Guide – Business Finance
Your business gains the use of equipment or other items of your choice
in exchange for regular payments over an agreed period of time (terms
from 1 to 5 years). When you make the final payment, the equipment
is yours. However, only the interest component of these payments is usually
Financier Purchase's the equipment for you and, in return, you pay the
financier a series of rental payments, which are fully tax deductible
equipment is used solely for earning assessable income). At the end
of the term,
the financier can take possession of the equipment and sell it. Usually,
they will allow you to purchase the equipment for the residual value
of the goods.
As an employee of a company, you lease a car from a Financier using a
Finance Lease. You then sub-lease the car to your employer via an
Your employer enters an agreement, which makes it responsible
for meeting the payments. The ideal arrangement for those who have
the option of receiving a car as part of their salary package.
You get ownership of the goods on delivery and The Financier takes a
charge over the goods. Otherwise this product is very similar to
an Asset Purchase,
although the fee structure is a little more complicated.
Asset purchase is simply a contract where the financier allows the purchaser
the right to posess and use any goods in return for regular payments.
Upon final payment the title of the goods transfers to the purchaser.