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Should you finance through the bank or a non-bank lender?

When you’re purchasing equipment which represents a highly significant investment, sourcing the most competitive finance that is at the cheapest interest rate and most suitable terms and conditions, can be critical to achieving your business objectives, productivity and profitability. Key to the process is covering off on all the finance options available to your business.

The Australian financial services industry is large, somewhat diverse, in some ways complex and includes a wide range of companies in the business lending sector alone. While ‘the bank’ has traditionally, and for many business owners still remains, the first call for finance, there are many other options available. In general terms referred to as ‘non-bank lenders’, these alternative options offer businesses greater scope in sourcing finance and their presence creates a more competitive market.

As a professional finance broker with specialist skills in sourcing equipment finance, Jade Equipment Finance is accredited with both the major Australian banks including the big 4 – CBA, NAB, ANZ and Westpac – and many non-bank lenders. When sourcing equipment finance quotes for our customers, your Jade consultant considers all options with our focus on the best interests of our customer, not the lender category.

Who are the non-bank lenders?

So who are these non-bank lenders? Well, some will be extremely familiar companies to you and some you may never have heard of. Essentially, a non-bank lender is a company, business or financial institution that lends money or extends finance and is not a bank under APRA regulations.

Not deemed ‘lenders of last resort’, the non-bank lenders that Jade Equipment Finance work with are high-profile in the sector and highly regarded companies. Some operate on a global scale, financing major projects, infrastructure and equipment in both the government and private sector. These include companies with impressive board members and personnel, enviable reputations and industry-leading credentials and capabilities in finance.

We are accredited with lenders including Pepper Money, Latitude Finance, Macquarie and Morris Finance to name just a few.

Some non-bank lenders, such as Morris Finance and others, offer finance only through a select group of finance brokers which includes Jade Equipment Finance. Some do offer finance direct to business customers. These decisions are made by the individual lenders.

Specialised Financiers

There are numerous finance companies operating in the lending sector and some specialise just in one particular area. There are specialists in consumer finance, motor vehicle finance, home mortgage lenders and those like Morris Finance, which as their name implies, specialise in equipment finance.

This speciality focus often delivers benefits to borrowers as the lender usually has a greater understanding of that type of asset acquisition than those that cover a wider range of purchases.

Differences and Similarities

  • Banks are registered with APRA (Australian Prudential Regulation Authority) as ADI – an authorised deposit-taking institution. With bank status, these institutions are permitted to accept deposits from customers. So they key difference between banks and non-bank lenders is that non-bank lenders do not accept deposits.
  • Both banks and non-bank lenders offer the same types of business finance products: Leasing, Chattel Mortgage, Rent to Own, Commercial Hire Purchase. The structure of these is standard across the industry in terms of tax deductibility of elements, treatment of GST and depreciation as these are subject to ATO rulings.
  • Interest rates vary from lender to lender whether they be a bank or non-bank. Individual lenders set their general interest rates based on the ability to access their funds and other issues. The interest rate that an individual lender offers to an individual customer will vary depending on a range of issues including the purpose of the loan and the risk assessment of that customer.
  • Banks usually have strict guidelines in regard to finance application approvals. While non-bank lenders are generally perceived as being more open to negotiating and more flexible.
  • For borrowers requiring specialised finance such as Low Docs and No Docs Equipment Finance, more attractive offers are usually achieved by Jade through non-bank lenders.

Which is better – bank or non-bank lender?

The simple answer is – there is no simple answer. When sourcing finance for our customers, in some cases one of the big 4 banks may offer the most competitive quote and for some customers, it may be one of our non-bank lenders that presents the better option.

Each business finance deal is individually negotiated by your Jade Equipment Finance consultant directly with our lender contacts and the offer achieved is dependent on a number of considerations:-

  • The credit profile of the borrower and the risk assessment by the lender of the borrower.
  • The equipment being purchased and the lender’s experience, knowledge and understanding of that type of equipment.
  • Industry sector.
  • Cyclical issues in finance: due to impacts on the general finance sector both globally and locally, offers may vary across the lending sector.
  • Individual lender requirement: each lender has their own guidelines and requirements around equipment finance.

Accessing Non-Bank Finance

By using Jade as your finance broker, you have access to both banks and non-bank lenders in sourcing your equipment finance. Jade Equipment Finance is accredited with a large number of banks and non-bank lenders and your consultant will source you the best quote available to meet your requirements.

With our extensive experience in the equipment finance sector we have the industry networks and contacts to know which lenders are offering the better deals on specific equipment at any one time. By engaging Jade Equipment Finance, you have the advantage of covering off on a wide range of options while saving your own time and hassle.

To discuss your options in regard to equipment finance, contact Jade Equipment Finance on 1300 000 003

DISCLAIMER: NO LIABILITY IS ACCEPTED REGARDING HOW THE INFORMATION ON MANUFACTURER GOODS AND SERVICES AND ANY GOVERNMENT POLICIES, GUIDELINES AND OTHER INFORMATION IS PRESENTED. SPECIFICATIONS AND FEATURES OF GOODS AND DETAILS OF OTHER ISSUES HAS BEEN SOURCED FROM PREDOMINANTLY ONLINE PUBLISHED SOURCES. NO LIABILITY IS ACCEPTED FOR ERRORS IN FACTS AND FIGURES OR INTERPRETATIONS. IN REGARD TO FINANCIAL DECISIONS, THE INFORMATION IS INTENDED FOR GENERAL PURPOSES. IT IS NOT INTENDED AND NOT TO BE TAKEN AS FINANCIAL ADVICE. INDIVIDUALS ARE DIRECTED TO REFER TO THEIR OWN FINANCIAL ADVISOR SHOULD THEY CONSIDER THEY REQUIRE PROFESSIONAL ADVICE SPECIFIC TO THEIR CIRCUMSTANCES.

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