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Car Lease & Car Leasing

A Car Lease (or 'finance lease') is a form of finance which enables business owners, employees or contractors to have the use of a car (or commercial vehicle, motorcycle, or another form of suitable transport) and all benefits of ownership with the tax benefits that come from having another company (in this case the finance company) maintain ownership of the vehicle.

Exactly how does a car lease work?

It's simple: You find a vehicle you want, the financier purchases it on your behalf and you then lease it back from them for an agreed (and fixed) monthly payment. When the lease is up, you can either pay a final instalment for the 'residual value' of the lease and take ownership of the car yourself, trade it in for another vehicle, or re-finance the residual amount and continue a new lease for another set time period.

What are the benefits of a car lease? Why lease when you could just buy a car?

  • You get flexible contract terms ranging from 2-5 years
  • The interest rate doesn't change
  • The monthly payment doesn't change
  • All your costs are calculated in advance
  • Someone else (the finance company) is paying the GST for you, reducing your monthly payment
  • You can apply a residual amount to the lease (see the above section) which reduces your monthly payments
  • If you use the car for business there are economical tax deductions
  • You can make lease payments in advance, which can be handy at tax time (particularly at the end of the year)

Who are car leases suitable for?

  • Companies
  • Partnerships
  • Sole traders
  • Individuals who lease the vehicle to generate income
  • Employees who are keen to use a Novated Lease as part of a salary package