FAQ'S | AKM FINANCIAL

What is a Car Lease?
A car lease is a financing arrangement where an individual or business pays to use a vehicle for a specified period, typically 2 to 5 years. During this term, regular payments are made, and at the end, options may include purchasing the vehicle, extending the lease, or returning it. Ownership remains with the leasing company throughout the lease period.
What is a Chattel Mortgage (Hire Purchase)?
A chattel mortgage is a type of loan where a business borrows funds to purchase a vehicle or equipment, with the asset itself serving as security for the loan. The business owns the asset from the outset, and once the loan is fully repaid, the security interest is removed. This financing method is popular among Australian businesses due to potential tax benefits, such as claiming GST on the purchase price.
What is a Car Loan?
A car loan is a personal or business loan designed to finance the purchase of a vehicle. The borrower receives a lump sum to buy the car and agrees to repay the loan over a set term, typically with fixed monthly repayments that include interest. The vehicle often serves as collateral for the loan, meaning it can be repossessed if repayments are not met.

What is a Novated Lease?
A novated lease is a three-way agreement between an employee, employer, and a finance company, allowing the employee to lease a car with payments made from their pre-tax salary. This salary packaging arrangement can offer tax benefits and simplifies vehicle financing for employees. If the employee changes jobs, responsibility for lease payments typically reverts to them, or the lease can be novated to a new employer.
What is Luxury Car Tax?
Luxury Car Tax (LCT) is a tax imposed on cars sold or imported into Australia that exceed a certain value threshold. As of the 2024-2025 financial year, the LCT rate is 33% on the value of the car above the threshold, which is set annually and varies depending on the vehicle's fuel efficiency. This tax aims to make luxury vehicles less accessible, promoting equity in car ownership.
What is Motor Vehicle Stamp Duty?
Motor Vehicle Stamp Duty is a state and territory government tax applied to the transfer of vehicle ownership in Australia. The duty amount varies depending on the vehicle's value, type, and the specific state or territory regulations. It's a one-time tax paid at the point of registration or transfer and contributes to state revenue.