Car Lease Perth
Car lease Perth - How it works
Leasing a car is different from some other forms of finance, primarily because you don’t own the vehicle during the agreement – but that does get you access to some amazing tax benefits. All leasing costs get based on the GST-free value of the vehicle and payments, plus the interest, are tax-deductible – which can save you thousands over the duration of the lease. You use the car for a specified period between one and five years. After that, you can either pay the residual amount and own the car, refinance the residual and extend the lease, or trade in the car and get another lease with similar or different conditions.
Finding the best Perth car lease deal
For most business users, choosing the best car finance option is about maximising any available opportunities to pay less tax and GST – and that’s where Savvy’s expert commercial finance consultants can help. Successful and cost-effective vehicle finance relies on you having as many options as possible and then picking the one that best suits your aims, your current situation, and your plans for the future. Here at Savvy, we partner with more than twenty-five specialist car lenders so that we can offer businesses and individuals the choices they need to identify opportunities to save and make an excellent car finance decision.
Why choose Savvy?
Car lease Perth explained
Car Lease Perth: The Finance Lease
A finance lease offers massive GST and tax advantages. You choose the car you want, but the lender purchases it – claiming back the GST – so your repayments get based on the value of the vehicle less GST. It’s a huge benefit from the outset of the agreement, representing a GST saving of more than $6,000 on a $70,000 car, for example.
Not only that, but because a lease agreement doesn’t represent a contract of sale during the term, you can claim the repayments as an operating expense – including both the principal and interest portion. Over the course of a five-year car lease, that has a significant impact on taxable revenue.
Let’s say you’re looking for a car lease, Perth based, and your turnover is $!20,000 per year. You find a vehicle for $80,000 and decide on a five-year term with an interest rate of 6%.
Every repayment you make not only builds equity in the car; it also reduces your taxable revenue. Coupled with the initial GST saving, over the term of a car lease agreement, that all adds up to some serious savings.
- Finance lease terms between 12 and 60 months with an option to extend further (residual refinance)
- End of lease options allow you to purchase by paying the residual, refinance the residual and extend the lease, or trade the car in and begin a fresh lease
- Each finance lease payment you make goes towards buying the car, increasing your equity
Car Lease Perth: The Operating Lease
Many Australian businesses and individuals use an operating lease because of their tax benefits and convenience. For commercial customers, operating leases present a chance to run presentable, reliable cars for anything between one and five years, and they essentially outsource administration, along with its considerable costs and time demands.
That’s because operating leases are a fully maintained way to finance any vehicle. For many business and private customers, including expenses like registration and insurance, car maintenance and servicing, and even insurance and fuel in the regular lease payment makes perfect sense. It’s called an operating lease for a reason – this type of finance bears huge cost benefits and productivity gains. Speak with a Savvy consultant about maximising your tax savings and tailoring different running costs to suit your specific operating requirements.
- Tax-deductible repayments: Business users can claim costs as an operating expense
- End of term options allow you to hand the vehicle back without charge or make an offer to buy the car
Commercial Car Lease Alternative: WA Chattel Mortgage Finance
Chattel Mortgage finance is a secured form of commercial lending, which basically means two things. Firstly, you get better interest rates because the lender’s risk is lower. Secondly, you own the vehicle from the start, but the finance provider retains an interest in the car until you make the last repayment.
- Chattel mortgages have terms between twelve and eighty-four months.
- Your car acts as collateral, keeping interest rates low.
- You can adjust a chattel mortgage residual to manipulate repayment amounts if you choose, unlike with a car lease
- All payments for the duration of the term are GST-exempt
- The entire residual amount is also GST-free
- The interest part of all repayments is tax-deductible
- Business users get to claim depreciation on the vehicle, as per ATO guidelines
- Registered businesses may claim GST on the full purchase price the next time they complete a business activity statement
Car Lease Perth Alternatives: Car Loans in Western Australia
For private car buyers who don’t have access to a salary sacrificing scheme and don’t want to lease a vehicle, car loans are the ideal finance choice. They’re a relatively simple way to buy a car, and their structure is much the same as a chattel mortgage. The risk to the lender is lower because your car acts as security until you make the final repayment, meaning lower interest rates.
You can buy new and used cars (up to age limits that differ between lenders)
- Terms last between one and seven years
- It’s OK to buy privately or from a vehicle dealer.
- With a car loan, you can trade your old vehicle in, use a cash deposit, or borrow the full asking price of the vehicle you intend to buy.