Considering financing an asset in your business? Here’s a few considerations

The Holistic Accountant

In this episode, Stuart and Mena dive into the different finance solutions available for asset finance and discuss the pros and cons of each option. They start by outlining the main types of asset finance:

• Chattel Mortgage - The lender takes a mortgage over a specific asset like equipment or vehicles and provides funding secured by that asset. This is one of the most common options.
• Hire Purchase - The financier purchases the asset and the client takes out a loan to pay it off over a fixed period, ultimately owning the asset. GST applies.
• Novated Lease - An agreement between the employer, employee, and financier where the employee uses pre-tax salary to make payments on a newly purchased vehicle.
• Sale and Lease/Hire Back - The client sells their existing asset to the lender and then leases it back, making rental payments.

Stuart and Mena highlight that chattel mortgages are most frequently used as they assist with cash flow. For employees, novated leases can be beneficial. They recommend considering balloon payments to further improve cash flow. However, the impacts on overall borrowing capacity need to be assessed.
The hosts advise speaking with a holistic accountant who can connect you with specialised asset finance brokers to determine the best solution for your specific circumstances and requirements.

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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.