Bus Vehicle Financing

The correct Bus or Coach is essential to your operations.

How you pay for this vehicle, especially when financing, is also an essential element for your business cashflow and taxation requirements.

When financing your Bus or Coach “leasing” is considered the most practical finance option.

Advantage of “Leasing”

· 100% funding can usually be obtained from most financiers.

· No additional tangible security requirements.

· Repayments can be structured to suit cashflow requirements I.e. incorporate monthly breaks where there is no payment, progressive lump sums, balloon payments, etc.

· GST and taxation advantages.

“Leasing” could mean any of the following:

Ø Equipment Loan / Chattel Mortgage

Ø Hire Purchase

Ø Finance Lease

Note: These finance facilities are generally a fixed contract I.e. fixed interest rate for the loan term.

Equipment Loan / Chattel Mortgage

Generally the preferred option of many smaller bus operators particularly those who claim the “cash” accounting method for GST purposes.

· Ownership of vehicle is yours from the start.

· You can claim full GST on purchase from next BAS lodgement.

· Claim depreciation and loan interest for taxation.

· Terms of up to ten years (when new) can generally be applied.

· Option of a balloon payment on loan maturity or have loan fully repaid.

Hire Purchase

Very similar to Equipment Loan / Chattel Mortgage. This is usually the preferred option for bus operators who claim the “accrual” accounting method for GST purposes.

· Ownership of vehicle is with the Financier and the Operator (hirer) possesses the rights to the vehicle. Full ownership is transferred on completion of loan term.

· Claim full GST amount on next BAS lodgement as long as you are utilising the “accrual” accounting method.

· Claim depreciation and loan interest for taxation.

· Terms of up to ten years (when new) can generally be applied.

· Option of balloon payment on loan maturity or have loan fully repaid.

Finance Lease

Not utilised as much these days with tighter taxation obligations required – suggest discuss with Accountant for advice.

· Ownership of vehicle is with Financier and the Operator is basically renting.

· The Financier claims the GST on purchase price, not the Operator.

· GST applies to each rent / repayment instalment, which the Operator can claim.

· Cannot claim depreciation or loan interest, but can claim the rentals for taxation.

· Terms of up to ten years (when new) can generally be applied

· Residual (balloon) amount applies at loan maturity.

What information will financiers generally require..........

· Up to date financial reports (profit / loss statement, balance sheet).

· Any contractual information supporting income.

· Summary of business operations.

· Sustainability of new bus or coach I.e information to support that the loan repayments can be maintained.

At BAV Finance / Bus Finance Australia, we are the leading financiers for the Bus and Coach industry. This is due to our finance structures, interest rates and importantly we are an industry body (Bus Association Victoria Inc), which allows us a greater understanding and knowledge of bus operations.

Please call Brett Collins or Stephen Guille on 03 9645 3300 or 1800 136 854.

www.busvic.asn.au (& select finance)