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Chattel Mortgage
A Chattel Mortgage is a finance arrangement where ownership of the asset is held by the customer
from the time of purchase, although the financier ‘mortgages’ the asset as security against the loan.
A Chattel Mortgage is generally suitable for organisations (companies, partnerships, trusts and sole traders)
using the ‘Cash’ or ‘Accruals’ method of accounting for GST.
A Chattel Mortgage can also be adopted by individuals who use the asset mainly for business-related purposes.
In the past, Commercial Hire Purchases (CHPs) were a more popular option; however due to recent changes to GST
treatment of CHPs, a Chattel Mortgage is now a significantly more attractive option.
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Commercial Hire Purchase (CHP)
A Commercial Hire Purchase (“CHP”) is a finance arrangement where the financier purchases an asset on
the customer’s behalf and hires it back to them for a fixed monthly repayment for a specific term. This
arrangement is also known as a Hire Purchase (“HP”) or a Corporate Hire Purchase.
A Commercial Hire Purchase is generally suitable for organisations (companies, partnerships, trusts
and sole traders) using the ‘Cash’ or ‘Accruals’ method of accounting for GST.
Individuals who use the asset mainly for business-related purposes can also use a CHP, although recent
changes to GST treatment of a CHP (that came into effect 1 July 2012) mean that a CHP is now significantly
less attractive than other forms of business-related finance.
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Finance Lease
A Finance Lease is a finance arrangement where the financier purchases an asset on your behalf
and leases it back to you for a fixed monthly rental over a specific term.
A Finance Lease is generally suitable for sole proprietors, partnerships and companies who are registered
for GST and wish to claim back GST on a monthly basis without obtaining immediate ownership of the asset.
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IT Rental
Southgate provides a specific finance option called an “IT Rental” which allows you to rent the equipment
from the financier for a fixed monthly rental over a specific term. At the end of the finance term, you have
several options available, including continuing to rent the equipment for a further term, making an offer to
buy the equipment or returning the equipment to the financier.
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Operating Lease
An Operating Lease is a finance arrangement where the lessee agrees to lease the motor vehicle
for a predetermined period, and then the vehicle is handed back to the leasing company at the end of the
term.
An Operating Lease is generally suitable for companies who do not wish to take ownership or residual
risk of the motor vehicle. Operating leases are generally more expensive than other finance solutions
due to the inclusion of a ‘premium’ for the removal of residual risk.
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Novated Lease
A Novated Lease is a finance arrangement which involves the salary sacrifice of the monthly
lease rentals, which are paid by the employer on the employee’s behalf, from their pre-tax salary.
A Novated Lease is suitable for individuals whose employer offers salary packaging and who wish
to take advantage of the available tax concessions on Novated Lease arrangements.
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Consumer Loan
A Consumer Loan is a finance arrangement where an individual borrows funds to purchase an
asset and the financier secures the loan against that asset.
A Consumer Loan is typically suitable for individuals where there is little or no business use of
the asset and it does not form part of a salary packaging arrangement.
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Disclaimer: We recommend that prior to entering any finance arrangement that you seek independent financial advice.
The information contained herein is of a general nature only and does not take into account your personal
circumstances. Southgate Financial Services Pty Ltd, its agents, employees and lenders accept no responsibility
for any loss that may arise.