What is a Finance Lease?
A Finance Lease is as a business finance product wherein the customer leases a vehicle or other asset from the financier, be it a bank or a financial institution, with set monthly repayments in the form of instalments over a predefined term. Generally the term varies from 12 to 60 months. The agreement should also incorporate a balloon/residual value at term end in line with the likely value of the asset at that time (as per ATO guidelines).
Advantages of Finance Lease
Finance Lease is not often used but some of the attractions are:
- Monthly lease payments are 100% tax deductable where the goods are wholly or predominately used for business purposes
- The interest rates are fixed for the term
- The monthly instalment is fixed for the term
- 100% finance available
(Independant professional financial and tax advice must be sought to determine all tax and GST issues)