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Motor Vehicle and Equipment Finance
This type of finance can be tailored to suit your needs, with fixed repayments and loan terms up to 7 years. A final balloon payment can be applied to your loan to reduce your monthly repayments. A balloon payment means that over the course of the loan, you will only repay part of the principal and as a result, at the end of the loan term will owe the lender a lump sum. Ownership of the vehicle remains with you, however the lender takes an interest in the vehicle as security for the loan. Once the loan is finalised the lender will lift their interest in the vehicle handing the customer clear title.
A commercial finance product where the vehicle is mainly used for business purposes. Flexible contract terms up to 5 years and a balloon amount can be applied to tailor your monthly repayments. Ownership of the vehicle remains with you and the lender registers an encumbrance. Once the loan is finalised the lender will remove the charge and hand clear title to you.
A rental agreement where the lender owns the vehicle and you then lease it for an agreed term and amount. Terms range up to 5 years. At the end of the lease term you have the opportunity to buy the vehicle and payout the lease or extend the lease for a further term.
A popular way of offering employees an opportunity to finance a motor vehicle as part of their remuneration package. A novated lease is an agreement between an employer, employee and the finance company. The employer makes the monthly repayments on behalf of the employee from their salary. Lease terms are usually from 1 to 5 years.
An operating lease, equipment rental or rental agreement is a versatile option for financing high depreciation, short life span new technologies such as computers, telecommunication and all other office equipment which generally have a high turnover due to rapid pace advancements in this area. The finance company purchases the equipment and rents it to you for an agreed payment schedule over a fixed term. While similar to a finance lease, an operating lease has greater flexibility.
It provides the ability to upgrade to new technology with a simple variation of your existing contract (certain criteria applies). The variation can be implemented during the initial term of the agreement. You can add in pieces of equipment and if required replace or upgrade equipment. You can choose to have maintenance software installation and other intangible items included in the agreement.
The term of finance agreement can be from 1 – 5 years and must be in accordance to ATO Guidelines.
Deposits are not required. The full purchase price must be financed. You have possession and use of the equipment, however, the finance company shoulders most of the risk of ownership.
Expiry of Rental Period: At the end of the Rental Period, you have a number of options:
- Return the goods to the finance company, without any responsibility for loss incurred by the finance company for the resale.
- Return the goods to the finance company and enter into another agreement for new upgraded equipment.
- Purchase the equipment at a fair market value (usually very low due to the high depreciation of the equipment).
- Re-rent the goods at a lower rate for a further term.
For more information on how assets are treated under a a rental agreement for taxation purposes, please refer to ATO Guidelines at: www.ato.gov.au/businesses.
You should always seek advice from your accountant on the rules and how they apply to your particular business and equipment.