Zero Percent Interest Finance on Motor Vehicles
Have you ever heard the saying, If it sounds too good to be true, then it probably is. What’s the catch? When a motor vehicle manufacturer offers a great interest rate it usually comes at a price. And that price is their terms-not yours. Often that means the deal isn’t so good for you after all. Let me explain. Suppose you see a great 1.9% percent interest rate on the car of your dreams. Should you rush in and buy? Mmm, Maybe or Maybe Not, but there should be a few questions you should ask first before you sign on the dotted line. Q1- Is the offer on the exact car I want? You may find the dealer has a special offer only on a special spec car that they want to move quickly. Maybe it’s a manual transmission (but you want the auto- or vice versa). Maybe it’s a run out model that could cost you thousands in depreciation when the new model is announced a short time later. Is it the right model, is it the correct colour ? Q2- Do I get a discount? More than likely the answer is ‘NO’. The interest rate is usually only available if you pay the full manufacturer’s recommended price. “That’s no discount not even free window tinting”. So you have to weigh the interest rate saving against the discount you don’t get. Q3- Can I change the terms of the deal? These ‘specials’ usually have restrictive and narrow terms. For example. The Deal may be limited to a 3 year term with no deposit allowed. So, If you want a four year term with a 10% deposit, then – “NO DEAL” Just remember nothing is for free and someone has to pay and it’s usually you ! Be careful, do the figures, then check again to see if it’s still worthwhile. Usually if you can negotiate a discount for as little as $2,000 to $3,000 your payments can be a lot cheaper. If “Zero % interest rates’ are confusing there’s a simple solution… CONTACT US for further information *Benson Leasing advise that the example provided above is an example only and may not apply to your specific business purchase and we recommend you consult your tax agent for advise on your individual circumstance. Please call us on 1300 795 058 or go to our website www.bensonleasing.com.au for all your car financing...
read moreThere is more than meets the eye when it comes to finance
The thinking that ‘Finance is designed for businesses who can’t afford to purchase equipment outright’ is very far from the truth! It is for smart business operators who what to maximizing their cashflow and reduce company tax. Let’s take a look how a recent customer used the ‘Rental Finance’ facility to ‘SAVE MONEY’ on buying new Refrigeration Units Equipment Finance Amount: $37,500 inc 60 x $758.09 Monthly Finance Instalments $45,485.40 Less gst (off-sets gst paid on your BAS) Less 30% Tax rebate (off-sets Company Tax payable) $16,540.19 NETT COST OF RENTAL $28,945.21 Or NETT COST OF RENTAL + OWNERSHIP $31,945.21 SAVING $5,054.79 * How is this possible? The utilisation of a Rental Agreement facility is very tax effective for business as the business doesn’t effectively own the goods till purchase at terms end. Therefore each instalment is viewed and simply accounted for as a expense item (just like your phone bill) which attracts up to 100% a tax deduction on each payment made in the term of the loan. A tax deduction through depreciating if purchased outright takes many more years to claim back. Other Business Building Benefits The Balance Sheet isn’t effected with the liability of a large loan as the business doesn’t ‘owe’ the money used to buy the equipment. A business retains Capital thus having the money working for them, not being lost acquiring equipment. This can be used on stock, Marketing, Investing… Benson Leasing has Finance available for amounts as little as $2,000.00. For a limited time Benson Leasing are offering Existing Customers Finance Pre-Approval up to $55,000.00 * Benson Leasing advise that the example provided above is an example only and may not apply to your specific business purchase and we recommend you consult your tax agent for advise on your individual circumstance. Please call us on 1300 795 058 or go to our website www.bensonleasing.com.au for all your car financing...
read moreWhat are the benefits of leasing over buying or a loan ?
There are both advantages and disadvantages associated with the different financing methods, so to help you decide what is best for YOU I have summarised the basic differences between leases and loans if considering a new vehicle. 1. Leases A lease is a long term agreement to finance the use of a vehicle for a fixed period of time. At the end of the term you will not own the vehicle. Generally, there are 2 main types of leases: 1- A financial lease – a residual value for a vehicle is set upfront to reflect the vehicle’s value at the end of the agreement. At the end of the term you have no option or right to purchase the vehicle, however Benson Leasing can help negotiate an offer for the set residual value. Under a financial lease you will be responsible for maintaining the vehicle. 2- A novated lease – A business may lease a motor vehicle on behalf of an employee, with the responsibility for the lease lying with the employee. Some employers allow their employees to salary package to a novated lease, with payments will be made from your pre-tax income, and thus reducing your taxable income. Please note that Vehicles salary packaged through a novated lease attract Fringe Benefit Tax (FBT). Then, there are 3 main types of novated leases: Novated finance lease: where just the vehicle is leased Fully maintained novated lease: where the vehicle and its running costs are included in the lease Fully maintained novated operating lease: the vehicle and its running costs are included in the lease and the residual value risk is assumed by the lessor. Advantages of Leasing: Preserve your cashflow. You are able to acquire a new car without making the initial cash outlay. Compared to a loan arrangement to purchase the same car, a lease usually requires no down payment. Lower payments. As you are paying for a portion of the cars full value leasing payments are usually lower than loan repayments. Reduce tax. When using a salary packaged novated lease the payments are made using your pre tax income reducing your taxable income which in turn reduces the tax you pay. Increase flexibility. A lease allows you to update the motor vehicle you are leasing every few years. Maintenance. Depending on the type of the lease the maintenance and running costs of the car are included in the lease. Disadvantages of Leasing: Lack of ownership. With a lease you do not actually own the asset, this will prevent you from making any modifications to the vehicle throughout the duration of the lease. At the end of the lease you will have to return the vehicle to the lessor or be required to pay the residual still owing. Fringe Benefit Tax. The amount of FBT you’ll get charged for your car will depend on the distance travelled each year and its based value (the purchase price excluding the cost of stamp duty, registration and CPT insurance). Residual value. This value is set by lessor when the lease is established. If at the end of the lease the car is worth less than the predetermined value you will still have to pay the agreed residual value. You will have to pay GST on the residual value if you decide to purchase the car when the lease ends. Long term legal obligation. A lease is a legal document that carries long term obligations. It can be difficult to cancel a lease agreement and there will penalty fees and costs associated with the cancellation. 2. LOANS A loan is used to...
read moreIs there really a benefit to buying Equipment before 30th June?
The benefits to buying into the sales hype of “End-of-Financial Year” Sales depends on a number of factors, and your individual financial needs. If you are seeking a tax benefit from your Purchases, the factors on which it depends may include the following: 1. Is the item considered to be a capital asset such as a car or machinery? If so, then there is probably very little tax benefit in buying it before the end of the financial Year as opposed to afterwards. Dependant on the recent changes to the Taxation Laws, you generally can’t claim a tax deduction for the full cost of a car or plant and machinery. 2. Are you classed as a “small business” entity? A “small business” taxpayer is one with turnover of less than $2 million and special rules apply regarding taxation, which can be more favourable. This threshold applies to all businesses you own, so if you have more than one then you will need to add their turnover together. 3. Are you getting a “real” discount by buying it before June 30? If it will be cheaper for you to buy the item before June 30 rather than after it, then it is a real saving. If you have received advice about tax benefits in making a capital Purchase for your Business, make sure you have considered the likely cash flow impact down the track. And remember – use long-term funds to acquire long-term assets, not working capital. Benson Leasing can help you work out an easy-payment schedule to suit your individual needs, considering your circumstances, the equipment you wish to purchase, and we can obtain the very best rate for you. TESTIMONIAL Hi Jody A quick note to say “Thank You” for your efficiency in the process of finance application for Russell & Lorraine. It was fast and efficient. It helps when we have a buyer who is willing to cooperate as did Lorraine. Thank you once again, Kind regards Venus Hot Rock Dining International Pty Ltd Please note that the above information is of a general nature, and is not given as specific Taxation Advice. We recommend independent Taxation Advise pertaining your individual needs is sought before making any financial or investment decisions. Benson Leasing and its Representatives do not accept any liability for any errors or omissions of information supplied in this...
read moreNot all finance companies are alike
Not all finance companies like financing all equipment or like all types of customers for that matter. Benson Leasing is your one stop finance shop, unlike approaching the one finance company or the one bank, where if you are decline for credit you’re finished, Benson Leasing has many different finance companies we can approach on your behalf. If you’re a new in business we can help, if you’re a non-home owner we can help or if you have a few payment defaults on your credit rating we can help there also. Benson Leasing have real people assessing your application and we have many premium lenders for the more establish client or entry level funders for new businesses. We can tailor a finance product that suits your actual business needs, and your own personal situation, whether you need to buy equipment or you sell equipment Benson Leasing has flexible finance solutions. Benson Leasing can help you avoid technology obsolescence, maximise your tax effectiveness, smooth out your budgets and can help with cash-flow friendly payments. Further Reading Here are a few interesting articles and comments we have been reading this month, which you may be interested in: From the Sydney Morning Herald: How have the hire purchase rules for vehicles changed? Read more Have your say – The Australian Government is reviewing the Personal Property Securities Act 2009 (PPS Act) and would like to hear from...
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