A finance lease keeps the trailer off your balance sheet — the lender owns it and you make lease payments. Popular for businesses that prefer off-balance-sheet treatment or want to upgrade regularly.
With a finance lease, the lender buys the trailer and leases it to your business for a fixed term. You make regular lease payments, and at the end you can usually pay the residual to own it, refinance the residual, or hand the trailer back.
Lease payments are generally deductible as a business expense, and the GST is included in each payment rather than claimed upfront. There's always a residual at the end, and for leases there are ATO guidelines on minimum residual values by term. Some businesses prefer leasing because it suits how they upgrade equipment or how their accountant prefers to treat assets.
Tip: compare a lease and a chattel mortgage side by side with your accountant before deciding. The repayments may look similar, but the GST timing and tax treatment differ.
Helpful guides: Chattel Mortgage vs Finance Lease for Trailer Finance · Trailer Finance Tax Deductions and GST: What Businesses Can Claim · Balloon Payments in Trailer Finance: Pros and Cons
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