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Car Lease (Finance Lease)
A Car Lease is a commercial finance product which enables the customer to have the use of a car or commercial vehicle and the benefits of ownership, while the financier retains actual ownership of the vehicle.
A Car Lease is technically called a Finance Lease and can be used to finance all sorts of vehicles, but "Car Lease" or "Car Leasing" are more commonly used. Car Lease can also be known as an Asset Lease or Vehicle Lease.
How does a Car Lease work?
The financier purchases the vehicle on behalf of the customer, who then pays the financier a fixed monthly lease rental for the term of the lease.
At the end of the lease the customer can either pay a residual value (final instalment) on the lease and take ownership of the car, trade it in or re-finance the residual and continue the lease.
Benefits of a Car Lease
- Flexible contract terms ranging from 24 to 60 months (two to five years)
- Fixed or variable interest rates
- Deposit (either cash or trade-in) may be used
- A tax deduction is available when the vehicle is used for business purposes
- Less stringent approval guidelines
- The loan is not secured against your vehicle
Who does a Car Lease suit?
A Personal Loan is suitable for individuals who wish to purchase a car that is outside of normal lending guidelines (e.g. older model and low value vehicles) or who do not wish to have a loan secured against their vehicle.
Tax implications of a Car Lease
As a Car Loan is a personal finance product, only normal tax deductions for depreciation and running costs can be claimed (on a pro-rata basis according to the percentage of business use).
Other options
If you are considering a Personal Loan you may also want to take a look at a Car Loan or Novated Lease (Salary Packaging).
Want to know more?
Call us on (03) 9888 9292 and we will be happy to discuss your options with you.
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