The Hire purchase option is usually used for organisations that use the ‘Accruals’ method of accounting, relating to the Goods and Services Tax (GST) or for Individuals that use their asset for business purposes.  The GST Component of the asset being purchased can be claimed on the next Business Activity Statement, instead of claiming the GST over the term of the finance contract.

Options - You can select to finance the full purchase price or use a deposit or a trade in, to reduce the amount financed, which reduces your repayments.  You could even apply your GST refund to pay off your loan earlier and to save interest paid over the term of the loan.

Finance lease option is available to sole traders, partnerships and companies that use the ‘cash’ method of accounting relating to the Goods and Services Tax (GST). 

Under this method the asset is financed excluding the GST component.  The GST component is claimed by the financier.  This means the amount borrowed is lower to the customer because the GST has been excluded. This means GST is then charged on the monthly rental and the residual value, which can then be claimed back on the entity’s next Business Activity Statement over the course of the finance contract.

The purchaser of the asset does not obtain ownership or equity in the asset.  The financier has ownership of the asset, while the purchaser takes over the risk of the residual value.

Individuals usually use these types of loans, a personal finance type of product, where the financier lends to the customer for the purchase then secures the loan against the asset. 

The customer takes ownership of the asset at the time of purchase, and then the financier takes an interest in the asset as the security for the loan.  When the loan is fully completed the financier will lift their security over the asset giving the customer clear title.

Options – You can select to finance the full purchase price or use a deposit or trade in to reduce the amount financed which will reduce your monthly repayments.

Chattel Mortgage as a finance option can be used by Sole Proprietors, Partnerships and companies that use the ‘cash’ method of accounting relating to the Goods and Services Tax (GST)

The GST component of the Asset being purchased can be claimed on the next Business Activity Statement, instead of claiming the GST over the term of the finance contract. 

Options – You can select to finance the full purchase price or use a deposit or a trade in to reduce the amount financed, which reduces your repayments.  You could even apply your GST refund to pay off your loan earlier and to save interest paid over the term of the loan.

Rental is where by the financier purchases the equipment on behalf of the customer and rents it back to the customer over a fixed period of time.

Options – The customer makes fixed monthly rental payments and at the end of the fixed term the customer can hand back the equipment to the financier with no further rentals, or continues the rental agreement or may buy the equipment outright at a market value price indicated by the financier.

Tax claim – The customer can claim 100% of the rental payments as a tax deduction when the equipment is used for business purposes. 

(Refer to your tax accountant for all confirmation of current tax claims available).

Novated lease is a method of salary packaging. This lease is a 3 way arrangement between an employee, their employer and the financier.  A Deed of Novation is put in place where the obligations of the finance lease are transferred from the employee to the employer.  The employer takes on the responsibility for making the lease payments to the financier by way of salary sacrifice by the employee.  The Deed of Novation will stay in place until the end of the lease or until the employee ceases employment with the employer.

Options – The novated lease may also be fully maintained where all the operation costs of the vehicle are covered by a single monthly lease payment for the term of the contract, made by the lessee to the leasing company. The leasing company will take care of all the maintenance and administration costs, such as the lease rental, servicing and maintenance, registration, tyres and insurance.