If the thought of choosing vehicle finance sends you into mild panic – now you can relax.
Choosing the correct finance package can save you thousands. With so many finance options around, which is right for you.
Many fleet owners and car purchasers turn to us for clarification of the many finance options available from Novated Leases to Chattel Mortgages and beyond! Today, we explain these, and the benefits of each, for you.
These are a great way to put your pre-tax income to work. Also known as ‘salary sacrifice’ or ‘salary packaging’, a Novated Lease allows you to acquire your next vehicle GST-free, even if you are not registered for GST.
Novated Leases are suitable for most Australian workers. The vehicle can be 100% personal use. In other words, these do not have to be ‘company cars’.
A Novated Lease is a three way agreement between you (the employee), your employer and the financier. It means your employer is responsible for the lease obligations whilst you are in their employment.
The agreement ceases when employment is terminated. The Finance Lease between the employee and the financier remains in place.
Benefits of a Novated Lease for the employee:
- Utilising pre-tax dollars (or salary sacrifice) to pay for finance and running cost
- Access to vehicle discounts
- Ability to lease new or used vehicle – exclusions may apply
- Simple monthly repayments
A Chattel Mortgage is a car finance option suitable for businesses, where the car (the chattel) being purchased is used for business more than 50% of the time.
The business takes ownership of the car straight away without having to tie up capital in the purchase, yet can claim tax eligible benefits on the vehicle. You do have the flexibility to include a payment at the end of the term in order to reduce repayments but this is optional.
Benefits of Chattel Mortgage:
- Tax deductions may be available when the car is used for business purposes
- Input Tax Credits may be available when the purchaser is registered for GST
- A Chattel Mortgage is secured against the vehicle, which allows lower interest rates
A Car Lease is like renting a car for a period, with the option of buying it at the end of the lease for a residual – that is, value or percentage typically agreed up front.
Car Leases can be good for:
- Consumers whose employer offers salary package for cars through a Novated Lease.
- Businesses who don’t want to tie up capital owning a depreciating asset.
Personal Loans, Hire Purchase, and more are still available, speak with us for further details!
Which finance is best for you?
As you can see, there are a LOT of finance options. It can quickly become quite confusing. Unfortunately, there’s not one clear cut solution for everyone.
In our experience, every car purchase includes a range of different variables. We look beyond the rate. The way a tax deduction is claimed for the cost of a motor vehicle differs greatly between a lease and the other forms of finance.
We can help you determine the best finance solution for you, so that you drive away feeling completely confident in your finance decision!