Car loans

A car loan is a personal loan secured by the car you are purchasing and consequently as a secured loan will have a lower rate than non-secured personal loans.

When you are shopping around for a motor vehicle through a dealer, you will quite possibly be offered finance by a dealer.  As part of the process of shopping around for a car we advise you to also shop around for the finance too.  If you source the finance for the car first you will be in a better position when negotiating on the motor vehicle price as you will be “cashed up”.

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Business loan

Whether you are looking at acquiring a new business or are already established in your existing business, we can help you with your financing needs.  You may need short term financing such as a bank overdraft or longer term financing to help you expand your business, whatever your requirements are, we can help you.

Our business loans offer you the flexibility of variable or fixed interest rates with structured repayments that feature either interest only or principal plus interest.

Bank overdraft
Being in business, particularly small business can be a regular challenge in terms of managing your day to day cash flow.  We can arrange for an overdraft account that allows you to have access to a pre-determined limit and you only have to pay interest on the amount that you have used.

Debtor finance
Debtor Finance is a financing product that allows you to maximise your cash flow, which is a key factor in the success of any business.  Unlike traditional lending products, this form of lending enables you to access funds using the strength of your sales as leverage. 

By borrowing against the outstanding value of your trade debtors you won’t miss out on business opportunities that you otherwise may have which can help you achieve your business goals and targets.

You might use this type of product if your business sells goods or services on credit terms and consequently has restricted liquidity, or if your business is expanding or if your business activity is affected by seasonal trends.

 

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Leasing

Trying to figure out which finance product is right for you can be confusing. In fact, we recommend discussing your situation with your tax professional. However, to simplify your decision process we outline the choices available to you here.

Lease products fall into two categories as either a finance lease or operating lease. They differ in the way they treat ownership, disposal and residual risk on the vehicle. Hire purchase options are available and function in a similar fashion to a loan to purchase an asset.

In order to decide on the most appropriate type of finance you first need to consider the following:-

• Do you wish to own the asset at the end of the lease period?
• Do you use the asset for business purposes more than 50% of the time?
• Are you looking to finance the vehicle only, or do you also want a range of fleet management services?
• How long do you intend to keep the vehicle and how many kilometres will you travel?
• Do you want or need to show the asset on the company balance sheet?

 

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Finance lease

A finance lease is a form of rental agreement under which you lease an asset for an agreed period and rental. A residual value is set upfront to reflect the asset’s value at the end of the term. This Accounted for on the balance sheet.

Under the conditions of most finance leases you have no option or right to purchase the asset. However it is common practice that most financiers will consider an offer from you to purchase the asset at the end of the term for the residual value. Alternately, you may trade it in on a replacement, return it to the financier paying the difference between the residual and market value (residual risk) or even extend the lease for a further term.

 

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Operating/Maintained lease

A fully maintained operating lease offers an organisation the benefits of a hassle free method of vehicle usage.  It is finance not shown on the balance sheet and in one monthly payment takes care of all costs associated with the vehicle i.e., all costs in relation to maintenance, insurance, finance are included.  Once you decide on the motor vehicle required you simply decide on the length of the lease required and calculate how many kilometers you will travel in each year.  Based on this the financier will calculate a monthly repayment.  At the end of the lease term you hand the vehicle back to the lender with no residuals or balloon payments required.

 

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Commercial hire purchase

Commercial hire purchase (CHP) is an agreement between the purchaser and the financier whereby the financier owns the vehicle or equipment during the hiring period. It differs from a finance lease in that the goods automatically become yours once all terms of the agreement have been completed – usually when the final installment is paid.  As such it is finance taken out by a business when they wish to purchase the goods.

A CHP can be arranged with or without a final balloon payment at the end of the term depending on what your budgetary requirements are. The repayments are fixed for the term of the CHP. An upfront deposit or trade-in, which will reduce your rental commitments, is optional. It is accounted for on the balance sheet.

 

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Chattel mortgage

Similar arrangement to a hire purchase but with specific GST benefits, which in certain circumstances will allow the entire GST proportion, be claimed in the first BAS period after purchase. Loan structure can be tailored in a similar fashion to a CHP or finance lease

 

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Novated lease (salary packaging)

It is an agreement between an employee, the employer and the financier. The lease is taken out in the name of the employee and the employer agrees to take on the repayment responsibilities for the duration of the employee’s employment. It is not recorded on the balance sheet of the employer.

If the employee leaves this employer, the lease may be transferable to a new employer or the employee can take on the responsibility of the repayments. The original employer no longer has any financial responsibility and is not left with a vehicle they do not require.

The benefit to the employee may be the reduction of tax as a result of having the repayments made out of pre-tax dollars. There may be fringe benefits tax consequences (based on the vehicle value and kilometres travelled) as a result of the transaction between the employee and the employer, so advice from your tax professional is recommended. Similar to a finance lease, residual risk rests with the employee.

 

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