FAQs.

All your questions answered in one place.

Car Finance

Car Lease

Should I lease my car?
A Car Lease may be right for you if more than 50% of the vehicle use is for business purposes or you are unable or do not prefer a Chattel Mortgage or Commercial Hire Purchase
How does car leasing work?

A Car Lease is best suited to customers using the vehicle for mainly business purposes. A finance provider will purchase the car for you and lease it back to you. It’s like leasing your car for a fixed monthly amount for a period of time. A Car Lease has a balance remaining at the end of the lease term known as the Residual Value (the value of your car at the end of the lease- you will know the amount at the beginning of the lease).

Once the lease period is up you can either purchase the vehicle from the finance provider by paying the Residual Value plus Goods and Services Tax (GST) or start a whole new lease for the remaining residual balance or trade/sell the vehicle.

What other options are there?
What if I want to buy my leased vehicle at the end of the lease?

At the end of the Car Lease you will have the option to buy your leased vehicle. To do this you will have to pay the remaining balance known as the Residual Value to the finance provider plus GST.

If your business is registered for GST you will be able to claim an Input Tax Credit for any GST paid as part of the purchase.

Tax Implications
Your Accountant should be consulted regarding this as there may be the provision to claim tax deductions on your car lease based on the depreciation limit set.
What benefits can I expect?

Benefits of a car lease include:

  • Reduced monthly repayments by opting for Residual Value payment at the end of the lease term
  • Lower interest rates as the vehicle is used as security for the loan
  • Flexibility in choosing the Car Lease repayment term which can be between two to five years
  • Tax deductions if you are using your car for business use
  • GST exemption for the purchase price of the car

Chattel Mortgage

What is a Chattel mortgage?

Chattel refers to a car or equipment and mortgage refers to the loan.

A Chattel Mortgage is for vehicles/equipment used for mainly business purposes. The finance provider will finance the vehicle/equipment with repayments which need to be made on a monthly basis and will use the asset as security against the loan known as a ‘mortgage’. You will have full ownership of the asset on purchase.

The finance provider will remove the ‘mortgage’ once the loan and any Residual Value (the final balance on the asset) have been repaid. You also have the option to re-finance the Residual Value or trade/sell the asset.

Will it suit me?
Businesses and individuals who use the car/equipment mainly for business purposes are eligible for a Chattel Mortgage as there is provision for tax deductions. It is best to speak to your accountant regarding this.
What are the benefits?

Benefits include:

  • Repayments can be structured over a range of terms – 2 to 5 years
  • Lower interest rates which can be fixed or variable
  • You have the option to set a balloon or Residual Value payment at the end of the loan term to lower the monthly repayments
  • You can choose to have fixed monthly repayments or structure your repayments to fit your seasonal cash flow requirements
  • You have ownership of the financed asset up front so it can be shown as an asset on your balance sheet with the finance showing as a liability
  • The GST may be claimed upfront as an input tax credit*
  • The interest and depreciation cost may be claimed on the asset throughout the period of the ‘mortgage’*
  • All running costs of the asset may be claimed*

*Please seek advice from your Accountant to check for eligibility

Tax Implications
  • The GST may be claimed upfront as an input tax credit*
  • The interest and depreciation may be claimed on the asset throughout the period of the ‘mortgage’*
  • All running costs of asset may be claimed*

*Please seek advice from your Accountant to check for eligibility

Consumer Loans

What is a consumer loan?

Consumer Loans are secured with a fixed interest rate. These loans are generally over a period of 5 years and can be up to 7 years. Secured loans require comprehensive insurance.

  • Daily reducible interest
  • Minimal fees and Charges
  • No penalty for extra repayments

Commercial Hire Purchase

What are commercial hire purchases?
Commercial hire purchase finance is applicable to both individuals and businesses that use the vehicle predominantly for business purposes. The finance provider purchases the vehicle and ‘hires’ the vehicle to the business for a fixed monthly repayment over a set period. The Business has the option to purchase the vehicle at the end of the term once any residual balance and interest charges have been paid. Comprehensive insurance is required for this loan.
What are the benefits?
  • GST claimed as you go through the period of the loan*
  • Depreciation claimed on vehicle through period of offer*
  • All running costs claimable*
  • Residual value optional
  • Reduce the amount borrowed by using a deposit

*Please seek advice from your Accountant to check for eligibility

Tax Implications

You may be eligible to claim the GST of the vehicle’s purchase price as an Input Tax Credit* if you are registered for GST. GST may also be claimed on any interest charged as Input Tax Credits* over the term of the loan.

*Please seek advice from your Accountant to check for eligibility