Assessing and Comparing Equipment Finance Lenders and Loans

Business operators have learnt a lot of lessons over the past few years courtesy of the COVID-19 pandemic. Some unfortunately learnt the hard way, some through opportunity and some through noting and avoiding the mistakes of others. One stand-out lesson has been the need for workable finance that is sustainable and supportive for a business in both good and challenging trading times. When buying new equipment, smart operators will be closely assessing and comparing equipment finance lenders and loans and ways to access the cheapest interest rate loans.

If it’s been a while since you embarked on this process, you will hopefully benefit from this snapshot of the lending market which our team at Jade Equipment Finance has prepared.

Assessing the Equipment Finance Sector

While the major banks remain the largest lenders in Australia, loans for business equipment are available through a number of sources, providing businesses with a range of options to acquire the cheapest deal.

There are positives and not so positive aspects to each lender category with the decision based on which best meets the needs of the individual business and the equipment being purchased.

  • The major banks are by far the most popular lenders but their banking status and the guidelines and regulations that come with that position don’t necessarily provide the best lending option for all businesses. The criteria they have for business finance approvals can include minimum trading periods and other conditions which preclude new businesses from applying. While competitive on rates, they are not always amenable to negotiating on loan conditions which can be a deal-breaker for many operators.
  • General finance companies do promote heavily and that can attract many to what appears to be a quick and easy way to equipment finance. It can be but checking the detail and getting alternative quotes is advisable. Many may end up having similar corporate structures to banks. Those that operate in both consumer finance and in business finance may not be as suitably targeted to the needs of business as other more specialised non-bank lenders. Worth checking out other alternatives as well.
  • Lenders that specialise in particular sectors can be a great source of equipment finance. These types of non-bank lenders often exclusively work with say heavy equipment finance and as such, they know the industry and can bring that insight and expertise to the negotiating table. One obstacle can be access. Working through a broker-style lender like Jade Equipment Finance can be the channel necessary to access specialist lenders.
  • Manufacturer finance and dealer loans is an area of finance which has been around for a long time but is definitely on the rise. Buyers can lock-in their loan at the point of purchasing equipment. A convenience? Possibly. You’ll still have to deal through their finance arm and go through the same loan application processes as with other lenders. The best and cheapest finance deal attainable? You’d have to get other quotes to find that out. Worth reading the contract closely for any hidden costs or conditions and yes, getting another quote. Or use our Equipment Finance Calculator to check what we can possibly achieve for you on the same purchase.
  • Broker-style lenders, Jade Equipment Finance included, offer a comprehensive and attractive alternative to banks, dealer and finance companies. With access to all these lenders – banks and specialist non-bank lenders, we cover off quickly and easily on all the options available to arrive at the cheapest deal to suit individual requirements.

Equipment Finance Interest Rates

Getting the cheapest interest rate is the first step and the critical factor in achieving the cheapest equipment finance. While all lenders use the official cash rate as established by the RBA as the basis for setting their own rates, interest rates on equipment finance will vary across the lending market.

This reflects the individual lender’s own costs of acquiring funding, their interest in lending to a particular industry sector, their internal guidelines and approach to lending and other factors.

While all will advertise rates for different loan products, the actual rate offered will be dependent on the credit profile and risk assessment of the individual loan applicant. Businesses can improve their prospects of a better interest rate by addressing any issues with their credit rating and possibly reducing other debt commitments before making application for new finance.

Lenders advertised interest rates typically apply for the purchase of new equipment unless otherwise stated. The interest rate applicable for used and second-hand equipment may vary.

Equipment Finance Products

The range of finance products available for business equipment is quite uniform across the market. However, different names can be used for the same loans by different lenders. Also keep an eye out for lenders that create special titles for their loans.

  • Equipment Loan is usually the same finance product as Chattel Mortgage.
  • Equipment Lease can be Operating Lease or Leasing.
  • Hire Purchase is the same as Commercial Hire Purchase.
  • Equipment Rental is usually the same as Rent to Own and Rent to Buy.

Each finance product has a different interest rate, tax deductibility of different elements and varying features and benefits. Primarily these relate to accounting practices and businesses should refer to their accountant when making a decision.

To be in a position to claim the benefits offered through IAWO and temporary full expensing, Equipment Loan/Chattel Mortgage should be selected.

Refinancing can be usually be achieved with the business’ choice of finance product. Refinancing is replacing the existing finance with a new deal. Pay out fees and charges can apply to finalise the existing deal and many businesses look to our expertise in sourcing and structuring refinancing.

There are real opportunities to secure workable, affordable equipment finance at cheap interest rates at the moment. So if you’re looking to invest in new plant, machinery or equipment take a few minutes to ask what Jade can do for you.

Contact Jade Equipment Finance on 1300 000 003 to discuss cheap interest rate equipment finance.