You can use them to make different investments on a multitude of assets including shares and property. Once you reach retirement age, you can use your superannuation for whatever you want, but if you’re not quite there yet, you’ll be glad to know that investments in collectable assets are on the rise within the SMSF world. Whether it’s jewelry, art, aged wine or vintage cars, these investments can impact your future and provide great potential for your wealth. Plus, you don’t have to wait until retirement for the funds. This article will give you some information on the mechanics of setting up an car loan through your SMSF and what you need to do to.

How to Get a Car Loan Through Your SMSF?

To get a car loan through your SMSF, you need to have at least $5,000 in your super fund. If you have this amount in your fund, then follow these steps:

  1. Contact your nearest financial institution to find out if they offer loans through an SMSF;
  2. If they do not have this service yet, then contact a finance company that provides such services;
  3. Once you have found the company or financial institution offering this service, ask them for a quote.

Are There Restrictions on Buying a Car Through SMSF?

The sound of investing your super for a car may seem like a no-brainer, but there are many things you’ll want to consider first. Using money from your self-managed superannuation fund needs to be handled with care. Like all SMSF investments, the asset must not provide present-day benefits. When buying a car, the car cannot be driven by or put on display for the benefit of any SMSF member, trustee or any related party.

If you use your super to buy a car, your super fund technically owns it. Therefore, you can’t store it at the primary residence of a member or trustee of the SMSF or a related party. And, in no circumstances can the car be driven by a related party of the SMSF—not even for maintenance purposes or to have restoration work done—because this constitutes use of the asset. However, a person who is not a related party can drive the vehicle for such a purpose. Specifically, the Superannuation Industry (Supervision) Regulations 1994 outline the rules of SMSF purchasing collectables and personal use assets, such as a car. The SMSF can only purchase collectables and personal use assets from the vendor’s trade channels. If the vendor does not offer such a channel, the SMSF must negotiate with them directly for a suitable price for these items.

Another strict rule of the SMSF is that assets must be insured upon acquisition. You will also have to document where assets are stored and declare their value every three years. Breaching any of these conditions could result in a very expensive outcome, so it is best practice to make any purchase in an SMSF (including collectible cars) with the guidance of experts while factoring in the costs of storage, three-yearly valuations and insurance.

Want to Use Your Investment to Make a Difference?

National Disability Insurance Scheme (NDIS) is a government initiative that supports people with disabilities. It provides different types of loans to help people with disabilities finance their needs, including education loans, transport loans and living expenses. Those on low incomes with no assets get access to affordable loans, which will help them plan for the future and enjoy life more fully. The NDIS also provides funding for the purchase of assistive technology and equipment, respite care and community services, helps people with disabilities access education, training and employment opportunities & covers their accommodation expenses.

Today, over 49,000 people with disabilities are looking for Specialist Disability Accommodation (SDA). Quite a few live in unsuitable or run-down places with no access to technology or proper facilities.

This is why the Australian government recently released $5 billion more in SDA funding to build affordable and convenient housing for Australians living with long-term disabilities. The government encourages investors and builders to participate in the scheme.

NDIS/SDA property investors are rewarded with higher yields and longer tenancy to provide the homes suitable & accessible for people with disabilities. It also means the government doesn’t need to foot the bill for unnecessary nursing homes, hospitals and high care staff. 

The SDAs have been designed to be flexible so that they can be tailored to meet the needs of each individual with varied disabilities or limitations. NDIS participants or tenants will live in such dwellings and spend a portion of their pension from NDIS to pay for rent. Investors then get a secure, government-backed and higher-than-average rental income monthly. 

For more information regarding the topics included in this article, feel free to visit the linked websites.

John Robinson
John Robinson

Howdy! I’m John Robinson from Levittown, New York. I am a mechanical engineer for 15 years and already had an established car repair company. I developed a personal relationship with cars since I was a kid. I always love the sounds and smell emitted by a car or truck and even at construction machinery. Since then I have been married but my love for cars only grew.