Investment in the latest plant, machinery and equipment can contribute significantly to gains in productivity which in turn can lead to increased profitability for the business. But how that machinery is acquired, that is with what form and price finance, can be pivotal to the overall cost-effectiveness of the investment. Cheaper equipment finance can add value to investments in the latest releases of new models of plant, machinery and equipment through reduced outgoings.
Manufacturers focus heavily on efficiency and productivity when designing and developing new models. But these gains can be realised to a lesser extent if the repayments on the finance are greater than the business can handle.
We focus on what to look for and how to achieve cheaper equipment finance which is workable as well as noting a number of recent new machinery releases.
Achieving Cheaper Finance – what to look for
The types of loans available to finance new plant, machinery and equipment tend to be the same across the lending market. Most lenders including banks and finance companies, offer Chattel Mortgage or Equipment Loan, Leasing, Rent to Buy and Commercial Hire Purchase (Hire Purchase).
The structure of each of these loan types is somewhat general in regard to suitability for the cash or accruals method of accounting, when GST is paid and claimed, when a tax deduction is claimed and entry on the balance sheet.
What is not standardised is the eligibility for loans, minimum and maximum loan amounts, the conditions around the finance, loan terms and in particular the interest rate. The interest rate on machinery finance varies across the lending market. This is due to the individual pricing regimes of lenders for the specific lending sectors.
Specialist non-bank lenders that have a particular focus on one industry, sector or type of machinery can tend to be more flexible in regard to negotiating terms and more competitive in terms of interest rates.
In relying on just one source of finance such as your bank, you may be overlooking more competitive and cheaper finance sources. While major banks remain the largest lenders in Australia and offer many benefits, taking a broader view of the lending market can result in cheaper loan options.
We enable businesses to cut to the chase when it comes to surveying the equipment finance market for the cheapest loans. Our service includes sources the cheapest finance offer from across a vast selection of banks and non-bank lenders – saving you the time and hard work of doing all that yourself.
Cheaper Interest Rates Deliver Greater Value
The interest rate is the key factor in the cost of finance. By achieving a cheaper interest rate loan, the total interest payable on the loan is reduced, the monthly repayments are reduced and the resale value enhanced due to the less cost paid overall. In short, lower interest rate finance is pivotal to achieving greater value on the purchase.
To see just how much the interest rate matters, use our Equipment Finance Calculator. Vary the interest rate slightly and note how the repayment changes. That incremental difference can add up to a sizeable amount over the 7 years of an equipment loan. All the time reducing the ROI.
Latest from Massey Ferguson
New to the agricultural machinery market is the MF8S Series from Massey Ferguson, now going the banner of AGCO. This range of new tractors includes 6 models, with a wheelbase of 3.05m and with power ratings available 205HP-205HP.
According to the company, the 8S delivers new comfort levels plus efficiency for farmers with a focus on fully-connectivity, sustainable and smart operations.
New features include but are not limited to:-
- Spacious new cab with outstanding visibility and unique design to minimise the impacts of vibration, noise and heat.
- Range of tech such as digital display dash, data terminal and multipad control lever for smarter farming through optimum control.
- New transmissions for improved fuel economy and reduction in power loss of 26%
Check out the full specs and features and discuss pre-approved finance with us so you can order on your first discussion with your AGCO dealer.
New Schlam Mining Machinery
For iron ore mining operators, the latest dump truck body from Schlam offers potential for higher payloads plus a longer service life. This is the Hercules EXO 240 tonne dump body which is 20% lighter than previous models to create increased payload. It also has a new design with use of innovative materials which the WA based supplier say will result in 100% rise in the service life.
Plenty of value and benefit on offer, worth investigating further
Maximise Loan Value before Rates Rise
The big topic of conversation and conjecture in the finance markets is of course around when the RBA will lift the cash rate. Speculation and opinion is rife and increasing. The conditions in the economy around inflation and unemployment are pointing to a being in the target range for a rise sooner than the RBA’s earlier indications of 2024. But they could wait until wages growth starts to improve which could mean more time.
To ensure maximum value is realised with any machinery loans, making purchases with finance while rates are at historic lows would be an astute move.
Speak with a Jade Equipment Finance consultant on 1300 000 003 to discuss value-increasing machinery 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.