Are you looking to lease a motor vehicle or other asset for business purposes? At Professional Finance Brokers our business specialists understand leasing and can assist you with all of your leasing finance requirements. Normally lease finance can be provided as either a finance lease or an operating lease with both of these options having different financial implications to both the lessor and lessee.
A Finance Lease is a commercial finance product utilised by businesses or individuals to purchase assets such as motor vehicles that are used predominately for business purposes. Normally under a finance lease the financier will purchase a motor vehicle or business asset on behalf of the customer who then leases the goods from the financier for a monthly rental repayment over an agreed term normally 4 – 5 years. Most finance leases contain a residual value representing a final instalment which is payable at the end of the lease term at which time ownership of the goods passes to the customer. Lease payments for the equipment are generally tax deductible and normally the GST on the monthly payments are also claimable by the lessee.
Novated leases are also a popular form of finance lease used by employees to purchase a motor vehicle as part of their overall salary package. A novated lease is effectively an agreement between an employee, their employer and a financier that allows the employee to purchase and use a motor vehicle for their own use with the monthly lease repayments made by their employer from the before tax salary of the employee.
An Operating Lease is a type of lease utilised by businesses and is effectively a rental arrangement where the financier retains ownership of the asset and rents the asset to a customer for a monthly rental over an agreed term. Under an Operating Lease there is normally no residual value to pay and at the end of the lease ownership does not automatically pass to the customer as in a finance lease.
At the end of the lease the financier assumes the residual value risk on the asset as the customer can either hand back the asset and upgrade, continue to rent the asset or offer to purchase the asset at an agreed price.
The accounting treatment for operating leases normally allows for them to be excluded from the businesses balance sheet. Not being included on the businesses balance sheet is considered a major advantage over finance leases, particularly for businesses that have certain financial covenants as part of their current financing arrangements with their financiers.
Operating lease payments for the equipment are generally tax deductible and normally the GST on the rentals will also be claimable by the lessee.
So if you are looking to lease a new motor vehicle or other business asset and need finance call us on (07) 33499044 or contact us now.