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Finance Lease

A Finance Lease is where a customer has use of an asset and enjoys the benefits of ownership, yet the financier still retains ownership of the asset.

How does a Finance Lease work?

The financier purchases the asset on behalf of the customer, who then leases it back from the financier and pays a fixed monthly rental for the term of the lease. At the end of the lease, the customer can either pay a residual value (final instalment) and take ownership of the car, trade it in or re-finance the residual and continue the lease.

Benefits of a Finance Lease

  • Flexible contract terms ranging from 12 to 84 months.

  • A balloon payment can be applied to the contract.

  • Fixed interest rate.

  • Client takes ownership at the start of the contract

  • A deposit (either cash or trade-in) may be used.

  • Interest is calculated daily on the balance outstanding.

Who does a Finance Lease suit?

Finance Leasing is suitable for companies, partnerships, sole traders and individuals where the leased asset is used for income producing purposes.

Tax implications of a Finance Lease

GST is charged on the monthly lease rental and on the residual value at the end of the lease (where the customer is registered for GST).

Residual Value (RV) of a Finance Lease

Residual Value on equipment under a Finance Lease needs to be in line with Tax Guidelines, and is based on the effective life of an asset as stipulated by the ATO.

Translease Pty Ltd strongly recommends that before entering into any facility that you obtain specific taxation, accounting and legal advice as to the implications and effect of entering into that transaction having regard to your own individual circumstances. You acknowledge that we are not providing you with any such advice.

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