Equipment Loan Tips
Choosing the right way to finance your equipment depends on a thorough assessment of your business requirements and objectives. It’s important to make sure your equipment loan repayment structure is in line with your financial and business position and to consider the flexibility of the repayment structures offered.
Individual business positions vary, so we offer a number of options to suit your taxation and financial situation:
An equipment lease agreement provides you with the use of the equipment for a designated period, generally between three and five years. Our team are able to structure a series of payments to suit your business cash flow. The residual value (the value of the equipment at the end of the lease period) can be agreed upon with the lender. This will happen before commencing the lease. You may opt to either pay-out this figure and purchase the equipment or indemnify the financier for this amount.
Commercial Hire Purchase
Hire Purchase will provide your business with the immediate use of the equipment, subject to payments over an agreed term. During the term, the financier owns the equipment. Ownership is transferred to you when the final payment is made. Our team will structure a plan with respect to your financial circumstances. It’s important to note that a deposit can be made before commencing the hire agreement to help offset future repayments.
The Chattel Mortgage is an attractive proposition in that it’s very flexible. You can either finance the full purchase price. Alternatively, you can include an upfront deposit or trade-in to reduce your rental payments. Similar to a lease agreement, a residual payment may also be added at the end of the term. This should reflect the equipment’s value at the end of the agreement. A Chattel Mortgage can improve cash flow where due to GST considerations, Commercial Hire Purchase is not suitable. The ownership of the goods remains yours. The full income tax credit will be claimed in the Business Activity Statement (BAS) for the quarter the asset is acquired.
The Finance EZI team has extensive experience in operating finance agreements for all types of equipment. We’re able to tailor finance to the individual needs of your business.