Features/Conditions |
Finance Lease
(Novated Option Available) |
Operating Lease
(Novated Option Available) |
Commercial Hire Purchase |
Chattel Mortgage |
What is it? |
You lease the item for use for a set period in return for rental payments. At the end of the term you can make an offer to buy the item |
You lease the item for use for a set period in return for rental payments. At the end of the term you return the item to lessor |
You acquire the item for use and in
return pay rentals over a set term.
At the end of the term ownership
is automatically transferred to you |
You take ownership of the item at
purchase but the lender takes a
charge over the item until all
rentals are paid in full |
Can you finance 100% of the cost of the item? |
Yes, generally 100% financing is mandatory |
Yes |
Yes |
Yes |
Is there guaranteed ownership at the end of the term? |
No |
No |
Yes. Ownership passes to hirer once all payments are made |
Borrower owners the item from the outset |
Flexible repayments? |
Yes |
Yes |
Yes |
Yes |
Interest Rate? |
Fixed for term of contract |
Fixed for term of contract |
Fixed for term of contract |
Fixed for term of contract |
Who owns the vehicle during the lease? |
Legal ownership with lessor (Easy Auto Leasing) |
Legal ownership with lessor (Easy Auto Leasing) |
Legal ownership with financier |
Ownership is with the borrower |
What is the accounting treatment?** |
On balance sheet* |
Off Balance Sheet* |
On balance sheet* |
On balance sheet* |
Can you have a residual capital value? |
Yes, set to ATO guidelines* |
No |
Yes- optional, called either a balloon or residual payment |
Yes- optional, called either a balloon or residual payment |
What can be claimed as a tax deduction? |
Lessee may be able to claim lease
rentals and stamp duty as a tax
deduction against assessable
income if leased item is used for
business purposes* |
Lessee may be able to claim lease
rentals and stamp duty as a tax
deduction if leased item is used
for business purposes*
|
Hirer may be able to claim interest
and depreciation as a tax
deduction if the item is used for
business purposes* |
Borrower may be able to claim
interest and depreciation a s a tax
deduction if item is used for
business purposes* |
