A Finance Lease is a form of rental agreement under which you lease your nominated asset or vehicle for an agreed term and rental amount. A residual value is set to reflect the equipment or vehicle's value at the end of the lease.
It is an attractive finance option for sole proprietors, partnerships and companies that use the 'cash'
method of accounting for the Goods and Services Tax (GST). Under the cash method, the vehicle is financed excluding the GST component of the acquisition price of the motor vehicle (or other asset) when is claimed back by the financier. This means you are financing the ex GST price, reducing the amount borrowed. However GST is then charged on your monthly payments, which can be claimed back on the entity's next Business Activity Statement over the term of the finance contract. During the term of the lease agreement the lessee pays the rental and does not obtain ownership or equity in the vehicle. The lessor retains ownership of the vehicle, while the lessee assumes the risk of the residual value.
At the end of the Lease you can make an offer to purchase the vehicle or equipment from the finance company, trade it in on a replacement, return it, or extend the lease for a further term.
- A finance lease is flexible as the lessee is allowed to select a lease term and repayments to suit their cash flow.
- The term of the loan ranges from 12 months to 60 months.
- There is no initial outlay required from the lessee as finance is for 100% of the value of the vehicle.
- Lease rentals and residual values can be negotiated within an appropriate range to allow more flexibility in budgeting.
- Where the vehicle is used for business purposes, the lease rental will be tax deductible.
- The lessee (where registered for GST) will be entitled to claim back the GST paid on the lease rentals.
To apply for or enquire about a Finance Lease please fill out our online finance enquiry form and one of our customer service representatives will be in contact with you or call 1300 3 FLEET (1300 335 338) today!
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Consumer Car Loan
Novated Lease
Corporate Hire Purchase
Chattel Mortgage
Operating Lease
All applications for credit are subject to normal credit approval criteria.
As we are not tax advisors always seek independent advice from your Accountant.
