Finance for Business Use
There are a number of options available to ensure that whether you are buying a single vehicle or fleet, we can get the right package for you. Through our finance partners, we can offer the full range of financing options such as:
- Commercial Hire Purchase
- Chattel Mortgage
- Finance Lease
- Line of Credit
- Novated Lease
Commercial Hire Purchase
Also known as an "Offer to Hire", this is a simple facility where you effectively "hire" the vehicle from the finance company for a fixed
monthly repayment over a fixed period and then at the end of the agreement, you get ownership of the vehicle. You can get up to 100% funding of the invoice value or you can contribute a deposit. Depreciation on the vehicle and the interest component is usually tax deductible if it is used to generate assessable income or the expense is incurred in running a business.
Repayment terms can be from 1 - 7 years and it's possible to include a residual value (balloon) to reduce the repayments. Repayments can be flexible with options of monthly, quarterly, half yearly, annually or seasonally to accommodate your cash flow. The interest rate is fixed so your costs are known in advance. GST is usually payable on the purchase price of the vehicle, fees and the term charges (interest) . It's possible to included GST in the amount financed. No GST is payable on the repayments nor balloon. You have the ability to repay the finance agreement early although penalties may apply.
monthly repayment over a fixed period and then at the end of the agreement, you get ownership of the vehicle. You can get up to 100% funding of the invoice value or you can contribute a deposit. Depreciation on the vehicle and the interest component is usually tax deductible if it is used to generate assessable income or the expense is incurred in running a business.
Repayment terms can be from 1 - 7 years and it's possible to include a residual value (balloon) to reduce the repayments. Repayments can be flexible with options of monthly, quarterly, half yearly, annually or seasonally to accommodate your cash flow. The interest rate is fixed so your costs are known in advance. GST is usually payable on the purchase price of the vehicle, fees and the term charges (interest) . It's possible to included GST in the amount financed. No GST is payable on the repayments nor balloon. You have the ability to repay the finance agreement early although penalties may apply.
Chattel Mortgage
This is the most popular choice as it allows you instant GST benefits if you account for GST on a cash basis. Unlike Commercial Hire Purchase, you become the legal owner from the date of purchase. The vehicle is the security for the facility. Up to 100% funding is available meaning your funds can be better used elsewhere. Repayment terms can be from 1-7 years and no GST is charged on the monthly repayment. Repayments can be flexible with options such as monthly, quarterly, half yearly, annually or seasonally. The interest rate is normally fixed so you have peace of mind in knowing your costs. A tax deduction is available for business use. There are low establishment and ongoing monthly fees. You have the ability to repay the finance agreement early although penalties may apply. The main difference between this and the Commercial Hire Purchase is there is no GST payable on the repayments with a Chattel Mortgage and ownership sits with you from day one.
Finance Lease
With a finance lease, the finance company purchases the vehicle and then "leases" to you. You get the benefit of using the asset for the agreed term and in return for the rental payments. It may also be available for vehicles that you have purchased in the last 6 months (known as "sale and leaseback"). At the end of the lease, you have two choices. You can:
There is no GST on the initial vehicle purchase. GST is payable on the rental payments over the term of the contract and on the residual value at the end of the contract. If you are eligible you may be able to claim the GST as an Input Tax Credit each month or quarter.
- Return the vehicle to the finance company who will sell it (you will pick up any shortfall if it does not fetch the agreed residual
value) or, - Make an offer to the finance company to purchase the vehicle
There is no GST on the initial vehicle purchase. GST is payable on the rental payments over the term of the contract and on the residual value at the end of the contract. If you are eligible you may be able to claim the GST as an Input Tax Credit each month or quarter.
Line of Credit
If you're running a fleet of vehicles or plan to buy more than a couple of vehicles per year then this could be for you. Once established this facility is available at any time and saves having to underwrite each purchase. Provided your overall exposure remains within the facility limit, you can draw down on this pre-approved facility for that next purchase, giving you time to focus on your business rather than having to spend time organising finance. They are simple to organise and normally are structured as a Chattel Mortgage facility. The minimum line size is around $500,000 but we are always happy to seek exceptions.
Novated Lease
Retention of good staff is always tricky, so why not offer them "novated leasing" as part of a salary package benefit to employees. The employee chooses the vehicle and leases it from the finance company. It in turn, "novates" the lease to your business which assumes responsibility for making repayments so long as the employee remains with you. If he/she leaves your business, then normally the car remains with the employee and either they or their new employer takes over the repayments.
It's only available for vehicles that have a carrying capacity of less than 1 tonne and seat less than nine people. A three way agreement between you, your employee and the finance company is entered into which allows for the car to be treated as a company car for tax purposes, which can provide the employee with significant income tax and GST savings. They'll pay one amount each month which is calculated to include their fuel, insurance, all running costs and the finance for the car of which comes out of both their pre-tax salary and post-tax salary (to cover FBT). Because the finance company claims the GST on the vehicle and running costs, it passes this on to the employee by way of a reduced monthly repayment, saving potentially thousands over the period of the agreement.
The vehicle is registered in the employees name so there is no stamp duty. If the vehicle is purchased at the end of the lease they only pay GST on the residual value at the end of the lease. The employee can choose to pay out any residual finance or hand the vehicle back (which needs to be within the mileage and in the condition agreed) and take out another agreement.
If you have staff earning more than $25,000 per annum, and mostly use their cars for personal use, then as an employer, this could be a great way of keeping then in your car park rather than your competitors.
It's only available for vehicles that have a carrying capacity of less than 1 tonne and seat less than nine people. A three way agreement between you, your employee and the finance company is entered into which allows for the car to be treated as a company car for tax purposes, which can provide the employee with significant income tax and GST savings. They'll pay one amount each month which is calculated to include their fuel, insurance, all running costs and the finance for the car of which comes out of both their pre-tax salary and post-tax salary (to cover FBT). Because the finance company claims the GST on the vehicle and running costs, it passes this on to the employee by way of a reduced monthly repayment, saving potentially thousands over the period of the agreement.
The vehicle is registered in the employees name so there is no stamp duty. If the vehicle is purchased at the end of the lease they only pay GST on the residual value at the end of the lease. The employee can choose to pay out any residual finance or hand the vehicle back (which needs to be within the mileage and in the condition agreed) and take out another agreement.
If you have staff earning more than $25,000 per annum, and mostly use their cars for personal use, then as an employer, this could be a great way of keeping then in your car park rather than your competitors.
