Pre-approved equipment loans are finance for assets such as plant, machinery and equipment where the application is conditionally approved prior to the purchase. Having loan approval prior to confirming a purchase is a common practice with many astute business owners. Pre-approval can deliver many benefits especially in capturing and capitalising on EOFY sales and special deals.
Operators with finance already arranged can be fast to snap up bargains of units which may be limited in stock. Many EOFY sales are for clearance items and end-of-run stock, with often only a limited quantity available. The buyer that is ready to commit with finance confirmed, can be the one that walks away with the great deal.
With the end of financial year now approaching and some businesses already advertising pre-EOFY sales, now is the time to start planning not only your acquisitions but also how you will finance those acquisitions. For operators that have never considered getting a loan before they committed to their purchase, we provide this overview of what is involved with pre-arranging an asset loan.
What are Pre-Approved Equipment Loans?
As stated above, pre-approved finance is a loan that is approved before the purchase is made. It may be approved before the choice of which machine, make or model or specifics are even decided. The loan application is submitted with all the standard financials documentation. The applicant typically advises us of roughly what they think they will need in terms of their loan total. An estimate is fine.
As much information as possible on the asset which they are planning to buy is preferable. This may be general information such as IT systems, tractors, a loader, kitchen equipment, medical devices, etc. Alternatively, it may be more specific with details of the make – CASE IH, Kubota, John Deere, etc and model which has already been earmarked. Whether the asset is being purchased new or second-hand is required as loans for these can differ.
Details on the goods to be financed is required as lenders will need to determine if they are suited for acceptance as loan collateral.
Operators will also need to specify the asset acquisition credit facility that they require – Chattel Mortgage, Lease, Rent-to-Own or Commercial Hire Purchase. A discussion with an accountant may be required to confirm this choice.
Applications are assessed based on the current financial position of the business and priced at current interest rates. A loan offer is made by a lender, which is ‘conditionally approved’. This means it is approved based on the information provided with the application. The offer is valid for a set time only.
The business owner can then proceed to purchase their asset knowing their financing is approved. When the purchase, or commitment to the seller, is made, the specifics are advised to us for the lender. The loan is then adjusted if required, to reflect those specifics. The specifics may be a different loan total - possibly higher or lower than the estimate. If interest rates have changed over the time between the offer was made and the loan required due to RBA cash rate decisions, the loan rate may also be amended. When the details are finalised, the finance is settled and the purchase completed.
Types of Pre-Approved Equipment Loans
Finance can be approved ahead of purchase for all types of businesses across all industry sectors for all types of business assets and non-asset expenses. We provide the service for large and small businesses in construction, health and medical fields, agriculture, hospitality, general business services, and many other sectors.
Small and new businesses can especially benefit from having their finance approved before making a purchase commitment. Many smaller operators can be unsure of exactly how much they would be approved to borrow based on their turnover, size, or time in operation. A scenario which can make them reticent to proceed with placing an equipment order, with those doubts about getting the funds to finalise the sale. Pre-approval removes the doubt and allows small operators, and others, to proceed confidently.
Asset finance can be pre-approved for all credit facilities as mentioned above - Chattel Mortgage, Lease, Rent-to-Own or Commercial Hire Purchase. If the purchase does not suit asset financing, pre-approval is also available for Unsecured Business Loans. This facility can be used for many business purchases not considered an asset suitable for loan security and where the loan required is relatively low, say for components, attachments and machinery accessories.
Apply Now for EOFY Sales
EOFY sales can start as early as the beginning of June so now can be an ideal time to apply for finance to be ready to buy. Budgets can be prepared using our Finance Calculator, and applications can be made online or by phone.
Be ready to capture the best EOFY deals by applying for pre-approved equipment loans with Jade Equipment Finance on 1300 000 003.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
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