Finance Lease
With this facility the financier purchases the
equipment required and then leases the equipment to the client
over a set term in return for a series of predetermined rental
installments. There
is a residual value at the end of the term, and most financiers
will offer to sell the equipment to the client for this amount. The
equipment must be used predominately for business use, terms
generally range from 12 to 60 months, and the interest rate is
fixed for the term.
Ownership under Lease
The financier owns the equipment until the final payment, including any residual, is paid. The ownership is then transferred to the Lessee.
Residuals on Lease
There is usually a residual value, which is owed to the financier at the end of the term. It is often calculated as a percentage of the original purchase price. In the case of residuals there is a risk the equipment will not be worth the residual payment.
Accounting under Lease
The purchase price under a finance lease is treated as a capital purchase and depreciated over the life of the asset. The interest cost is also treated as an expense. GST and stamp duty are payable with each installment. Normally lease payments are treated as deductible expenses for businesses.*
*Please refer to your Accountant or advisor for Tax Advice.
Balance Sheet
Both the asset and liability are shown on the balance sheet.
Upgrades and Add Ons
Upgrades and add ons generally require another lease and/or payout of the old lease – a penalty may be incurred for this.
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Operating Lease/Rentals
As with a Finance Lease, the financier purchases the equipment required, and then rents the equipment to the client for a series of predetermined rental installments. No residual is payable, however and at the end of the term you can return the equipment to the financier. Alternatively, if the client wishes to retain the equipment they can make an offer for fair market value to the financier to purchase the equipment. The equipment must be used predominately for business use. Terms generally range from 12 to 60 months, and the interest rate is fixed for the term.
Ownership under an Operating Lease/Rental
Renting is an operating lease where ownership is not the motivation but where upgrading to new equipment during the term is easy. If you don’t upgrade, equipment is returned at the end of the term. Alternatively you can make an offer to purchase the equipment.
Rentals on Operating Lease/Rental
Normally there are no residuals in a rental agreement – it is undisclosed.
Accounting under Operating Lease/Rental
Rental costs are written off in the month they are incurred. Rental costs are normally treated as deductible expenses for businesses.* GST and stamp duty are paid with each installment.
* Please refer to your Accountant or Advisor for Tax Advice.
Balance Sheet
Rental equipment is not shown on the Balance Sheet and neither are the rental payment liabilities, other than due or overdue payments.
Upgrades and Add Ons
One of the advantages of a rental is easy upgrades and add ons.
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Novated Lease
A Novated Lease is a form of Finance Lease for Motor Vehicles, designed for employees who have the option of receiving a car as part of their salary package. It works the same way as a Finance Lease except the employer assumes the employee’s rights and obligations under the lease, including payment of the lease rentals. Should the employee leave the company, the vehicle remains with the employee and they assume responsibility for the rentals. Terms generally range from 12 to 60 months and the interest rate is fixed for the term.
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Commercial Hire Purchase
A Hire Purchase arrangement is a contract where the financier owns the equipment during the term of the hiring. The hirer pays installments over the term of the loan, and when the final installment has been paid, ownership of the equipment passes to the hirer. The equipment must be predominantly for business use, terms generally range from 12 to 60 months, and the interest rate is fixed for the term.
Ownership under a Hire Purchase
As mentioned above, the ownership is transferred to the hirer at the completion of the hire purchase contract. GST is not paid on the installments themselves, however stamp duty is paid on each installment and there is GST charged on the stamp duty portion on each installment.
Residuals/Balloons on Hire Purchase Agreements
Hire Purchase agreements often contain options for residual or balloon payments at the end of the term. Where a balloon option is taken, there is a risk the equipment may not be worth the residual payment at the end.
Accounting under Hire Purchase Agreements
The purchase price under a hire purchase contract is treated as a capital purchase and depreciated over the life of the asset. The interest cost is also treated as an expense. GST and Stamp duty are accounted for at the start. Under a hire purchase, contract depreciation and interest charges are normally treated as deductible expenses for businesses. GST is usually claimed in full up front, however conditions apply*
*Please refer to your Accountant or Advisor for Tax advice.
Balance Sheet
Both the asset and liability are shown on the balance sheet including GST and stamp duty.
Upgrades and Add Ons
Upgrades and add ons generally require another hire purchase agreement and/or payout of the old hire purchase agreement – a penalty may be incurred for this.
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Chattel Mortgage
A Chattel Mortgage is a loan agreement whereby the customer borrows funds to purchase equipment, and takes ownership of this equipment. The lender will take a charge over the equipment as their security. The equipment must be used predominantly for business use. Terms generally range from12 to 60 months, and the interest rate is fixed for the term.
Ownership under a Chattel Mortgage
As mentioned above, the ownership of the goods is with the purchaser/customer from the outset once the invoice is raised and the financier has paid for the goods. The customer makes fixed payments over the term of the contract to repay the goods. There is no GST or stamp duty on the installments.
Residuals/Balloons on a Chattel Mortgage
Chattel Mortgage agreements often contain options for residuals or balloon payments at the end of the term. Where a balloon option is taken, there is a risk the equipment will not be worth the balloon payment.
Accounting under Chattel Mortgage
The purchase price under a Chattel Mortgage agreement is treated as a capital purchase and depreciated over the life of the asset. The interest costs are also treated as an expense. GST and Stamp Duty are paid at the start. Under a Chattel Mortgage, depreciation on the goods and interest charges are normally treated as deductible expenses for businesses*. GST is claimed back in full upfront by the customer*
*Please refer to your Accountant or Advisor for Tax advice.
Upgrades and Add Ons
Upgrades and add ons generally require another hire purchase agreement and/or the payout of the old Chattel Mortgage agreement – a penalty may be incurred for this.
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Low Doc Equipment Loan
This product is available for clients who
A. Are starting a business with no financials, but have property.
Or
B. They have been in business with an ABN for a minimum of 2 years with no property and no financials.
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Equipment Rental/Lease
Renting is also known as an operating lease. As with a Finance Lease, the financier purchases the equipment required, and then rents the equipment to the client for a series of predetermined rental installments. No residual is payable, however and at the end of the term you can return the equipment to the financier. Alternatively, if the client wishes to retain the equipment they can make an offer for fair market value to the financier to purchase the equipment. The equipment must be used predominately for business use. Terms generally range from 12 to 60 months, and the interest rate is fixed for the term.
Ownership under Rental
Renting is an operating lease where ownership is not the motivation but where upgrading to new equipment during the term, is easy. If you don’t upgrade, equipment is returned at the end of the term. Alternatively you can make an offer to purchase the equipment. Equipment rentals are popular for every day office equipment such as computers, phones and photocopiers.
Residuals on Operating Lease/Rental
Normally there are no residuals in a rental agreement – it is undisclosed.
Accounting under Operating Lease/Rental
Rental costs are written off in the month they are incurred. Rental costs are normally treated as deductible expenses for businesses* GST and stamp duty are paid with each installment.
* Please refer to your Accountant or Advisor for Tax Advice.
Balance Sheet
Rental equipment is not shown on the Balance Sheet and neither are the rental payment liabilities, other than due or overdue payments.
Upgrades and Add Ons
One of the advantages of a rental is easy upgrades and add ons.
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Secured Consumer Loans
This product is designed for individuals where the equipment will not be used predominantly for business use, enabling clients to finance the purchase of motor vehicles, motorcycles, caravans or boats. The facility is similar to the Chattel Mortgage product for business use, where the lender will have a charge over the equipment financed as security for the loan. Terms generally range from 12 to 60 months and the interest rate is fixed for the term.
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Personal Loans
A Personal Loan can be a quick and easy way to obtain finance for a range of purposes such as:
- Travel
- Education
- Furniture
- Debt consolidation
- Car, boat or motor bike
- Or just tiding you over to make ends meet.
Personal Loans can be secured or unsecured. Secured personal loans would be secured by the asset being purchased such as a car or a boat or the loan can be secured by an existing asset owned by the customer.
Unsecured personal loans usually incur a slightly higher interest rate because the lending is unsecured over the term of the contract.
SD Loans & Leasing offers competitive personal loan solutions from our panel of lenders.
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Housing Loans & Residential Investment Property Loans
Some of the different types of Loans available through SD Loans & Leasing are:
- Low Doc Loan
- Standard Variable Loan
- Basic Variable Loan
- Introductory Loan
- Fixed Rate Loan
- Line of Credit
- Bridging Finance
- Reverse Mortgage
- Professional Packages
Low Doc Loan
A Low Doc Loan requires less information to be provided to the lender as evidence of affordability.
Standard Variable Loan
The interest is variable and will fluctuate in line with financial markets. This type of product tends to provide borrowers with greater flexibility compared to a fixed rate loan. Standard Variable Loans may also be available with facilities such as offset accounts, direct salary credit and redraw facilities.
Basic Variable Loan
The interest rate is variable and will fluctuate in line with the financial markets. A Basic Variable Loan often doesn’t include features such as offset accounts, direct salary crediting and redraw.
Introductory Loan
Sometimes known as Honeymoon loans, they enable you to commence with a lower rate for a fixed period (normally 6-12 months) and then revert to a higher rate (usually the lender’s standard variable rate) for the remaining loan period. These loans can be either fixed or variable.
Fixed Rate Loan
The interest rate on the loan is fixed for a period of time typically between 1 and 5 years. The benefit of this product is that you know how much you are required to pay during the fixed rate period. However, even if variable rates increase or decrease during the fixed rate period, your repayments will not change. Locking in your interest rate will also reduce some or all of the flexibility available under the variable rate products.
Line of Credit
This is generally an interest only loan that gives the borrower freedom of choice in respect of principal payment. Monies paid against the loan can be withdrawn up to the original limit.
Bridging Finance
May be available should you decide to purchase a new home before you sell your existing property. The lender will take security over both properties providing there is sufficient equity and that both debts are affordable. The maximum borrowing is usually based upon 80% of the value of the properties.
Reverse Mortgages
This loan is designed especially for seniors, allowing them to access the equity in their home. The interest is added to the loan, amongst other conditions. The debt is repaid on death of the borrower or sale of the property.
Professional Packages
Many lenders offer discounted loan packages to attract professionals or larger loans. Eligibility of a Professional Package is based on the loan size, or could be the amount of salary, or the profession, or a combination of all. Depending on the amount you borrow and the type of loan you choose, you could be entitled to an interest rate reduction and many other benefits in relation to your borrowings under this package. Professional packages usually attract an annual fee in return for a range of benefits.
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Commercial Real Estate Loans & Business Aquisition Finance
SD Loans & Leasing offers Commercial Finance solutions tailored to your needs from a choice of Australia’s top commercial lenders.
We can provide finance for most commercial property transactions from the simple to the complex.
Accredited SD Loans & Leasing professionals can assist with commercial lending scenarios that include the following:
- Purchasing a commercial property
- Purchasing a business
- Business acquisition
- Purchasing a franchise
- Property developments
- Construction of a commercial property
- Refurbishment of a commercial property
- Come and go facility for business operations
This type of finance can be a mixture of the above and can also include equipment finance at the same time. At SD Loans & Leasing we specialise in doing just that for our customers.
The finance can be structured over various terms up to 30 years depending on the purpose. The loans can be interest only or principle and interest repayments and the loans can be fixed or variable rates or a combination of both.
We act as your commercial finance agent to help you structure
the deal correctly and inform you each step of the way. We
help you obtain market competitive rates from a choice of commercial
lenders and provide comparisons with each of the lenders which
will save you time and resources.
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Cash Flow Finance
This facility is also known as Debtor finance, and or factoring. This facility provides a flexible and cost effective line of credit. It provides funding of up to 90% of the value of your debtor’s ledger. You may draw funds as required and interest is charged only on what you utilize thus providing a flexible funding package that reacts to the changing cash needs of a growing business.
This facility is ideal for those businesses who are cash strapped and don’t have enough equity in property to meet the growing needs of their business. The facility is secured by the book debts.
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Insurance Premium Funding
Insurance Premium Finance is available to business customers only for commercial purposes such as the finance of equipment insurance such as trucks etc, motor vehicle registration fees and workers compensation insurance.
SD Loans & Leasing deal with a panel of funders. Ask our professionals for a competitive quote today.
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Insurance
A new property is quite an increase in your commitments. It takes a lot of hard work to acquire assets, so it makes good sense to have adequate protection along the way. This not only means having your property and contents covered, but also ensuring that you and your family will be protected in the event of accident, injury or death. SD Loans & Leasing can help you arrange the necessary cover.
Home Building Insurance
Your lending institution will require you to have your home building insurance in place in order for them to settle on your home loan.
This should be arranged immediately.
Home Contents Insurance
Many people choose to combine their home and contents insurance as this is often less expensive than having two separate policies.
You have two choices – indemnity (depreciated value) and replacement/reinstatement.
Life insurance to cover your loan
Life insurance to cover your loan is essential because, unless you are independently wealthy, your ongoing good health is necessary for you to continue to meet your mortgage repayments. People generally require enough insurance so that in the event of terminal illness or death, their dependents will be able to repay the mortgage and have money to live on.
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Deposit Bond
A deposit bond (or a deposit guarantee) is a simple and cost-effective alternative to a cash deposit when purchasing property.
This is particularly useful if you are buying at action, as it means that you don’t have to keep a significant sum of cash on hand for what could be a prolonged period of time – and it enables you to move quickly when you have to.
A deposit bond is also an excellent solution for investors who don’t have cash at their disposal and don’t want to cash in investments such as shares.
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