Image courtesy of worradmu/ FreeDigitalPhotos.netFinance Lease

Finance lease is a commercial finance product which enables the end-user to have the use of commercial equipment and the benefits of ownership, while the financier retains actual ownership of equipment. A Finance Lease can also be known as an Asset Lease or Vehicle Lease.

With a Finance Lease, the financier purchases the equipment on behalf of the customer, who then leases the equipment back from the financier and pays a fixed monthly lease rental for the term of the lease.

In this arrangements, the financier purchases the equipment on behalf of the customer, who then pays the financier a fixed monthly lease rental for the term of the lease.

At the end of the lease the customer can either pay a residual on the lease and take ownership of the equipment, sell the equipment or re-finance the residual and continue the lease.

Finance leases have a number of benefits:

  • Flexible contract terms
  • Fixed interest rates
  • Fixed monthly lease rentals
  • Costs are known in advance
  • A residual can be applied to a lease, lowering monthly payments
  • Your equipment does not sit “on your books” as an asset/liability
  • Tax deductions for the lease payments can be claimed
  • As the GST contained in the vehicle’s purchase price is claimed back by the financier, only the equipment’s price exclusive of GST is financed, lowering monthly payments
  • Ability to make advance lease payments for tax deduction or cash-flow purposes

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