Finding the best financing solution for your next business car, vehicle or fleet purchase requires careful consideration as this could have an impact on your business’ cash flow and tax bill.
With help from your finance specialist, you can choose the right finance option for your business with several options available:
- Finance lease
The lender purchases the vehicle on your behalf and leases it back to you. The lender retains ownership of the vehicle. At the end of the lease term, you could pay off the residual value of the loan and take ownership of the vehicle or hand the vehicle back to the finance company.
- Commercial hire purchase
The financier purchases the car and hires it to you for an agreed period. Although you use the vehicle, the financier retains ownership. At the end of the initial hire term, you can take ownership upon payment of the pre-agreed purchase price.
- Chattel mortgage/car loan
Money is lent to you to purchase the vehicle. Much like a home mortgage, you take ownership of the vehicle and the lender uses the vehicle as security. Once the chattel mortgage is paid, the lender provides clear title to the vehicle.
- Business loan
You can use a business loan to purchase vehicles. The business can use a traditional term loan repaid with principal and interest payments or a revolving line of credit. Business loans can be secured or unsecured.
- Novated lease
Employees can lease a vehicle using their pre-tax income. The lease payments are taken directly from the employee’s salary, thereby reducing their taxable income.