Motor Vehicle and Business Equipment Finance
Phone: (02) 9890-9799 Fax: (02) 9890-9431
Email: adrian@aldersfinance.com.au
Finance Products
So you've found the car that you want or that phone system looks perfect - but how do you finance it now? Choosing the right type of finance for your set of circumstances is just as important as picking your equipment.
The main types of finance are listed in further detail on our website but here are a few basic points that should help:
- Simply put, there are two basic types of finance: Finance where you own the asset and finance where the finance company owns the asset.
- A Commercial Hire Purchase, Chattel Mortgage, Commercial Loan, Master Facility or Loan Facility are all examples of finance where you own the asset.
- A finance lease, operating lease, novated operating lease, or novated lease are all examples of finance where the finance company owns the asset.
- An operating lease or rental or rental agreement are the same thing.
- Any finance with the word mortgage, loan or purchase usually indicates that you own the asset.
- If you rent or lease something then GST is likely to be charged on the instalments and finance is calculated on the GST exclusive amount.
- Finance products where you own the equipment (including hire purchase, chattel mortgage, and loan facility) generally allow you to claim a tax deduction on the depreciation of the equipment and the interest component of the loan (based on the percentage of business use). The repayment itself is not tax deductible.
- Payments made under rentals or leases are generally tax deductible (based on the percentage of business use)
- Finance leases have residual values (there are guidelines and rules that should be followed), whereas operating leases do not have residual values
- Amounts outstanding at the end of Hire Purchase agreements are called balloons. These balloons can be tailored to suit your budget (cash flow).
Your decision could be guided by answering
some of the following questions:
- What am I trying to achieve by financing the equipment?
- How much can I afford?
- How can I maximize tax deductibility?
- How often do I want to change the equipment?
For more information, read the following sections: