When requiring a loan to purchase new equipment, business operators will typically be seeking to secure cheaper equipment finance. The cheapest loan possible to ensure the acquisition is cost-effective and delivers a benefit to the business. With most banks and lenders clearly displaying their interest rates and terms for equipment finance, many operators may be wondering if these are set in stone or up for negotiation? Is it possible to actually negotiate a better deal on equipment finance?
While many operators would consider themselves fairly shrewd at negotiating contracts, tenders and pricing for their projects, negotiating with the major banks is a totally different scenario. Engaging the services of a specialist equipment finance broker rather than handling the task alone can result in cheaper equipment finance for a business.
Understanding the equipment lending market may provide greater insight into why it is possible to negotiate cheaper finance when the right strategic approach is adopted.
Equipment Lending Market
The range of lenders in the equipment finance market is quite large but not all are amenable and flexible to negotiation due to their structure and approach to lending. The market comprises the major banks, minor or second tier banks, finance companies and non-bank specialist lenders.
While there continues to be new lenders entering the market, the big banks remain the largest overall group of lenders for business and consumer finance. Most businesses will automatically turn to the bank where they hold their transaction account when requiring finance.
Under their status as banking institutions, the banks must operate to certain guidelines which are also determined at least in part by their size and corporate structure. Guidelines in regard to loan approvals are set and the team are typically required to abide by these guidelines.
While not having banking status, many finance companies are also large corporations and regardless of the image portrayed as workable and approachable, many still have their corporate processes and their procedures to be followed.
Offering discounts on rates and waiving certain loan conditions for small business especially is not usually achievable when a business operator enters finance negotiations with a bank. They do however have business managers that do work to structure finance deals for their customers.
Lenders that do tend to have greater flexibility when it comes to negotiating cheaper finance are the specialist, non-bank sector. Some of these lenders that Jade Equipment Finance are accredited with, have set up with the specific objective of assisting businesses to achieve cheaper and more workable finance.
Great news for business owners except how do operators find and connect with these lenders? Many operate to an industry-only model. They select certain finance brokers such as Jade and deal through them to provide finance to businesses. Business owners can access many of these specialist equipment finance companies through their Jade consultant.
Structuring the Finance
Being in a position to negotiate cheaper finance requires having a level of bargaining power. Power that in many instances, even longevity and large transaction accounts don’t necessarily provide when it comes to talking finance.
As a broker-style lender, Jade Equipment Finance has bargaining power with a range of lenders derived from the quantity of equipment finance business that we conduct with those lenders.
So what can be negotiated and what should businesses be considering in the quest to acquire cheaper equipment finance?
The interest rate is the key to the overall cost of finance. The rates set on finance for different types of equipment and for different loan types will vary across the lending market. While the official cash rate is set by the Reserve Bank of Australia, individual lenders then set their rates based on their costs and their specialist interest in a particular industry sector.
Jade consultants work hard to negotiate cheaper rates for our customers, but business owners can also take steps towards achieving better finance through keeping a good credit rating.
While many businesses may see getting a cheaper interest rate as the only way to get a more workable there are other aspects to the loan which can also be addressed to achieve a cost-effective outcome.
The finance term can be critical to achieving the repayment levels that work with the business cash flow. Negotiating a longer term can reduce repayments. For those wanting no deposit equipment finance, seeking approval for a larger loan total may be a means to more cost-effective finance.
Lenders may also apply certain conditions on equipment finance that through expert negotiating may be eased and result in a better overall outcome for the business.
Businesses requiring low docs, no docs and bad credit equipment finance can benefit greatly from engaging with a finance broker. These are specialist loan categories which are not serviced by all banks and lenders. Specialist lender services may be required to source this type of loan. Jade Equipment Finance provides these services.
Achieving Cheaper Equipment Finance
Achieving cheaper equipment finance is a real possibility for many operators, especially when the right strategies are adopted. Handling the process on your own can present challenges and can be extremely time-consuming. Time which effectively should be included in the cost of the finance.
Engage with Jade Equipment Finance to reduce that wasted time and negotiate better and cheaper equipment finance that works for your business.
Contact Jade Equipment Finance on 1300 000 003 to discuss negotiating cheaper equipment finance.
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.