A Finance Lease or Car Lease is a commercial financial product which allows the customer to have the use of a car or commercial vehicle, while the financier retains actual ownership of the vehicle.
The financier purchases the vehicle on behalf of the customer, who then leases the vehicle back from the financier and pays a fixed monthly lease rental for the term of the lease.
At the end of the lease the customer can pay a final instalment on the lease and take ownership of the car, trade it in or re-finance the residual and continue the lease.
Car Leasing can be suitable for companies, partnerships, sole traders, and individuals where the leased vehicle is used for income producing purposes.
There are different types of leases but generally they are used for financing the purchase of assets like cars, computers, equipment, machinery etc. It is a popular form of financing as the business' capital is not spent, but of course the borrower doesn't own the goods, they pay a "rental" to the financier. The full lease payment is tax deductible if used 100% for business, but the value of the item cannot depreciate over time. A lease agreement generally requires that a pre-agreed amount will be owed at the expiry of the term.
Shogun Finance can match you with a comprehensive and competitive finance solution, whether you are looking for a motor vehicle for the family or business, a fleet for your sales staff or machinery for a factory.
A Hire Purchase arrangement is an agreement to purchase a vehicle subject to payment terms to the finance company. It is different to a lease as you will own the vehicle when you make the final payment. The terms of the agreement can be from 1 - 5 years.
Deposits are not required. You might choose to trade in an existing vehicle in order to put in a deposit to reduce the amount to be financed.
You can choose to have a balloon payment as the last payment of your finance agreement. This final payment is usually between 10% - 40% of the cost price.
A novated lease is used for employees who have the option of receiving a car as part of their salary package. The employer pays all rental payments to the financier on the employee's behalf and the employee enjoys full use of the motor vehicle. The term of finance agreement can be from 1 - 5 years and must be run in accordance to Australian Taxation Office Guidelines (ATO).
The employee then novates the lease to their employer, who assumes all the employee's rights and obligations under the lease, including responsibility of meeting the lease payments, normally deducted as part of the employee's salary package. Deposits are not required and the full purchase price must be financed.
The vehicle remains in the name of the employee who is the registered owner and has control of the vehicle at all times. If the employee leaves the company, the vehicle remains with the employee. In this situation, it is generally the case that the employee takes over the payments or gets another employer to make the payments. This means, the original employer is not left with an unwanted car and the employee keeps the vehicle.
An Operating Lease (or equipment rental) is a versatile option for financing high depreciation items such as computers, and office equipment. The finance company purchases the equipment and rents it to you for an agreed payment schedule over a fixed term. While this is similar to a Finance Lease, an Operating Lease has greater flexibility.
An Operating Lease provides the ability to upgrade to new technology through a simple variation of your existing contract. This variation can be implemented during the initial term of the agreement and you can also add in pieces of equipment and replace/upgrade equipment. You can choose to have maintenance, software installation plus other intangible items included in the agreement. The term of finance agreement can be from 1 - 5 years and must follow ATO Guidelines.
Deposits are not required and the full purchase price must be financed. You must have a residual payment as the last payment of your finance agreement according to ATO Guidelines. This residual value is determined by the finance company and the finance company is responsible for paying it. Be aware that the residual values are generally not disclosed to you.
Under an Operating Lease you have the possession and use of equipment however, the finance company has ownership.
At the end of the rental agreement you have a number of options, you can:
