Finance Lease & What You Need To Know!
A Finance Lease is a commercial finance product, which enables the customer to have the use of a car or commercial vehicle and the benefits of ownership, while the financier retains actual ownership of the vehicle.
How does a Finance Lease work?
The financier purchases the vehicle on behalf of the customer, the financier then leases the vehicle back to the customer, the customer pays a fixed monthly lease rental for the term of the lease. At the end of the lease the customer can either pay a residual value (being the final instalment) on the lease and take ownership of the car, should you choose to own it, otherwise you can trade it and upgrade, or re-finance the residual if you don’t have the funds to buy it and continue the lease.
Benefits of a Finance Lease
- Flexible contract terms ranging from 1 to 5 years months
- Fixed interest rate for the term of the lease
- Fixed monthly lease rentals
- Costs are known in advance
- A residual is applied to a lease, lowering monthly payments
- Tax deductions are available when the vehicle is used for business purposes
- As the GST contained in the car’s purchase price is claimed back by the financier, only the vehicle’s price exclusive of GST is financed, lowering monthly payments
- Ability to make limited advance lease payments for tax deduction or cash-flow purposes
- The lease is secured against the vehicle, providing lower interest rates
Who does a Finance Lease suit?
Finance Leasing is suitable for companies, partnerships, sole traders and individuals where the leased vehicle is used for income producing purposes. It is also ideal for employees who want to salary package a vehicle through a Novated Lease as part of their remuneration..
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