If last year taught us anything, it’s you never know what the future holds. And the organisations that faired best, were those with the flexibility to adapt the quickest.
We took that lesson on board, and now, if your vehicles are managed by Smartfleet, you have access to more finance options, giving you greater flexibility than ever before.
So in addition to our leading fleet management service, did you know we can also now help with a variety of funding arrangements? You can choose from an operating lease, a finance lease, a chattel mortgage or any combination of the three.
We can still, of course, manage any vehicles you own or have financed with other lenders, but now you know we can provide a range of finance solutions, it’s even easier.
We’re one of the few fleet management companies in Australia who can successfully handle a diverse array of finance types, from such a wide variety of lenders.
So what does that mean for you? In short, it gives you options.
You can now finance and run 100 vehicles on operating leases, 10 on finance leases and 20 trailers, for example, on chattel mortgages - all with Smartfleet.
Your asset finance portfolio can be adjusted according to the specific use of the vehicle, and a range of other factors including cash flow, appetite for risk, kilometres travelled and what you’d like to do with the vehicle at the end of the lease.
We’re not going to go into every single detail right now, but you’ll find a quick overview of the finance options below.
You’ll know which serves your overall situation the best, and if you’d like to discuss it in more detail, please contact your Smartfleet Account Manager, or call us on 1300 555 665.
Generally, an attractive option for large fleets. With an operating lease there’s no initial outlay, the payments are tax deductible and at the end of the lease (one to five years) you simply hand back the vehicle, and choose a replacement.
There are charges involved if you run over your kilometre targets, and if you hand it back in disrepair - but otherwise it could be a great way to get a lot of cars on the road, for not much upfront cost.
Also, you’re not taking on the risk of the residual value at the end of the lease. That sits with the finance company, and is built into your fixed monthly costs over the term – with finance and running expenses all wrapped into one single payment.
An operating lease could be a good option when:
You’re confident you can estimate the kilometres accurately, and you know the car will be looked after with reasonable care. Also, you don’t want to take responsibility for disposal at the end of the lease - and because you never actually own the vehicle, that’s not a problem.
A finance lease is very similar to an operating lease. There’s no deposit required, you can choose from a one to five year term and the running costs are wrapped into a single regular payment too.
The only real difference, now, is you have a residual (or balloon) payment at the end
of the lease term. You’ll have several options to choose to from, depending on whether you’re keeping the vehicle, or replacing it. You can refinance based on the residual value, get a new vehicle altogether, or pay out the residual and keep the vehicle. The residual value is determined by your lender, but tracks closely to the ATO’s Residual Value guidelines.
In essence, you’re taking on the risk of the residual value at the end of the term, and responsible for refinancing or disposal, so there’s a little more admin involved. On the other hand there are no penalties to pay in regards to kilometre targets, or the condition of the vehicle.
A finance lease could be a good option when:
You’d like to have more control. Perhaps you know the vehicle is going to have a long and useful life, and you’re not bothered about resale value further down the line. You’re happy to pay for and own the vehicle outright when the time comes, or you’re confident you’ll get a decent resale price to settle the residual, with a good bit left over.
A chattel mortgage is a different beast altogether. The lender gives you money to buy the vehicle, then holds a mortgage over the asset as you pay them back over the term. So the vehicle is owned by you from the beginning, which means you can claim the GST associated with the purchase price back in the very next BAS.
You can put a deposit down if you want, adjust the length of the term to suit, and you can actually pay the loan down to zero at the end of the term (so no balloon). There are no ‘set’ guidelines from the ATO on that front, so it’s a lot more flexible.
Depending on your usage, you can also claim interest and depreciation costs as a tax deduction, making it – potentially – a very tax effective ownership model for a vehicle.
Running costs can also be wrapped up into one fixed regular payment, making the entire process a lot easier.
A chattel mortgage could be a good option when:
You’re GST registered and operating on a cash accounting basis, so you can claim the GST back on your next BAS. Also, if you’re looking at keeping the car for a shorter period of time, you can maximise your tax deductions before the depreciation starts to tail off. Finally, you’re happy to do the paperwork yourself, to claim tax and depreciation.
So, there you have it. More options, more finance, more flexibility, plus one very important advantage.
With Smartfleet you only have one organisation to deal with, for everything to do with your fleet – so you are only one email, or a phone call, away from help.
So, as you’re starting to make plans for the year ahead, keep the lessons of last year in mind.
Being smart means taking an informed look into the future, preparing a plan (or two) to deal with it, and then as the future unfolds into the present - having the flexibility to adjust along the way.
If you’d like to find out more, or you’d like some help, please let us know. Just contact your Smartfleet Account Manager, call 1300 555 665.
*Please note: The information in this article contains general information only, does not constitute personal or financial advice and does not take individual circumstances into consideration. We recommend you consider your own objectives, financial situation and needs and seek appropriate independent legal, financial or other professional advice based upon your own particular circumstances, before making any decisions.