Commercial finance

Companies and self-employed who are GST registered have access to finance that can be tax effective whilst keeping the cost maintenance and operating costs low with regular rotation and replacement of vehicles and equipment. Downside is insurance tends to be higher for vehicles not fully owned or there is money owing. This is the case for all the options looked at here.

Chattel Mortgage

This form of financing is a happy medium for lenders and borrowers, the lender is not responsible for the car( or equipment )or about the end value. The borrower on the other hand has the advantage of ownership of the car or truck and can claim back the GST in most cases. They can also claim the interest on the loan and depreciation and maintenance costs.

With the chattel mortgage the period of the loan can range from 1 year to 5 years. The residual or balloon amount varies according to the length of the loan period, varying from 50% for 3 years, to 30% for 5 year loans.

Commercial Hire Purchase, CHP

Commercial Hire Purchase is great solution for those using the vehicle or equipment for business use. The process involves the lender who buys the equipment and agrees to hire it out for a set period and fixed monthly repayment (and residual, if necessary) to the hirer.

At the end of the term the hirer will payout the residual and obtain ownership of the car or the equipment. Tax implication;the item is not owned by hirer so GST is claimed by the financier. the hirer can claim the monthly repayments and maintenance against the business income.

Finance or Asset Lease

The lender buys the car or equipment and the client will make regular repayments, interest rates are generally fixed allowing the client to budget for the expenses.

The main features of finance lease:

•        Lease payments are generally tax deductible.
•         Depreciation is also claimable as expense for accounting and taxation purposes
• Lessee is responsible for the running costs.
• Taxation guidelines apply to terms and residuals allowed.
• The purchase price represents the leased amount. GST is claimed by the financier.
• GST has to be paid on repayments and the residual.

sydney Mortgage Broker providing carloans, chattel mortgage, finance lease, hire purchase, home loan, refinance home loan, first home owners grant, bridging finance for homes, car loans, commercial low doc loans, no doc commercial loans, business loan