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Old 08-12-2005, 23:39   #1 (permalink)
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Leasing

I have read in differnet post that alot of u lease your vehicles. Is leasing only avaliable to companies? I own and run my own business would leasing be avalable for me. any help welcome and some leasing companies websites would be great. Also cost if leasing what are people paying (and for what car of course)

thanks all
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Old 08-13-2005, 03:13   #2 (permalink)
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Re: Leasing

I personally got for a chattle morgage that way you get the gst credit in one big lump sum at purchase, other then that most ways of buying have very similar tax benifits if kept for around 5 years if you roll them over more often you sould really look into the right product for you. make sure you don't pay above 8% on any new car finance if you don't get that or below try else where, my latest ute through westpac equipment finance was 7% . i nearly fall over when i hear what some people pay for finance, costing themselves thousands just by not doing 5 minutes ringing around for the best quote
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Old 08-13-2005, 06:31   #3 (permalink)
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Re: Leasing

Quote:
Originally Posted by FPV002
I have read in differnet post that alot of u lease your vehicles. Is leasing only avaliable to companies? I own and run my own business would leasing be avalable for me. any help welcome and some leasing companies websites would be great. Also cost if leasing what are people paying (and for what car of course)

thanks all
Leasing is available to sole traders, partnerships and companies.

There are 3 main forms of finance for vehicles used for business. Commercial Hire Purchase (CHP), Leasing, and Chattel Mortgage (CM).

The main difference between Leasing and the other two is that you rent the vehicle from the bank/finance co. You register and insure it in your business name but they own it and you rent it from them. They claim the depreciation but you claim the lease rentals (instalments). You cannot have any equity (ownership) in the goods so the lease has to be for the full purchase price. If you have a trade-in the dealer gives you a cheque for the trade-in amount. At the start, a residual value (sometimes referred to as a balloon payment)and lease term is agreed upon but has to fit within guidelines allowed by the ATO. Common lease terms/residual values are 36mths/40% residual, 48mths/30% or 60mths20% residual. This means that at the end of the term you still owe the residual value which you can pay as lump sum to own the car or re-lease the residual amount over a further term, say, 1-2 yrs. At the end of the lease term you can either just hand the goods back, buy them for the residual value or lease again. If you hand them back and the lender cannot sell the goods for the residual owing you will have to pay the shortfall. On the other hand if you buy them and then sell for more than the residual you keep the profit.

Leasing is sometimes used to raise capital in a business by leasing goods already owned. This is known as a sale lease-back because you ahve to sell the goods to the lender first then rent them back. If leasing a 2nd hand car other than from a licensed dealer you usually have to do lease - back by buying the goods first then sell them to the lender etc.

Insurance costs more for cars under finance - CHP, Leasing or CM.

With CHP or CM you can have equity in the goods by paying a deposit or trade-in. You "own" the goods so you claim the interest on the finance and the depreciation.

Your accountant will best advise which product will suit your business.

Shop around and get quotes but don't listen to interest rates. Some companies quote a low rate but its the instalments that count. Compare apples with apples and make sure the term and residual value are the same

Regards

Shayne
(Finance Broker)
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Old 08-13-2005, 17:21   #4 (permalink)
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Re: Leasing

Thanks for your help Shayne were abouts are you located?
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Old 08-14-2005, 17:41   #5 (permalink)
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Re: Leasing

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Originally Posted by FPV002
Thanks for your help Shayne were abouts are you located?
As per my profile I'm at Gosford NSW (between Sydney & Newcastle) . I specialize in mortgage broking & risk insurance (income protection etc)

The residual values/terms I gave as examples above are typical car examples for a lease. Depending on the car, a higher residual value may be allowed (e.g Merc against a Hyundai) which means that the rentals (payments) will be lower. It also means you have a higher amount to payout to own the car.

Conversely, a lower residual will result in higher payments and less to payout at the end.

A good rate ATM would be between 7-8%pa. Obviously, the stronger the applicant, history, profitability,assets etc, the lower the rate

I have seen Subaru Finance as low as 3%pa to help move stock
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