Express Vehicle Financing
One of the more common strategies used by business owners to reduce tax is to purchase a car before the end of the financial year.
This often sees lenders completing up to 1/3 of their entire year’s vehicle finance budget in the last 6 weeks of the financial year. Thankfully the last minute stress and rush has been alleviated by some banks who have introduced what most call “Express Vehicle Financing”.
New Purchases
If you can satisfy the following criteria some banks will provide up to $150,000 in equipment finance (including cars) without the need for financials:
- ABN holder & GST registered for a minimum 2 years
- You are a home owner (or paying off a mortgage)
- You do not owe money to the Australian Tax Office
- You do not have an adverse credit history
The turn around is fast and you will, in many cases, have your car within a week.
Replacement (or Upgrade) Finance
If you have just finalised paying off some equipment finance, in many cases you automatically qualify for “Replacement Finance” as long as the new repayments are less than 125% of the old repayments.
If you are interested in finding out more please contact Mick on 0437 645 255 and he will be happy to help.
2 Responses
Could you tell me is it better tax wise
to perches a work Ute under finance or lease
Hi Allan,
There are different forms of finance but typically most businesses now use a Chattel Mortgage to finance the purchase of a vehicle. A Chattel Mortgage (or Equipment Loan) works in the way that you pay off the vehicle over a set period of time and the vehicle is used as security for the loan. The interest rate is generally lower than a personal loan due to the financier holding the vehicle as security. Importantly ownership is yours from the date of purchase. You can claim depreciation and interest on the loan (if applicable).
For a lease, the financier owns the vehicle. You can only claim the lease repayments (if applicable) and to own the vehicle you will need to pay the agreed value at the end of the lease term. For employees who salary sacrifice, this is typically the preferred finance.
However, for an opinion on which is better will depend on your individual circumstances and I recommend that you come in and see one of the accounting team. Mick Doyle our in-house finance specialist is also available.