While inflation is falling with each monthly CPI Index release from the Australian Bureau of Statistics (ABS) recently, prices across many sectors still remain high, placing pressures on households and businesses. High fuel and energy prices as well as materials and labour, presented challenges for many businesses to minimise their monthly outgoings to maximise returns. When an investment in new machines or other assets is required, achieving lower equipment finance payments will be a priority.
Committing to credit with repayments that stress cash flow can lead to a range of issues for all types of enterprises. As experts in commercial lending, we work with operators of all sizes and all types to structure machinery funding solution with repayment schedules that will work with cash flow and keep monthly commitments on target.
Get Lower Equipment Finance Payments from the Get-Go
Acquiring new assets with funding provides the opportunity to achieve the target repayment level from the get-go. By using our buying tools including the loan equipment calculator, operators can work out their preferences in loan term, balloon and credit total that calculate out to their targeted repayment level.
Then comes the task of getting approved for that preferred credit structure. To achieve rates, terms and conditions that will deliver the target wanted by the operator, can start with the choice of lender.
The criteria that lenders use to set rates on individual applications and to approve certain repayment terms and other conditions, varies across the market. Access to the most suitable lender is provided by using our specialist broker services with multiple lender accreditations in many key industry sectors. We know the matrix used by our lenders, ie what types of set-ups they offer the best rates to and what guidelines they use for approval, so we can quickly align our customers with the most suitable lender.
Lower Rates Deliver Lower Equipment Finance Payments
Monthly repayments are calculated with a combination of total borrowed, term and the interest rate. By far the interest rate is critical and the focal point both for our customers and for our brokers. Get approved for the lowest rate and that can flow-through to lower repayments.
Rates vary across the sector, with the selection of commercial credit facilities, with the profile of the applicant and with new and used machinery. While our brokers negotiate for the lowest rates, operators can review their credit profile and position to see if these can be improved to increase the prospects of a better rate offer.
When considering whether to purchase new or used, possibly request quotes for both options to compare the rates and repayments. Used models will typically have a lower purchase price and hence less required in borrowings, but may attract a higher interest rate. Having quotes for both options may assist with the buying decision and the funding outcome.
Chattel Mortgage and CHP attract lower rates than Leasing and Rent-to-Own. Operators may discuss the choice with their accountant to see if one of the lower rate options will work with their accounting practices and objectives. Commercial Hire Purchase is compatible with both the accruals and the cash accounting methods so may be an option to consider against Leasing and Rent-to-Own.
Get Expert Support to Structure Loans for Lower Repayments
With multiple elements working together to determine the monthly repayment, funding structure is critical to the monthly commitment. To keep this amount down to the minimum, operators can consider the amount requested, the term and the balloon. A change to either or several of these will change the repayment amount. Our brokers will work with you and negotiate with our lenders to achieve the optimum solution.
Refinancing to Achieve Lower Equipment Finance Payments
For operators mid-way through a funding arrangement with repayments that are pressuring cash flow, business equipment refinancing may be an option to consider. While many operators seek to refinance for a lower interest rate, a lower monthly outgoing is an equally important and much-sought objective.
The interest rate on the refinanced credit will be based on current rates, not the rates that were applicable when the current loan was secured. For loans secured during the historic low rate period in 2020-2021, this will likely mean a higher rate. The RBA is tipped to hold the cash rate steady in the near future, so the rate environment may be seen as more stable than in the past few years making it somewhat easier for operators to plan financing.
While the rate on refinancing may be higher than for the original purchase, the amount required to pay out the existing loan may be less than the original amount and the term and balloon may also be reviewed to achieve a target lower monthly repayment.
If machinery payments are weighing your business down or if you are planning new investments, we do have a wide range of products and services and the capabilities to support operators achieve their lending objectives.
To minimise monthly outgoings with lower equipment finance payments contact Jade Equipment Finance on 1300 000 003 to discuss the options.
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.