Standard Lease
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A lease is often used for motor vehicle finance (car leases), to obtain finance for machinery and equipment for use in business, or even for insurance premium funding. With a lease, the financier (lessor) retains ownership of the asset while the customer (lessee) has full use of the asset in return for periodic payments. The lease payments are fully tax deductible so long as the asset is utilised to generate taxable income. A residual amount is paid at the end of the term for the lessee to gain outright ownership of the asset. |
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Term: A Lease may be taken over a term of 1-5 years, subject to credit approval of the term. (Terms may have to be shorter for older goods, or if the amount borrowed is small.)
Interest Rate: The interest rate will vary from lender to lender, we can offer our clients the best rate for their individual situation. Once the contract is established, the rate is fixed for the life of the contract.
Establishment Fees: These will vary from lender to lender, and may range from no establishment fee up to $350.00. (In many cases the establishment fee does not have to be paid up front, but may be added to the amount borrowed.) There may also be a private sale fee if the vendor of the goods you are purchasing from is not a trader of those goods normally, or in the case of a vehicle, an LMCT dealer.
Residuals: The residual value in a lease is generally set as the depreciable limit by the Tax Office. There may be some discretion available in lowering a residual if, for example, you are leasing a car and you will do higher than average kilometres; however as a rule, the residual must follow ATO guidelines.
Early Payout Fees: If you decide to pay out your loan before the end of the term, the lender will rebate the majority of the interest remaining on the loan. The portion not rebated is considered an early payout fee. This percentage charged varies from lender to lender; please enquire as to discounts offered.
Tax Benefits: The major tax benefit of a Lease is the ability to claim your monthly lease payment as a business expense.
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Asset Lease Australia specialising in Commercial Finance.