Finance Lease Explained
An advantage of a finance lease is that you get to use it for the finance lease period. The lender has the right to sell the equipment if they wish but usually you can purchase the equipment for the agreed value, this known as the residual value. The residual value is stipulated in the finance lease agreement.The lender funds the motor vehicle (or other goods) for you and, in return, you pay us a series of rental payments, which are fully tax deductible (if the equipment is used solely for earning assessable income).
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How Does a Finance Lease Work?
In a finance lease agreement the lender is known as the leaser and you are known as the lessee. Essentially the lender will purchase the asset on your behalf and lease it to you as specified in the Lease Agreement. The finance lease agreement has all the contract details such as the residual value of the asset, the period for finance lease, the monthly lease payments and the depreciation rates for tax purposes.
When the Finance Lease expires, There Are Some Alternatives Available to You:
- You can opt to refinance the residual value of the finance lease
- The finance lease contract can be payout in full
- Alternatively you make an offer to purchase the asset. We will listen to your offer and make a decision to accept the offer
Still not clear and want to know your chance of financial application success? Call us now on 1300 583 022 or fill out the contact form for a Free Confidential Consultation.