Car Lease Melbourne
Car Lease Melbourne – How it Works
Car leases are a cost-effective route to accessing the vehicle of your choice. The main advantage is in their tax savings. Car lease structures offer GST-free vehicle prices and all repayments are tax-deductible – when combined, those two factors can save you tens of thousands of dollars over the duration of a car lease. Melbourne businesses can access a few different products when it comes to leasing a vehicle, and there are alternatives too. Your end of lease options are extremely flexible, and finance terms run between one and five years.
Compare the best Melbourne car lease options
Comparing all your car finance options is easier than it sounds. There are hundreds of lenders out there, offering many types of vehicle finance product, and covering all your bases is impractical. Using a bank for car finance can be just as problematic because they only offer their own limited range of products – which isn’t great if you have specific needs, and doesn’t exactly promote competitive rates. Savvy makes shopping for car finance achievable, because we do the searching for you, and we’re with you every step of the way to help with your application.
Why choose Savvy?
Car lease options explained
A finance lease presents Victorian business owners with one of the most tax-friendly ways to buy a vehicle:
- Repayments are tax-deductible
- The vehicle purchase price is GST-free
A financial lease works in a similar way to an operating lease while the agreement is running. However, you get an extra end of lease option when compared to an operating lease. When the lease agreement finishes, you can pay the residual amount (which is based on the car’s depreciation during the term) and own the vehicle. If you’d rather extend the lease, you can refinance the residual and keep using the vehicle. If those two options don’t fit, you can sell or trade in the car by way of paying the residual and begin a new finance agreement.
- Terms run from 12 months up to five years
- Every time you make a payment, you accumulate equity in the car
- End of lease options are buying, refinancing, selling, or trading the vehicle in
- The payments and interest may be tax-deductible
- The purchase price of the car is GST-free
An operating lease comes with tax-deductible regular, fixed payments, so it’s the finance option of choice for many Melbourne businesses. Not only are the fixed payments easy to budget for, but you can also claim both the principal element and the interest portion of the monthly cost as a business expense. That makes for weighty savings over the course of several years. An operating lease is a fully maintained car finance option. That means businesses with more than one car essentially outsource all administration – but that works with just one vehicle too. Many larger companies use operating leases because they save costs and people hours; however, thousands of sole traders and private car buyers also use them. You can either hand the vehicle back when the term ends, or you can choose to buy. You get to include registration, servicing and maintenance, fuel, insurance, and breakdown cover in your repayments, or you can tailor what you bundle.
- Terms range between 12 months and five years
- Companies can outsource fleet management
- Claim the payments as a business expense
- At the end of the lease, you can negotiate to purchase the car or just hand it back
Chattel Mortgage - car lease alternative
Chattel mortgages represent an excellent alternative to car leases for some businesses. They’re a commercial finance product, so they’re not available to private buyers. Chattel mortgages have some unique and very cost-effective features, and they also have terrific GST benefits. Chattel mortgages are secured vehicle finance, and you own the car from the start of the agreement.
- Businesses can claim back all the GST applied to the purchase price when they file their next business activity statement
- All repayments are GST-free
- The entire residual amount is GST-free
- Businesses can claim the interest portion of all repayments
- Businesses can also claim depreciation
- Agreement terms run from 12 months up to seven years
The Pros and Cons of a Car Lease in Melbourne
Businesses don’t tie up valuable working capital in vehicles
Huge tax savings over the course of a lease agreement, with tax-deductible repayments
With a finance lease, businesses can buy a car without paying GST
Fully maintained packages minimise admin and maximise convenience
Businesses can’t claim depreciation on vehicles they don’t own
You can’t usually modify vehicles after they’ve been purchased
Operating lease deals may feature usage limits
Insurance requirements for leased vehicles are usually higher