Finance Lease

A Finance Lease is a type of business loan where the financier (the lessor) purchases the equipment or vehicle required by you (the lessee) and is therefore, the owner of the goods. The Financier then leases the goods to you under a Lease Agreement, which sets out the residual value of the goods, the term of the lease in months and the monthly rental. Residual values are determined by the Australian Tax Office’s applicable depreciation rates.

When the lease expires, there are some alternatives available to you:

Return the equipment to the financier who can sell it in the marketplace. If the net sale is less than the agreed residual value, you will need to make up the shortfall.
Refinance the residual value.
Payout the contract.
Make an offer to purchase the equipment, which may be accepted by the financier.

Who can benefit

Any business seeking a loan to acquire plant and equipment, motor vehicles, or similar goods used in the production of assessable income.

Key Features

Obtain equipment without capital outlay.
Variety of payment options.
Flexible lease terms, subject to the financier and ATO guidelines (maximum term 60 months).
The residual value of the leased goods is established in accordance with a schedule issued by the Commissioner of Taxation.
Lease rentals are usually tax-deductible, if the leased goods are used to produce assessable income.

Benefits

With no initial outlay required, you can use your working capital for other purposes.
You have the option to select the length of the lease term and the timing of repayments to suit your cash flow (maximum term 60 months).
You can negotiate rentals and residual values within an approved range, allowing more flexibility in budgeting.
You can utilise this product to finance the outlay of recently purchased equipment.
You may be able to make use of taxation benefits.

GST

Finance lease agreements are subject to GST. GST is payable on lease rentals, early terminations and residual values.

We recommend you see your accountant or financial planner for specialist advice or let us recommend one of our professional partners to help you through this process.

At Ray Backhouse – Lifespan Financial Services we have unique partnership arrangements with a number of experienced and professional accounting and financial planning firms that can provide you with the specialist advice for your particular situation or type of business. This network of professional services ensures that your interests are coordinated in a manner that delivers the best results across all aspects of your financial circumstances.

Interest rates

The interest rate depends on the amount being financed and the security used. It is fixed throughout the term of the loan.

Fees and charges

An establishment fee is payable and includes GST.
The cash booklet fee is payable and includes GST.
Fees cannot be financed and must be paid at the time of signing the documents.
Monthly rental payments may be subject to GST.
Pre-determination fees may apply.

Repayment Schedules

Repayments can be made

Monthly
Quarterly
Semi Annually
Seasonally
Yearly
Negotiated
Prepaid (according to tax office guidelines)