10 August 2018

Want to grow your business?
Need more equipment?
Looking to buy a new car?

Yes? Then Asset Finance may be the best option for you.

There are many types of car & equipment finance to choose from, so how do you know what suits you best?

We have listed below the common types of financing options available and provided a simplified explanation to help you.

Equipment loan (Chattel Mortgage): A popular option whereby the lender advances you the funds for the vehicle or equipment allowing you to own it from the beginning. A mortgage is held over the asset by the lender who uses it as security, just like a home loan.

Hire Purchase: In this case, the lender owns the vehicle or equipment for the duration of the Hire Purchase agreement. As the borrower, you hire it off them until all repayments are made. On final repayment, the ownership is transferred to you or you can purchase it at any time.

Finance Lease: In this scenario, the lender purchases the vehicle or equipment and leases it back to you, the customer. At the end of the lease period, you have the option to pay the total residual value thereby owning the asset outright.

Novated Lease: In this situation, an employer borrows money from a lender (as a novated deed) on behalf of an employee and takes ownership of the vehicle. The employee has unlimited use of the vehicle and contributes to the repayments of the vehicle via salary sacrifice. Alternatively, it may form part of their remuneration package. However, this option does not apply to equipment.

Operating Lease: Is an agreement between you and a lender whereby you rent the equipment for use over a fixed period. At the end of the lease, you can return the equipment with no further obligation. This option can be used to fund many types of assets and payments may be considered an operating cost, thereby not appearing as a liability on your balance sheet.

For all of the above types of loans, repayments are made over a 2 to 5-year period and businesses may be able to take advantage of tax exemptions on the repayments. If you would like to explore your options further, give our team at Bellevue Capital Financial Services a call. Alternatively, you can enter your details below and we will contact you to learn more about you and how we can help you achieve your goals.