Purpose: An Operating Lease, Equipment
Rental or Rental Agreement is a versatile option for financing high
depreciation, short life-span new technologies such as computers,
telephony and all other office equipment which generally have a short
lifespan due to high obsolescence. The financier purchases the
equipment and rents it to you for an agreed payment schedule over a
fixed term. Whilst similar to a Finance Lease, an Operating Lease has
Term: The term of finance agreement can be from 1 - 5 years and must be in accordance to ATO Guidelines.
Deposits: Deposits are not required. The full purchase price must be financed.
You must have a residual payment as the last payment of your finance
agreement according to ATO Guidelines. This residual value is
determined by the financier and the financier is responsible for paying
it. Be aware that the residual values are generally not disclosed to
Ownership: You have possession and use of the equipment, however, the finance company shoulders most of the risk of ownership.
At the end of the Rental Period, you have a number of options:
the goods to the finance company, without any responsibility for loss
incurred by the finance company for the re-sale.
- Return the goods to the finance company and enter into another agreement on new upgraded equipment.
- Purchase the equipment at a fair market value (usually very low due to the high depreciation of the equipment).
- Re-rent the goods at a lower rate for a further term
Rental payments are 100% tax deductible because they are treated purely
as an operating expense - the equipment must be used solely for
business purposes. Rentals do not appear on the balance sheet,
therefore there is no contingent liability. Rental payments are subject
to GST, with the amount financed being exclusive of GST.The Car loan market is very competitive. If you have any questions
that we can help you with, please call at any time on 1300 79 63 69 or
click on the Make an Obligation Free Enquiry link below and one of our
experienced consultants will be in touch with you within 24 hours.