Funding Options

When it comes to funding your fleet vehicles, no two businesses are the same. That’s why we offer a choice of finance products to suit your needs.

Whether you’re thinking about vehicle finance via an operating lease, finance lease or term purchase, or give your employees the option to take out a novated lease.

Learn about our comprehensive range of funding options:

Operating Lease

An operating lease is an off balance sheet asset funding option for businesses that don’t want to take on the risk of selling the vehicle at the end of the lease. You can choose any or all of the Fleet Management Services to form your monthly payment.

With an operating lease, TFM owns the vehicle and leases the vehicle to you with your choice of term and kilometre usage. At the end of the term the vehicle is simply handed back, avoiding the risks associated with ownership, as there is no residual value to pay.

This option includes 100% financing at a known monthly cost so there’s no capital outlay. Treated as an off balance sheet funding option, lease rentals are generally fully tax-deductible and treated as an expense on your Profit and Loss statement.

Finance Lease

A finance lease transfers the risk of ownership to you without transferring legal ownership. You choose a residual value within the ATO’s specified range to suit you, and at the end of your lease, you can pay it out, extend your term or enter into a new agreement.

A finance lease gives you 100% financing at a known monthly cost with no capital outlay. Lease rentals are normally fully tax deductible and treated as lease repayments and interest.

At the end of the lease, you can extend for an additional term, or make an offer to pay out the lease and enter into a new lease agreement on another vehicle.

Term Purchase

Term purchase transfers the risk of ownership to you, and when the final installment is received you’ll have full legal ownership. Toyota Fleet Management offers a fixed interest rate for terms between 12 months and 84 months.

You can pay the cost in equal installments or specify a balloon to suit you or your cash flow preferences. The balloon can generally be refinanced at maturity. And you also have the freedom to pay out the vehicle at any time. Term purchase is the ideal choice if you want to own the vehicle at the end of the repayment term. This option provides 100% financing for the GST-inclusive price of the vehicle at a fixed monthly cost. Both the liability and asset are shown on your balance sheet.

You can pay the entire amount financed in equal instalments or specify a balloon payment, depending on your cash flow preferences. If you choose a balloon, the amount can generally be refinanced at maturity.

Although payments aren’t tax deductible, depreciation and the interest portion of the loan are usually fully tax deductible. This may be attractive for assets with higher tax depreciation allowances. Excess kilometres do not apply (unless attached to a contract with full maintenance), and either a profit or a loss can be applied to an eventual sale.

Chattel Mortgage

This is a sale of a vehicle where the legal ownership lies with the customer. A financier takes a mortgage (security interest) over the chattel (goods). No GST applies to interest and term charges. Just like term purchasing, you can claim depreciation and interest for business usage.

Sale and Lease Back

A sale and lease back lets you free up capital through the sale of vehicle assets at the written down or market value. The vehicles are then leased back to your business.

If you’re looking for cash flow, sale and lease back releases capital when you sell vehicle assets to TFM at the written down or market value. The vehicles are leased back to you, immediately freeing up capital for alternative investment.

Enjoy the following benefits:

  • Each vehicle is assigned a lease term and kilometre allowance tailored to its usage, with the lease expiry falling within your company vehicle replacement policy.
  • Structured transactions ensure the purchase price is compatible with your tax and accounting requirements .
  • You can select a future transaction date beyond which the capital, management and administration of the fleet is outsourced .
  • Enjoy improved cash flow forecasting, due to fixed rentals or instalments.

Novated Leasing

Novated leasing is a finance arrangement used with salary sacrifice, where an employer pays an employee's vehicle finance and running costs from their pre- and post-tax salary.

Novated finance lease

A novated finance lease is the most common form of novated lease. Residual value ranges are set by the ATO and the subsequent ownership risk is borne by the employee.

Novated operating lease

As the name suggests, the employees’ lease obligations are transferred or 'novated' to the employer, who makes these payments to TFM for the term of the lease. If the employee leaves their employment, the novation agreement ceases and all financial liability for the lease reverts to the employee.

A novated operating lease alleviates the ownership risk for the employee as the vehicle can be returned at the end of the lease. Subject to fair wear and tear and excess kilometre obligations, the employee does not carry any responsibility for any potential loss on sale. A novated operating lease is an ‘off balance sheet’ funding option.

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