Asset purchase finance is the term used these days instead of hire purchase (HP). Adelaide businesses and companies use asset purchase finance to purchase aircraft such as light commercial planed and helicopters, primarily for business use.
Asset purchase aircraft finance assists you to acquire an aircraft where the title to the aircraft passes to you on payment of the finance when the agreement expires. You can make periodic payments over the term of the agreement (fully amortised), or with a balloon payment, (partly amortised). You are able to claim both the interest content of the repayments and the depreciation on the aircraft as a tax deduction where it is being used to generate assessable income.
Balloon Payment
A ‘balloon’ is a lump sum repayable by you at the end of the term of the asset purchase aircraft finance. A balloon payment assists in keeping the monthly payments within cash flow budgets (think of it as paying the deposit at the end of the term not at the beginning). While there are no set rules to determine the balloon amount, it can be no more than the estimated saleable value of the aircraft at the end of the term.
Typical balloon values for aircrafts are:
| Term Of Asset Purchase | Balloon % |
|---|---|
| Year 1 | 65.63% |
| Year 2 | 56.25% |
| Year 3 | 46.88% |
| Year 4 | 37.50% |
| Year 5 | 28.13% |
Lenders will finance up to 100% of the purchase price of the aircraft, however if you like, you can pay a deposit prior to the commencement of the asset purchase aircraft finance agreement.
Insurance
Lenders will require comprehensive insurance; the first years premium can be financed.
Amounts and Terms
There are no rigid rules to lending amount minimums or maximums specific to asset purchase aircraft finance, with lenders typically funding amounts between $15,000 and $150,000.
GST Impact on Asset Purchase Aircraft Finance
No GST is payable on the interest component where it is separately identified and disclosed under asset purchase aircraft finance agreements. Asset purchase customers who are registered for GST can claim input tax credits for any GST paid on the purchase of the aircraft. The aircraft is effectively purchased by instalment payments.
Fees and Charges
The following list sets out the most common fees and charges which may be payable under an asset purchase aircraft finance agreement.
Loan application fee, repayment book fee if direct debit is not chosen, early termination fee, vehicle security register fee (VSR), alternative payment method fees and government stamp duty fees.
2 ways to Apply For Aircraft Finance
Fast Way
The fastest way to get an answer for finance is to complete our easy application form online. You even have the ability to attach files from your computer.
Easy Way
The easy way to apply for finance is to request a call back. Leave some details and we’ll call you back to complete the loan application over the phone.