Finance Lease
A Finance Lease also known as a car lease, asset lease or vehicle lease is a commercial finance product which allows the customer to have the use of a commercial vehicle and the benefits of ownership, while the financier retains actual ownership of the vehicle.
The financier purchases the car on behalf of the customer, who then leases the car back from the financier and pays a fixed monthly lease rental for the term of the lease.
At the end of the lease the customer can either pay a residual value (final instalment) on the lease and take ownership of the car, trade it in or re-finance the residual and continue the lease.
Benefits of a finance lease are:
- Flexible contract terms ranging from 12 to 60 months (one to five years)
- Fixed interest rate
- Fixed monthly lease rentals
- A residual is applied to a lease, lowering monthly payments
- Tax deductions are available when the car is used for business purposes
- As the GST contained in the car’s purchase price is claimed back by the financier, only the vehicle’s price exclusive of GST is financed, lowering monthly payments
- Ability to make advance lease payments for tax deduction or cash-flow purposes
- The lease is secured against the car, allowing lower interest rates