Motor Vehicle Loans

    Commercial Hire Purchase

    This type of finance is an agreement between you and the lender to acquire a vehicle. During the hire period, the lender legally owns the vehicle and you pay regular instalments to the lender. When you pay off the loan in full, legal ownership is transferred to you.

    If you use your car to generate assessable income, the interest component of the instalments and the depreciation on the car may be tax deductible.

    Chattel Mortgage

    This is the most common type of Vehicle loan for business use!

    A Chattel Mortgage is a commercial finance product where the customer takes ownership of the asset (chattel) at the time of purchase.

    Under a Chattel Mortgage the financier advances funds to the customer to purchase an asset, and the customer takes ownership of the asset (chattel) at the time of purchase.

    With Chattel Mortgage the customer can claim the interest charges on the contract and depreciation (in the case of vehicles up to the depreciation limit*) as a tax deduction.

    The Benefits of a Commercial Hire Purchase

    Flexible Finance

    You can finance 100% of the vehicle purchase price, or place a deposit.

    Purchase Anytime

    You can purchase the vehicle at anytime during the term of the agreement.

    No interest rate fluctuations

    You are protected from interest rate fluctuations during the loan period.

    Government Legislation – GST Changes to Hire Purchase Agreements from 1 July 2012

    The Government has thrown a “curve ball” in relation to changes proposed to the treatment of Hire Purchase Agreements from 1st July 2012. Whilst these changes were originally thought to be positive the proposed legislation has added additional GST consequences for these Agreements.

    A customer who accounts for GST on a cash basis from the 1st July 2012 will be treated the same as if the customer accounted for GST on a non-cash (accrual) basis. The effect of this change is that it will allow customers on a cash accounting basis (typically clients with a turnover of less than $2m) to claim the fully amount of any available input tax credits at the time the first payment under the hire purchase is invoiced or paid.

    Currently these customers can only claim the GST tax credits progressively in relation to each payment under the hire purchase which has caused a bias away from hire purchase in favour of other asset finance products, in particular chattel mortgage.

    The “curve ball” the legislation is that term charges (interest) imposed on the amount financed and all related fees and charges will become fully taxable for GST purposes. This means additional GST will be payable upon settlement of the contract. The effect of this change will mean that a Financier of the Hire Purchase contract will now become liable for all of the GST on the charges and it will pass the liability onto the customer by issuing a tax invoice. The customer can then elect to pay the GST directly to the Financier from their own funds, at settlement, or have the GST liability included in the amount financed under the Hire Purchase contract. (subject to credit approval).

    Government Legislation – GST Changes to Hire Purchase Agreements from 1 July 2012

    The Government has thrown a “curve ball” in relation to changes proposed to the treatment of Hire Purchase Agreements from 1st July 2012. Whilst these changes were originally thought to be positive the proposed legislation has added additional GST consequences for these Agreements.

    A customer who accounts for GST on a cash basis from the 1st July 2012 will be treated the same as if the customer accounted for GST on a non-cash (accrual) basis. The effect of this change is that it will allow customers on a cash accounting basis (typically clients with a turnover of less than $2m) to claim the fully amount of any available input tax credits at the time the first payment under the hire purchase is invoiced or paid.

    Currently these customers can only claim the GST tax credits progressively in relation to each payment under the hire purchase which has caused a bias away from hire purchase in favour of other asset finance products, in particular chattel mortgage.

    The “curve ball” the legislation is that term charges (interest) imposed on the amount financed and all related fees and charges will become fully taxable for GST purposes. This means additional GST will be payable upon settlement of the contract. The effect of this change will mean that a Financier of the Hire Purchase contract will now become liable for all of the GST on the charges and it will pass the liability onto the customer by issuing a tax invoice. The customer can then elect to pay the GST directly to the Financier from their own funds, at settlement, or have the GST liability included in the amount financed under the Hire Purchase contract. (subject to credit approval).

    Bridgecoast Finance has other Vehicle Loan options

    Consumer Loan

    This is the most common loan used for individual finance

     

    Novated Lease

    This type of finance is an arrangement between you, your employer and the financier.

    Commercial Hire Purchase

    This option gives you flexible repayments and you will own the vehicle at the end of the loan term

    Finance Lease

    This type of finance gives you the option to rent a vehicle for an agreed period of time and at the end of the loan term you have the option to upgrade.

    Chattel Mortgage

    The most common type of vehicle or equipment plan.

    Fully Maintained Operating Lease

    A fixed fee to cover your vehicle management, such as maintenance, registration, renewal, tyres etc. At the end of the term, you simply return the vehicles to the financier.

    Call us on 1800 803 428 or:

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