Finance and Lease

FINANCE TAILORED TO BENEFIT THE CLIENT RATHER THAN THE FINANCIER.

Corporate Hire
Contract Rental
Novated Lease

Corporate Hire (CHP)

For vehicles used predominantly for business purposes. Under a Hire Purchase Agreement, the vehicle is purchased by installment payments over a specified term. Ownership is transferred from the Financier to the buyer after the last payment (balloon payment) is made.

In a basic CHP there are four variables to consider

The amount to be financed
The finance term
Interest
Balloon payment

Tailored Packages

Motorfleet can tailor CHP to suit the needs of the client by incorporating all or part of the following vehicle management services and operating costs.

Vehicle Trading
Service and maintenance
Tyres
Registration renewal
Roadside assistance
Insurance
Fuel management

CHP Features and Benefits

With CHP the client claims the interest and depreciation of the vehicle as a tax deduction.
CHP is a cost effective way for individuals to finance a vehicle as GST is not payable on the monthly payment.
Unlike a finance lease, there are no ATO guidelines controlling the setting of balloon payments. The balloon payment can be set at $0 if the client prefers this.

Prior to entering any financial commitment we recommend you seek independent qualified financial advice regarding your personal circumstances.

Contract Rental

Motorfleet not only has a solution for individual employee's, we also have a flexible vehicle solution for Company's that need vehicles for either short or long term requirements.

What is Contract Rental?

Contract rental is a more flexible form of fully maintained operating lease whereby a vehicle is rented for a specific term and kilometre limit at a fixed monthly rental. At the end of the contract the vehicle is simply handed back to Motorfleet and or the affiliated fleet manager.

What is included in Contract Rental?

With Contract Rental all vehicle-operating costs can be included in the one fixed monthly rental (excluding the cost of fuel) or alternatively a Contract Rental program can be tailored to suit the client's specific needs. The standard Contract Rental includes the following:

Choice of new or used vehicle's.
Service and maintenance up to the specified kilometre limit.
Annual re-registration for the term of the contract.
A specified number of tyres.
Full comprehensive insurance.
Roadside service.
Fuel card.

Motorfleet will have the vehicle to suit your Company's needs and budget, with a comprehensive range of new and used passenger and commercial vehicles available at any time for Contract Rental.

Novated Lease / Vehicle Salary Packaging

Finance Structure

Theoretically a Novation Agreement can be used with almost any form of lease. Typically, a Novated lease is structured as a Finance Lease although Novated Operating Lease's (Contract Rental) are also becoming very popular.

What is Vehicle Salary Packaging?

Salary Packaging occurs when an employee forgoes the right to receive income in exchange of the provision of a non-cash benefit. This reduces the employee's taxable income and therefore potenially they pay less tax.

Employees are able to package all sorts of items such as computers, superannuation and shares however, motor vehicles financed via a Novated Lease is the most popular form of salary packaging.

There are three main ways for Employees to save money by salary packaging a motor vehicle via a Novated Lease as follows.

Saving on the purchase price of the vehicle.
Saving due to the GST input tax credit on the purchase price of the vehicle.
Tax saving through salary sacrifice.

Motorfleet's focus is to assist employees to minimise the purchase price of the vehicle and to maximise the available tax benefits. We minimise purchase prices by negotiating additional discounts from the car manufactures and Dealerships on our client's behalf. And we assist you to maximise the use of pre-tax dollars.

What is a Novation Agreement?

A Novated agreement, when used in conjunction with a vehicle lease represents an agreement between three parties being the employee (lessee), the employer, the financier, then by attaching the novation Agreement the following occurs.

The employer takes over all the obligations of the lease except for the residual value which remains the obligation of the employee.
These obligations remain whilst the employee remains employed. During this period the employer makes all the lease payments to the financier and pays all running costs from the employee's salary.
If employment is terminated, the novation Agreement is rescinded (ceased) and only the lease agreement between the employee and the financier remains. When the employee leaves the employer they are required to take the vehicle with them.
A novation agreement is typically used in conjunction with a finance lease structure. This is mainly because most clients want to have the option to own the vehicle at lease end.
Novation Agreement can also be used with Contract Rental. This type of arrangement may be more suitable to clients who are paid car allowances or have short term requirements possibly due to contract work.
Generally the purpose of the Novation arrangement is to allow the employee to take advantage of tax saving from Salary packaging, as all lease payments are paid from Gross (pre-tax) dollars.
Under a Novation Agreement most employers are entitled to input tax credit on the monthly lease payments and may elect to pass these on to the employee in the form of reduced salary sacrifice.
GST however is still payable on the residual value because the obligation of the residual value remains the responsibility of the employee.
If the vehicle is salary packaged then fringe benefits tax is also payable.

Prior to entering into any financial commitment, Motorfleet recommends you seek independant qualified financial advice regarding your personal circumstances.