Need to Upgrade Machinery in Tricky Operating Conditions? It Could Come Down to Sourcing Affordable Equipment Finance

Securing affordable equipment finance may rely on obtaining the lowest rates, most workable terms and repayments that suit the business’ cash flow. For operators across multiple industries, operating conditions are challenging at the moment, making the decision whether or not to upgrade machinery a difficult one.
It could come down to the ability to source affordable and workable equipment finance. Sounds straightforward enough. But is it as straightforward and easy to achieve? We cover off on some of the steps that operators may consider to improve their prospects of securing machinery loans that are affordable and work for their business.

Access the Right Equipment Finance Lenders

The commercial credit market is extensive and can be highly competitive with banks, finance companies and specialist non-bank lenders active in the sector. There are many variations in asset finance rates, approval criteria and loan conditions offered by different lenders. Approval and offers vary with individual applications and the industry.

The market is diverse with lenders that specialise in loans to operators in key industries. With this speciality and industry insights, they can be more competitive than more general commercial lenders.

Using the services of an experienced finance broker can be a first step for operators seeking their most affordable equipment finance. We provide access to a vast lender base including specialists in different industries and experts to handle the entire process for business operators, focussing on achieving the most competitive rates to deliver affordable solutions.

Getting the Best Equipment Finance Rates

Key to affordable asset loans is the interest rate. While access to lenders offering the most competitive rates can be integral to achieving the best solution, there are other contributing factors. Rates vary with asset acquisition credit facilities, lenders and the specifics of the individual application. Chattel Mortgage and Commercial Hire Purchase offer lower rates across the market than Lease and Rent-to-Own. But choosing the most suitable credit facility should not be made on the rate alone. Operators should speak with their accountant to determine which credit facility has the features and benefits aligned with their set-up and objectives.

Financials and credit history are critical to securing the best rates. If possible, reduce debt before applying for new loans to improve the balance sheet.

Lower loan amounts compared with the value of the unit being financed may result in a better rate. While most businesses will be seeking no-deposit financing, making a down payment or using the current machine as a trade-in to reduce the price and loan may pay dividends in a better rate.

Operators may also consider a lower-priced model which would require a smaller loan amount. Many will consider buying second-hand rather than new with the attraction of the lower purchase price. But consideration should be given to the differences in rates and loan conditions on new vs used equipment finance. The interest rate may be higher on a used machinery loan compared with a new model. Request quotes on both options to make an informed decision as to which presents your most workable acquisition.

Structuring Equipment Finance to Suit Cash Flow

‘Affordable’ financing can mean the cheapest, but it can also mean workable – with monthly payments that work with cash flow. The monthly payments are determined by the rate, the amount borrowed, the term and the balloon with Chattel Mortgage and Commercial Hire Purchase. Refer to our Equipment Finance Calculator and calculate different combinations of loan and term to see exactly how they change the monthly loan payment. Change the loan amount, term and balloon and note the difference in monthly payments and total interest accrued.

The term can impact not only the monthly outgoings but also the total interest accrued. This adds to the total acquisition cost which may then impact achieving ROI targets. Determining the ideal term may deliver the most affordable equipment finance over the ownership or life cycle of the unit.

Terms can vary up to 7 years, subject to lender approval of individual applications. Achieving a term and a balloon that delivers the most suitable monthly payment may involve negotiating with the lender. Not all lenders will be open to negotiating with business owners. When using our brokers, we handle that for you, using our industry-level connections and leverage with key lenders.

Equipment Finance for Small & New Operators

While there are challenges across many industry sectors, small and new businesses can face greater challenges when requiring financing for new machines, particularly affordable loans at workable rates. Access to our non-bank lenders and Low Docs Machinery Loans opportunities may be the way forward. Speak with one of our brokers for the options available to you.

When operating conditions are challenging but you need to upgrade machinery, speak with Jade Equipment Finance 1300 000 003 to source affordable 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.