The vehicle and equipment finance market predominately uses five products to assist clients purchasing assets:

• Commercial Hire Purchase
• Chattel Mortgqge
• Finance Lease
• Novated Lease
• Personal Lease

these finance options enable you to purchase vehicles, equipment or plant without tying up large amounts of your working capital. As your mortgage & finance professional Shire First Mortgages can help you structure finance to suit you and your cash flow situation. You may also gain tax advantages if the goods are dedicated to generating a business income.

The terms of the finance are set at the beginning of the contract so you know exactly what your regular repayments will be. In most instances you will not be required to pay an initial deposit.

Commercial Hire Purchase (CHP)

• Most common vehicle and equipment finance product
• Loan termm of 12 - 60 months available
• The supplier/dealer will invoice your funder for the goods
• Title of goods passes to you once all payments are made
• The GST- inclusive amount is financed
• Deposits and/or trade-ins can be used to reduce the loan amount
• Loan can be fully amortised (nil residual ballooon) or a residual balloon payment can be factored in to reduce the monthly payments.
• Payment structures such as seasonal payments are available
• Your interest rate is fixed for the loan term
• The repayments and residual balloon payments do not include a GST component.
• For asset depreciation and interest deductibility purposes, the asset is effectively "owned" by you even though title does not pass until loan maturity.
• If you are on an accrual accounting basis for GST you can claim the full GST component back at the commencement of the loan*
• If you are on a cash accounting basis for GST you must claim the GST component back proprtionately across the loan term making this type of finance unlikely to be the most suitable for you *

Chattel Mortgage (CM)

• The funder will take a security charge over the assets to be financed
• The assets must be "owned by you" at settlement
• The supplier/dealer will invoice you for the goods
• The Chattel Mortgage can be registered with ASIC and/or the Land Titles Office under a Bill of Sale
• Loan terms of 12 - 60 months are available
• The GST-inclusive amount is financed
• Deposits and/or trade ins can be used to reduce the loan amount
• Loan can be fully amortised (nil residual balloon) or a residual balloon payment can be factored in to reduce the monthly repayments.
• Other payment structures such as seasonal payments or GST going back in as a rental are availagble
• Your interest rate is fixed for the loan term
• The repayments and residual balloon payments do not include a GST component.
• Fees and stamp duty can be included in the loan amount
• For asset depreciation and interest deductibility purposes,, the asset is "owned" by you
• Whether you are on either an accrual or a cash accounting basis for GST you can claim the full GST component when lodging your next BAS* making a Chattel Mortgage suitable for you regardless of your accounting method*

Finance Lease

• True finance lease is rarely used as it offers less flexibility than equity products
• Finance Lease can appeal to businesses who wish to avoid capital expenditure
• Most commonly used for motor vehicles but available on equipment in some circumstances
• Lease terms of 12 - 60 months are available
• The funder will "rent" the asset to you. You have no title to the goods but accept the residual value risk
• Your supplier/dealer will invoice the funder for the goods
• Your funder will claim an input deduction for GST, therefore the loan amount is the GST-exclusive price of the asset
• No deposit or trade-in equity can be applied to a Finance Lease
• The residual value is set in accordance with the ATO effective lefe guidelines
• Passenger cards to be leased which will exceed 30,000 kms pa will require a "High Kilometre" letter to be acknowledged by the client in order to use the lower residual values as dictated by the ATO.
• If you wish to lease a vehicle which exceeds the Luxury Car Tax threshold, you must acknowledge that, for tax purposes, you are demed to "own" the vehicle.
• For asset depreciation and interest deductibility purposes, the asset is "owned" by the funder. You may treat the monthly rentals as a deductible expense.*GST is charged and claimed on each monthly rental.*

Novated Lease

• Enables employees to salary-package their cars which can result in tax benefits*
• A novated Lease is a three-way agreement between an emplloyee, an employer and the funder
• The employee signs a finance lease agreement, both the employee and employer sign a Novation Agreement under which the employer agrees to make the repayments out of the employee's salary.
• The credit risk is assessed on the employee, not the employer.
• If the empliyee ceases employment, the lease may be "re-novated" to another employer, or the employee simply begins making the payments directly.
• The exact benefit to the employee must be independently calculated by a qualified financial advisor taking into consideration the employee's salary and overall tax position, car value, kilometres to be drive, FBT rates and tax rates.*

* Independent professional an tax advice must be sought to determine all tax and GST issues.

Contact us for a personalized quote or more general information