What is Equipment finance

An Introduction to LeasingEnhancing your business

Typical client profile for Leasing

Leasing caters only for commercial clients:

• Registered company

• Client operating a business with an ABN

• PAYG client operating a motor vehicle predominantly for work-related purposes (51%+)

• PAYG client who could benefit from a salary-sacrificed Novated Lease for their motor vehicle

What finance can I offer?

• Motor vehicle finance• Passenger cars for business use

• Light commercial vehicles – vans and small trucks

• Heavy trucks and trailers

• Plant and equipment finance• Income-generating assets

• Manufacturing, construction, medical, transport…

• Computers and electronic equipment

• Where is Macquarie Leasing cautious?• Retail / restaurant fit-outs (furniture and display) – unlikely to be

approved

• Sale and Leasebacks – criteria must be met

• Equipment over 10 years old

What products can I offer?

• Commercial Hire Purchase

• Chattel Mortgage

• Finance Lease

• Novated Lease

• Pre-Approved Limits

Loan Wize Fact Sheets explains

when each product should be employed

What information will I need?

• To assess an applicant for credit-worthiness we need:

• Last two years financial statements

• Assets and Liabilities statements of all individuals / directors

• Schedule of existing financial commitments

• Background on client – describe business

• Purpose of loan – why is the vehicle / asset required?

• The larger the loan, the more information required

Vehicles and Assets

• Passenger cars

• Light commercial vehicles

• Heavy trucks and trailers

• Forklifts

• Mining vehicles and equipment

• Construction vehicles and equipment

• Manufacturing plant and equipment

• Printing presses and associated plant

• Electronic and computer equipment

• Office fit-outs for professionals

• If you’re not sure – call us

What information will I need?Vehicle & Assets

• Commercial Hire Purchase

• Chattel Mortgage

• Finance Lease

• Novated Lease

Products Available

Commercial Hire Purchase

• Flexible product best suited to business clients on an accrual basis for GST

• Lender “owns” the goods until final payment is made

• Deposits or trade-in equity can be applied

• Interest and depreciation claimed by the client

• GST claimed up-front if client on accruals basis

• GST claimed across the term if client on cash basis

• Balloon payments can be included during the term and at maturity if desired – no tax guidelines applicable

• Interest rate is fixed

This information is not to be treated as tax advice in any form. Clients should always obtain their own advice from a qualified person prior to entering into any finance or

leasing agreement

Chattel Mortgage

• Flexible product best suited to business clients on an cash basis for GST

• Client owns the goods and allows the lender to secure them by way of a chattel mortgage

• Deposits or trade-in equity can be applied

• Interest and depreciation claimed by the client

• GST claimed up-front by business clients

• Balloon payments can be included during the term and at maturity if desired – no tax guidelines applicable

• Interest rate is fixed

This information is not to be treated as tax advice in any form. Clients should always obtain their own advice from a qualified person prior to entering into any finance or leasing agreement

Finance Lease

• Best suited to business clients who prefer to minimise capital expenditure

• The lender owns the asset as “Lessor”

• Client rents the asset via a monthly payment

• No deposits or trade-in equity may be applied

• Rental payments are usually claimed by the client

• GST on payments claimed across the term

• Residual values set in accordance to ATO guidelines

• Client indemnifies the lender for residual value

• Rental payment and term are fixed


Novated Lease

• Best suited to salaried clients wishing to “salary sacrifice” the costs of owning a car

• The lender enters into a lease agreement with the client

• Client then enters into a Deed of Novation with their employer

• Employer pays the rental payments to the lender out of the client’s pre-tax salary and claims the deduction

• Credit decision is based on credit-worthiness of the client

• If client leaves the employer, the lease payment responsibility reverts to the client

• Residual values set in accordance to ATO guidelines

• Client indemnifies the lender for residual value

• Rental payment and term are fixed


Points to Note

• For business clients who have an ongoing need for the purchase of vehicles and/or assets you can arrange a Facility Limit via lemders. This ensures an easy process each time a new asset is acquired.

• Sales and Lease-backs and Private Sales may be accommodated for good clients.

• Increased rates and fees are charged in accordance with the additional work involved.

Some real life examples…

Self-employed builder is referred to you by a happy residential mortgage client, who has noted via your marketing material that you also provide vehicle and equipment finance;

He is looking for finance to purchase a 2-year old utility vehicle and also a large air-compressor valued at $30,000;

The scenario may play out as follows:


leasing agreement

Another example…

Quantity Surveyor who is a financial planning client of a valued referral source comes to you for vehicle finance on a new 4WD;

Client has 4 years experience but only 6 months in current employment;

The scenario may play out as follows:


leasing agreement

IN SUMMARY

IN MOST CASES:

A typical self-employed client will most likely be suited to a Chattel Mortgage for their vehicle & equipment finance needs, mainly because…

A typical large company that turns over more than $1m per year and accounts on an accrual basis will most likely be suited to a Commercial Hire Purchase because…

A typical PAYG client who requires a vehicle for business use will likely use a Commercial Hire Purchase because…

A typical salaried employee who wishes to obtain a vehicle via a salary sacrifice will use a Novated Lease because…

Thank youQuestions?

What is Equipment finance

Economy & Finance

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