What is Equipment finance

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What is Equipment finance

  1. 1. An Introduction to Leasing Enhancing your business
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. • Commercial Hire Purchase • Chattel Mortgage • Finance Lease • Novated Lease Products Available
  8. 8. 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
  9. 9. 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
  10. 10. 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 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
  11. 11. 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 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
  12. 12. 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.
  13. 13. 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: 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
  14. 14. 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: 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
  15. 15. 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…
  16. 16. 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…
  17. 17. 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…
  18. 18. 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…
  19. 19. Thank you Questions?

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