Below is an outline of the different options available.
Chattel Mortgage
Who is a Chattel Mortgage best for?
Businesses on cash based accounting.
With a Chattel Mortgage, you own the asset and you can tailor your payments by selecting the term (up to five years) and incorporating a larger final instalment and/or upfront deposit.
You can establish other flexible arrangements to better align to your cashflow, including seasonal payments and having your GST refund entitlement (if applicable) paid into the loan to reduce monthly instalments and interest charges.
The interest rate is fixed for the term of the loan and if the vehicle is used for income generating purposes the interest charges and depreciation on the vehicle or equipment may be tax deductible. If you are a business registered for GST, you may be entitled to an input tax credit with respect to your acquisition of the vehicle.
Commercial Hire Purchase (CHP)
Who is a CHP best for?
Businesses on accrual based accounting, OR individuals who use their vehicle at work.
With a CHP you can tailor your payments by selecting the term (up to five years) and incorporating a larger final instalment or an up-front deposit.
You can establish other flexible arrangements to better align to your cashflow, including seasonal payments.
The interest rate is fixed for the term of the loan and if the vehicle or equipment is used for income generating purposes, the interest charges and depreciation on the asset may be tax deductible.
Financial Lease
Who is a Financial Lease best for?
Businesses that always need the most up-to-date vehicles and equipment, without tying up large amounts of capital.
The lease can be tailored with rentals in advance or arrears, flexible terms (up to five years) and a residual value that is set to reflect the asset’s use and ATO guidelines. GST is included in each rental and the residual value, and if your business is registered for GST, you may be able to claim an input tax credit for this GST.
Novated Lease
Who is a Novated Lease best for?
Employees who wish to salary package their vehicle.
To be applicable for a Novated Lease, the vehicles must have a carrying capacity of less than one tonne and seat less than nine people.
The employee, in conjunction with their employer, signs a Novated Lease Agreement for an agreed term (up to five years). Monthly rentals and a final residual payment are based on ATO guidelines. Running costs of the vehicle including monthly rentals may be salary sacrificed from the employee’s gross pay, potentially reducing their taxable income.
The employer may pay some or all of the running costs of the vehicle including GST and may be able to claim an Input Tax Credit with respect to any GST incurred on such costs.
The employer should also be aware that the provision of a vehicle under a Novated Lease is a fringe benefit and Fringe Benefits Tax (‘FBT’) implications will need to be considered.
Consumer Loan
Who is a Consumer Loan best for?
Private customers where the vehicle is entirely for personal use.
You can tailor your monthly payments by selecting the term (up to seven years), with payments in advance or arrears. This product has fixed monthly repayments, a fixed interest rate, and puts you in control of your financial budget. Balloon payments may be considered subject to requirements and lending criteria.