Do you want to get the latest equipment and vehicles with no capital outlay? Then Finance Leasing may be the option to take.
So what is a Finance Lease?
A finance lease that can help your business to budget with increased certainty. The bank will buy the equipment, then as the owner, they lease it to your business for an agreed period. At the end of the term, you return the equipment to the bank. If you would like to keep the equipment, you can either apply to refinance the equipment for another term, or make an offer to purchase it outright (any offer to purchase will be considered on it’s merits).
So what are the benefits to a Finance Lease?
- Security is usually the asset itself – preserving access to working capital credit lines.
- Keeping your business up-to-date – leasing allows you to regularly make use of the latest technology and most efficient vehicles, plant and equipment.
- No capital outlay – no up front deposit needed, which means you can use your working capital for other core business needs.
- Get the real value out of your equipment – leasing terms are structured to allow for the residual value at the end of the term to reflect the equipment’s expected useful life.
- Tax deductible – generally the rental is deductible to the extent the asset is used in your business.
- End of term value is attributed to the asset – thus reducing the cash flow impost (as opposed to standard banking lines).
- Tailoring to match your cash flow – interest charging cycles and repayment cycles aligned with your anticipated cash flow.
- Simplicity – rentals will be automatically debited from your nominated business account.
What are the features to a Finance Lease?
- Most depreciable assets can be funded.
- Choice of interest rate type.
- Choice of rental payment options.
- The bank owns the asset and leases it to you.
Important Facts* (Information provided by National Australia Bank)
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Interest rate: |
Available on application. |
Interest type: |
Agreements under $500,000
|
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Agreements over $500,000
- Fixed
- Variable
- Capped and collared
- Or, a combination of these.
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Minimum term: |
12 months |
Maximum term: |
72 months. Other terms can be considered on application. |
Minimum amount: |
Greater than $10,000 is preferred. |
Maximum amount: |
Unlimited |
Payment options: |
Monthly, quarterly, half-yearly, annually, in arrears, in advance, or to match any seasonally-driven cash flow need. |
Security Required: |
Generally the security is the asset itself. A director’s guarantee and indemnity may also be taken as supporting security. Additional security might also be required – this will be assessed on your application. |
Ownership: |
The bank owns the asset and leases it to you. |
Related options: |
Commercial Hire Purchase
Equipment Loan
IT Rental |
What it costs: |
Fees and charges are payable. You will need to request specific details from your bank or finance broker. |
Terms and Conditions: |
100% finance is mandatory.
Proceeds of trade-ins and/or deposits must not be used as equity.
Your ownership of the goods at the expiry of the lease contract is not guaranteed. Other Terms and Conditions apply. Request full details from your bank or finance broker. Credit approval and asset eligibility criteria apply. |
Where to from here?
The information for this article has been provided by NAB. For further information on how you can secure business financing for your business, please contact Andrew Halsey, Business Relationship Manager, Telephone: 08 9333 4147 and mention that you were referred by Innova Business. |
