There are a number of forms of leasing/hire purchase which can provide tax efficient and flexible terms. Some of these facilities can be arranged on a low doc basis. Metro Loans suggest that you obtain independent advice from your accountant or financial adviser prior to committing to a Lease or Hire Purchase facility.

Novated Lease

A lease on a motor vehicle where the employer makes the payment out of pre-tax income.

Finance Lease

Car is owned by the lender and leased to the user for a set repayment amount over a set term 100% funding of asset – no equity is allowed You can have a residual or balloon payment at the end of the term. Whilst the client has no guarantee of ownership the usual case is the lender will offer for sale at the end of the term the vehicle at the residual value. Repayments are generally tax deductible in full.

Hire Purchase

Equipment is owned by the lender and hired to the user for a set period. Can be 100% funding or equity can be contributed. Balloon payment can be structured into the deal similar to a lease. Tax deduction is generally the interest on the facility and depreciation. Ownership automatically passes to the user upon final payment.

Operating Lease

A lease where the lender not the borrower is responsible for the residual value. Is off balance sheet and can have some advantages for a company.