Let’s delve into the differences between a finance lease, commercial hire purchase, and chattel mortgage:



Chattel Mortgage:

Ownership: With a chattel mortgage, you own the asset from the start of the finance term.

Security: The assets you purchase act as security for the loan.

Interest Rates: Generally, chattel mortgage interest rates are competitive.

Tax Benefits: There are GST benefits associated with chattel mortgages.

Use Case: Ideal for businesses that want full ownership of the asset immediately.

Finance Lease:

Ownership: During the lease term, you don’t own the asset, but you may have the option of ownership when the lease ends.

Ownership Benefits: You have the option of full actual ownership at the end of the term.

Tax Deductions: Business tax deductions are available on lease payments.

Use Case: Suitable for businesses that prioritize flexibility and want ownership benefits.

Commercial Hire Purchase (CHP):

Ownership: Similar to a finance lease, CHP involves leasing an asset for a fixed period.

Adjustable Repayments: Repayments can be adjusted to include a balloon payment.

Ownership at the End: You gain ownership of the asset at the end of the agreement.

Use Case: Commonly used for medium-term financing of tools, equipment, and vehicles.

Remember that the choice between these options depends on factors such as your business type, financial circumstances, tax position, and the specific asset you wish to acquire. Consider how much your business will pay in interest and fees, whether you need to upgrade the asset during the finance term, and what you’d like to happen to the equipment at the end of the agreement. 

We can help you navigate this, at NewStart we have a dedicated team who focus on asset finance going out to market of 40 plus providers to find you the most competitive rate in market. 

Whilst the above information is general in nature and doesn't take into consideration your personal circumstances, please reach out for a confidential discussion today. 

Alternatively jump straight into my diary and book some time now. 


https://usemotion.com/meet/josh-beniston/meeting?d=60



Comments

Post a Comment

Popular posts from this blog

Are You Really Ready to Secure Approval for Your Home Loan?

Image
As the housing market continues to evolve, one question looms large for prospective homeowners: Are you ready to secure approval for your home loan? Here are some key considerations to ensure you're prepared for this significant financial step. 1. Financial Readiness: Take a deep dive into your financial situation. Have you saved enough for a down payment? Do you have a stable income to support monthly mortgage payments? Understanding your financial readiness is crucial before approaching lenders. In todays market and regulation lenders will take a microscope to your finances and transactions. 2. Credit Health: Your credit score plays a pivotal role in loan approval and the interest rate you receive. Review your credit report for any errors and work on improving your score if needed. Lenders often look for a score of 620 or higher for conventional loans. We are able to obtain these reports for our clients as their mortgage broker. 3. Debt-to-Income Ratio: Lenders assess your de
Read more

Commercial lease vs residential lease

Image
Commercial lease vs residential lease Lets break down the key differences in this mini blog for some bite size learnings 1. **Purpose of Use:** The primary distinction is the purpose for which the property is leased. Residential leases involve renting property for individuals or families to live in, while commercial property leases are for business purposes, such as offices, retail spaces, or industrial facilities. 2. **Lease Terms and Length:** Residential leases often have standard terms, usually 6 or 12 months, and can be renewed. Commercial leases, on the other hand, tend to have longer terms, commonly ranging from 3 to 10 years or more, reflecting the stability businesses require. 3. **Rent Determination:** Residential rents are often influenced by factors such as location, property features, and demand in the housing market. In contrast, commercial rents are determined by factors like the size of the leased space, location, and the potential for business success in that area. 4.
Read more