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FAQ: Do interest rates vary according to the type of equipment?

Equipment Finance is a broad category which embraces not only multiple industries but countless individual pieces of machinery and equipment. The most sensitive diagnostic and treatment equipment for the medical sector, precision drilling, calibrating and cutting equipment for the engineering sector, customised manufacturing machinery, trucks and heavy vehicles for many operators and the largest, heavy-duty earthmoving and excavation equipment that move mountains in the mining and resources sector are all encompassed in the general ‘equipment finance’ category.

With such a diverse range of equipment covered under this category, it is not surprising that we would receive a query around if there are different interest rates for different types of equipment. In general terms – no. At Jade Equipment Finance we offer our cheap interest rate across all equipment categories. But – interest rates on the individual equipment finance deals we source for different customers will vary based on a number of factors.

Interest Rates: General Determining Factors

  • The Reserve Bank sets the ‘official interest rate’ which essentially determines the price that banks and other lenders pay to source their own funds. This in turn will establish their individual benchmarks for the different finance and loan sectors in which they operate.
  • Individual lenders will have differing interest rates for the same sectors, such as equipment finance.
  • A lender will establish their base rate for equipment finance based on their exposure to, confidence in and their experience with a certain industry sector.
  • Lenders that specialise in equipment finance may tend to offer cheaper interest rates than say major banks. Specialist equipment finance lenders tend to have a deeper understanding of their area of interest than lenders and banks that cover a wider and more general field.
  • Lenders price their interest rates partially in response to global economic influences.

Specific Interest Rate Factors

  • From the broader general level, we come down to how the interest rate on your specific equipment finance deal is calculated.
  • The interest rate on individual equipment finance deals is determined primarily on the individual aspects of the business applicant.
  • Individual lenders conduct their own risk assessment of each application based on the business’ credit profile, trading situation, forward prospects and the financial documentation provided in the application to arrive at their own interest rate on that loan and their overall finance offer.
  • In general, the more positive the credit profile and financial documentation provided, the lower the risk assessed and the lower the interest rate offered.
  • Low docs finance applications include less financial documentation and as such attract a higher interest rate. To achieve a better interest rate, businesses seeking a low docs option may look to increasing the quality and quantity of financial documentation they provide with their application.
  • The total loan amount and the loan term requested may have an impact on the interest rate offered.

Finance Offer Determining Factors

While the interest rate is a key determining factor to the overall finance deal, it is not the only factor. Yes, getting a cheap interest rate is critical and achieving better interest rates is Jade’s trademark. But there are other factors which should be taken into consideration when assessing an equipment finance offer. And some of these factors will vary due to the type of equipment.

  • Whether purchasing new or used equipment, the perceived working life of the equipment may be taken into account by the lender when structuring a finance offer.
  • The age and condition of the equipment will be considered when lenders assess a finance application. In some cases of older equipment, the lender may request the applicant pay a greater deposit to reduce the overall loan amount, while still offering a low interest rate.
  • While the applicant still achieves a low interest rate loan, using cash reserves to pay a greater deposit may pose a challenge. Another lender may not request that extra deposit but the finance offer may be at a higher interest rate.
  • The loan term being requested by the applicant may not meet the guidelines of individual lenders. Their offer may be for a shorter term but at an attractive interest rate. Another lender may meet the business’ term request but at a higher interest rate.
  • Equipment finance products – Chattel Mortgage, Leasing, Rent to Own – include an option for a balloon or residual. The amount of that balloon/residual has an effect on the repayment level. Some lenders will have limits around the amount they will permit which may be based on aspects of the specific equipment.

When sourcing finance offers, our consultants strive to achieve not only the cheapest interest rates, but the right balance with the other elements of the finance deal. Ensuring that the loan term, repayment level and any balloon or residual also meet the individual requirements of our customers.

Sourcing Cheap Interest Rate Equipment Finance

At Jade Equipment Finance we negotiate with lenders on behalf of our customers to achieve genuine cheap interest rates on every deal, regardless of the type of equipment being purchased. No ‘teaser rates’ that are only low for a short time but rates that are cheap and fixed for the entire loan term.

We are accredited with many lenders that specialise in equipment finance, deal only through brokers and are more flexible in negotiating on interest rates than many banks. A factor that gives Jade an edge when it comes to achieving a low interest rate for your equipment finance deal.

For a no-obligation quote for cheap interest rate equipment finance, contact Jade Equipment Finance on 1300 000 003

DISCLAIMER: INFORMATION, DATA AND DETAILS OF GOODS, POLICIES AND PROGRAMS THAT IS PRESENTED IN THE ARTICLE IS INTENDED SOLELY FOR THE PROVISION OF GENERAL INFORMATION. UNDER NO CIRCUMSTANCE IS THIS INFORMATION INTENDED AS THE PROVISION OF FINANCIAL ADVICE FOR ANY INDIVIDUAL AND/OR FOR THE PURPOSE OF MAKING SPECIFIC INDIVIDUAL FINANCIAL DECISIONS. FOR ADVICE ON INDIVIDUAL CIRCUMSTANCES, READERS SHOULD REFER TO A FINANCIAL ADVISOR. NO LIABILITY IS ACCEPT FOR ERRORS, INCORRECT DETAILS OR INCORRECT PRESENTATION OF DETAILS OF GOODS, PROGRAMS, SERVICES, ETC AS PRESENTED. THE INFORMATION HAS BEEN SOURCED IN GOOD FAITH AS GENERAL INTEREST AND INFORMATION FROM MANUFACTURER, SUPPLIER AND GOVERNMENT WEBSITES.

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