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March 29, 2014

Get a New Car Now With a Finance Lease

Providing the funds up front to pay for a new car can be a bit of a stretch, or just not necessarily the best option for your business. There are many solutions out there to finance a car for your business, and a finance lease is one of the popular options available.

A finance lease allows you to get the new car or equipment of your choice now without needing a large lump sum amount of cash to pay the full cost in one payment.

Finance Lease Explained

With a finance lease, the leasing company essentially buys the vehicle that you would like, and leases it to you for a set amount of time. Over the term of the lease, you make payments on a monthly basis to the leasing company that covers the cost of the vehicle and normally fuel is included in this amount too.

At the end of the lease, you make a residual value payment and continue to hold full ownership of the vehicle. The residual value (final payment) is agreed between you and the leasing company and is based on their estimate of the future value of the vehicle.

You can nominate a residual value lower than the leasing company’s estimate, but it must meet the regulations set by the Australian Taxation Office (ATO). Nominating a lower residual value will mean higher monthly payments during the term of the lease to balance the cost.  

Finance Lease Benefits

  • Retain capital in your business – without having to pay the total value of the item up front, you can retain the capital for use in other areas of your business
  • Costs are set in advance – with a monthly lease payment and final residual value payment set in advance, you can budget for these costs over the long term
  • Competitive interest rates – because the lease is secured against the vehicle, competitive interest rates are available with a finance lease
  • Save money with GST benefits – as the leasing company is the purchaser of the vehicle, they can claim tax benefits on the GST that is charged on new vehicles. The cost that is financed is exclusive of the GST that the leasing company receives a tax benefit for, which means your lease payments are lower.

If you need a new car or equipment now without having to outlay the full cost up front, a finance lease could be a good option. Talk to Street Fleet to look at how this option can work with your circumstances. 

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