Car Loans

Need to Know

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Novated Lease

Lender Novated Leasing is a flexible, portable and convenient way of acquiring a motor vehicle for both employers and employees. Employees can lease their vehicle of choice while their employer pays the rentals and other running costs (if agreed to) directly from the employee’s salary. Potential tax benefits for the employer and employee and the vehicle maybe leased entirely for private use.

Finance Lease

The financier buys the car and then leases it to the motorist. This offers the immediate use of the car with little or no capital outlay. These leases are available for individuals and businesses where the car is for business purposes. The motorist pays fixed, monthly rental payments and is financially responsible for the maintenance and trade-in residual risk of the car. At the end of the lease period, the motorist is given the option to refinance, return, sell or buy the car for the residual amount.

Commercial Hire Purchase

The financier buys the car and then hires it to the consumer over a set period. Can be for individuals and businesses. Monthly payments generally pay out the entire loan in the set period and the vehicle is transferred to the motorists when all payments are complete. Mostly replaced by chattel mortgages.

Operating Lease

An agreement where the financier buys the vehicle and rents it to the motorist. The financier retains ownership of the car. The motorist has no risks associated with ownership, including the residual at the end of the period. At the end of the term, the motorist has the option to buy the car, continue to rent it or change to another (usually newer) car.

Chattel Mortgage

A fixed loan where the financier advances money to buy a vehicle. The financier holds a mortgage over the car which is used as security for the loan. Motorists can finance the total purchase price of the car or can make an up-front deposit or can use a trade-in. A residual payment may also be placed at the end of the term.

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