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Operating Lease Finance
Under an Operating Lease Agreement, the lessor or financier acquires the equipment on their books and depreciates the asset over the useful life.
The lessee (or customer) rents the equipment back and then simply hands back to goods at the end of the term.
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Operating Lease Finance
Overview of a Operating Lease for Truck Finance
The Operating Lease facility provides a simple, off-balance-sheet solution for acquiring essential heavy vehicles. Under this agreement, the lessor or financier purchases the equipment and retains ownership, keeping the asset on their books and managing its depreciation over its useful life. This removes the depreciation liability from your company's balance sheet.
The lessee (or customer) simply rents the equipment back for a defined period in exchange for fixed rental payments. These payments are usually treated as a 100% tax-deductible operating expense, which is ideal for businesses focused on maximising cash flow and streamlining their expense management.
A key feature of the Operating Lease is the flexibility at the term’s end. The customer is generally not committed to purchasing the asset; instead, they simply hand the goods back to the financier. This allows businesses to continually refresh their heavy vehicle fleet with the latest equipment, avoiding technology obsolescence and disposal risks.
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Rental Flexibility
Features of a Operating Lease Facility
- Term of a lease can range from 12 months to 84 months
- Client has no asset risk with respect to resale value as they simply hand the asset back to the financier at the end of the term
- Client can purchase the asset from the financier at the end of the term based on the fair market value of the goods at the end of the term
- 100% of the cost of the asset is financed
- Full monthly can be claimed as a tax deduction on profit and loss statement
- Financier claims the gst on the purchase price as an input tax credit
Tax Advantages
Benefits of a Operating Lease Facility
- Flexible payment options allow clients to make payments suitable to their cash flow
- No asset risk held by the customer as they are not required to payout a residual payment at the end of the term in order to take ownership of the goods
- An operating lease for truck finance gives the client the ability to upgrade trucks or machinery on a regular basis by purchasing new at the end of the term
- Reduced tax paid to the ATO as the full payment is claimed as a tax deduction
- Operating Leases are treated as off balance sheet lending which improves the balance sheet position of the business
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Start Now and complete our Quick Assessment Form to obtain a Pre-Approval up to $500K – decision within a few seconds.
Alternatively, you can call one of our Finance Consultants to discuss your funding scenario.
Example Breakdown
Example Funding Scenario
- Purchase Price of new Casagrande Drilling Rig – $935,000 (gst inc)
- Finance Type – Operating Lease
- Loan Amount – $850,000 (client borrows the ex gst amount)
- Term – 60 months
- Residual – NIL
- Payments – monthly in advance
Outcome
- Client could claim the full monthly payment as a tax deduction on their profit and loss – minimising tax paid to the ATO
- No residual payment to be paid at the end of the term which meant client could hand back the drilling rig at the end of the term
- Operating Lease allows client to upgrade to a new drilling rig at the end of term without having to worry about trading in an existing machine
- Under tax accounting principles, an Operating Lease is treated as off balance sheet borrowing, allowing client to reduce the liability position on their balance sheet
Customer Reviews
Our customers say it best. Find out what it's like dealing with the Experts in Truck Finance. You could be the next success story.
Nathan you are fantastic to deal with. Always prompt with deals never a hiccup. After 8 truck deals will never use another broker. Keep up the great work you make my life stress free.
TH
Tracey Hall
Scone Equine Transport Pty Ltd
I have been dealing Heavy Vehicle Finance since 2014 and have found them be nothing short of amazing.They have funded various trucks and trailers for me over the years and its a fantastic feeling to know that I still have the same account manager after all of these years of business.It is very good to know that a finance approval is only a phone call away.
CW
Colin Wallace
Palanquin Pty Ltd
I have used the team at Heavy Vehicle Finance twice now for our financing needs for prime movers and side tippers. A Great team to work with and very prompt and professional. We will use again in the future.
JC
James Coustley
JJC Civil
I have used Nathan and his team for multiple purchases for our earthmoving company and Nathan has gone above and beyond to help us with expanding our business. I couldn’t recommend Nathan more highly.
SW
Sam Wood
Sureflo Plumbing & Roofing Contractors Pty Ltd
We used Heavy Vehicle Finance for the purchase of our Truck. They went above and beyond for us and made sure that the process was as stress-free as possible. The entire interaction was nothing short of amazing. We will definitely be using them again in the future.
MM
Meagan McNicholl
Next Gen Transport Pty Ltd
Can’t thank Nathan enough for how fast and professional he was with organising my finance for my new truck. He was straight to the point with no stuffing around. Highly recommended
TH
Tim Hartas
Hartrax Contracting Pty Ltd
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