How does Rent-To-Buy Work?
Under a Rent-To-Buy facility, the client rents the goods back from the financier and then receives a 75% rebate on the monthly payments made over a particular period of time.
Features of a Rent-To-Buy Facility
Benefits of a Rent-To-Buy Facility
Example of a Rent-To-Buy Facility used for Mining Equipment Finance.
New business looking to purchase a Rock Crushing Plant – $585,000 (gst inc)
- Finance Type – Rent-To-Buy
- Loan Amount – $585,000 (client borrows the gst inc amount)
- Term – 12 months
- Residual – NIL
- Payments – weekly in advance
- Client had been knocked back by all 4 of the major banks based on the fact the business was just starting out and that the goods were deemed to be too specialised
- The rent-to-buy facility allowed the new business to acquire the crushing plant and win a $10M contact
- Fixed interest rate allowed client to easily budget for ongoing expenses
- 75% of the monthly payment is rebated back to the client, which means they could refinance the equipment at the end of the 12 month period for $380,250.
Who would use a Rent-To-Buy Facility?
A Rent-To-Buy facility is a form of financing heavy equipment, for new start ventures or for businesses that have a work contract for a specific period of time (12 – 24 months) but do not want the burden of paying off the goods over a 5 to 7 year period.
Heavy Vehicle Finance advises that all businesses discuss a particular funding scenario with their Accountant before making a decision on what product to use when looking at crushing plant finance or any other type of heavy equipment funding. There are many different tax implications that need to be discussed with a tax accountant before deciding whether or not a Rent-To-Buy facility would best suite the financial structure of the business.
To ask more questions about a Rent-To-Buy Facility?
To discuss how a Rent-To-Buy facility works in further detail, please call one of our Finance Consultants on 1300 788 740. One of our specialists Finance Consultants will be able to advise as to whether or not a Rent-To-Buy facility would best suit your business and a particular funding scenario. You might also wish to input your details into our online finance pre-approval form so as to secure a finance pre-approval.