Car Lease
Further on our series on car finance we come to one of the most well- known type of funding called “The Car Lease”. Believe it or not most people say and think they have a “Car Lease” when in fact they have a Hire Purchase, Chattel Mortgage, which is very popular.
Car leasing is when the car is for business use and carries certain tax benefits, making it an attractive option for some.
If the car is for private use there is no point in leasing. The costs can be about the same as for a car loan but the exit penalties are much higher and interest is calculated in an old fashioned way. Which means any overpayments made will not reduce the total interest cost.
GST is charged on the monthly lease payment and on the residual value at the end of the lease. Where the customer is registered for GST, they can claim some or all of the GST contained in the lease payment and the residual value as an input credit on their next Business Activity Statement. (BAS)
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