Finance options for work vehicles explained

September 7th 2022 | Categories: Lending |

finance options for work vehicles main

If a new work vehicle is on the radar it is worth investigating the different vehicle finance options available. The Mortgage and Finance Association of Australia outlines the common vehicle finance options available including car leases, operating car leases, novated leases, hire purchase and chattel mortgage finance.

The Mortgage and Finance Association of Australia outlines the common vehicle finance options available.

Car Lease

If you take out a car lease, the lender agrees to rent the vehicle to you for a set period for an agreed (generally monthly) amount. If the vehicle is entirely for business purposes, the lease payments are completely tax deductible.  

 Explore our Knowledge Centre below for more insights.

Operating Lease Vs Finance Lease – Which Is Right For Me?

Choosing between an operating lease and a finance lease depends on your situation.

Fully Maintained Car Leases

With a fully maintained car lease, the ongoing vehicle maintenance charges are included. You can also include tyres and fuel, and you pay a higher lease rental.  

Novated Lease

Under a novated lease, an employee makes an agreement with the Lender for the finance of a vehicle. The employer then takes the repayments out of the employee’s pre-tax salary. If the employee changes jobs, they take the car with them.  

Commercial Hire Purchase

A commercial hire purchase is like a car lease in that you pay “rent” over the repayment term. The difference is that you gain equity as you make payments, and the title passes to you with the last repayment. A commercial hire purchase agreement can be structured with or without a “balloon” payment ie an additional lump sum payment to be made at the end of the lease.  

Chattel Mortgage Finance

Chattel mortgage finance is a car loan that allows a business using the “cash” method of accounting for the Goods & Services Tax to claim back the GST on the vehicle purchase price in their next Business Activity Statement.  

Get in touch with our Lending Team for more information about vehicle finance or Contact us today.

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What you need to know: This information is provided by Invest Blue Pty Ltd. (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice regarding those matters and seek personal financial, tax and/or legal advice before acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.