With a secured personal loan the goods being purchased are used as security for the loan, however you have ownership of the goods from the beginning of the loan contract. When you make the final payment we will remove our security interest over the goods and you get clear title.

 

You can make a deposit towards the purchase to reduce your monthly repayments, however, depending on your credit profile, no deposit may be required at all. You may also be able finance other costs associated with the vehicle purchase such as insurance, registration, and on-road costs.

 

With a Business Loan your business takes ownership of the vehicle (the chattel) at the time of purchase and the credit provider takes a mortgage over the goods as security for the loan by registering an interest on the Personal Property Securities Register (PPSR). Once the contract is paid in full, the interest is removed giving your business clear title to the goods.

 

A Business Loan is suitable for those companies, partnerships and sole traders who use the cash method of accounting (they record business income and expenses as and when they occur) as it allows them to claim the GST in the vehicle's price up-front. GST is charged on the purchase price of the vehicle but not the monthly rental or the contract balloon (final instalment). Where your business is registered for GST, you can claim some or all of the GST contained in the vehicle price as soon as you lodge your next BAS, rather than over the term of the loan. Under a Business Loan, a business can claim the interest charges on the contract and depreciation up to the depreciation limit as a tax deduction.

 

There are many benefits for a Business Loan including perserving the cash flow of your business, the ability to finance additional costs in the loan and a fixed cost for the whole term of the loan.

The payments of a Hire Purchase can be structured by varying the level of deposit and/or making balloon payments either during or at the end of the Agreement. A Hire Purchase also provides a business with the ability to purchase the equipment at any time during the term of the agreement.

 

Unlike a Finance Lease, where the full amount of the lease rental is tax deductible, only the interest component of the payments and the depreciation on the goods are tax deductible.

 

An Asset Purchase is suitable for companies, partnerships and sole traders who account for GST on an Accruals basis, and individuals using the vehicle for business purposes.

 

If your business is registered for GST, you can apply Input Tax Credits to claim some or all of the GST contained in the purchase price of the vehicle. Businesses using Accrual accounting can claim the GST as a lump sum on their next Business Activity Statement (BAS), whereas those using Cash accounting can claim the GST by instalments over the term of the contract. GST is not charged on the monthly repayment or on the balloon (final instalment) amount. Where the vehicle is used for business purposes, the business can claim depreciation up to the depreciation limit and interest charges on the contract as a tax deduction.

 

The benefits of a Commercial Hire Purchase include preserving the cash flow of your business, the ability to finance additional costs such as comprehensive insurance and on-road costs, and specific asset security but with the ability to claim the GST as a lump sum on the purchase if the business is registered for GST on an accrual basis.

With a Finance Lease, the lessor purchases the car or commercial vehicle on your behalf and then leases it back to your business in return for fixed monthly lease rentals. At the end of the lease you can either pay the final instalment (the "residual value") on the lease to take ownership of the car, trade it in or re-finance the residual and continue the lease; it's that simple.

 

A Finance Lease is suitable for companies, partnerships, sole traders and individuals where the leased vehicle is used for income producing purposes. It is also ideal for employees who want to salary package a vehicle through a Novated Lease as part of their remuneration.

 

The key feature of a lease is the separation of ownership and use of the leased asset. AFS, as lessor, retains legal ownership of the assets receiving all lease rentals under the agreement and is entitled to the return of the assets that are subject to the lease. Your business, as lessee, has the possession and right to use the assets for the term of the lease in consideration for which your business makes lease rentals to AFS.

 

GST is charged on the monthly lease rental and on the residual value at the end of the lease. Where your business is registered for GST, it can claim some or all of the GST contained in the lease rental and the residual value as an input credit on its next Business Activity Statement. Where the amount financed is below the depreciation limit your business can claim the lease rental as a tax deduction. Above the depreciation limit, interest charges on the lease and depreciation up to the value of the depreciation limit can be claimed.

 

A Lease normally has provision for a predetermined residual value to be satisfied at the end of the lease term. At this stage, you may wish to re-lease the goods or to satisfy your obligations with regards to the residual value.

 

This non-equity form of financing enables your business to free up cash resources from the purchase of assets for other uses. The rental nature of a lease also assists insulate a business from technological obsolescence.

The AFS novated lease is a tripartite agreement between AFS as the finance company (Lessor), you as an employee (Lessee) and your employer (Payee), under which you lease a car and your employer agrees to take on your obligations under the lease by paying the monthly lease rentals, and often the running costs, from your pre-tax income ("salary sacrificing" this income).

 

On completion of the novated lease period or on termination of your employment, responsibility for the lease reverts to you and the employer has no further obligation.

 

A novated lease may give rise to a fringe benefits tax liability and you should seek independent advice on this issue from your accountant.