The cheapest equipment loan may be achieved by securing the lowest interest rate or may be considered finance with the lowest monthly payments. The interpretation of the most affordable finance or lowest priced, can vary with different business operators. Some business owners may seek the lowest rates to reduce the total cost and the payments. Others may seek to structure the finance to achieve the lowest monthly repayments.
Whatever your interpretation, our brokers work towards achieving the most affordable, least costly loans for every customer. Understanding what factors contribute to the cost of finance – rates, repayments and total investment, may assist operators to formulate their expectations and prepare budgets when buying new machinery and other assets.
Securing Lowest Rates for Cheapest Equipment Loan
Interest rates are the key to the overall cost of finance and to the repayments. Achieving the lowest possible rate will be the objective of most business operators when sourcing finance. Rates vary across the lending sector as banks and lenders set their own rates. Lenders typically use the cash rate as set by the Reserve Bank as a basis from which they establish their lending rates across their portfolio. In addition to the cash rate, lenders need to allow for their own funding costs.
Lenders vary their rates according to their own forecasts and guidelines and the perceived risk of lending at a particular time and to a particular industry sector. One lender may be offering the best rates at one time, while another may emerge as the most competitive at another time. The market can present a complex scenario. Using our broker services can assist operators to quickly identify which lender is currently offering the best asset finance rates.
Lenders advertise or display their best rates at that time. These figures will be for new assets and for businesses that have good credit. Businesses with less than good credit can expect a higher rate. Higher rates can apply to used compared with new machinery finance.
Interest rates can also vary with different industry sectors. The interest rate is essentially the lender’s assessment of risk in lending to that business. Lenders can assess different sectors as a higher risk than others at different times. This may be due to economic conditions impacting the sector, the overall Australian economy, or global scenario.
Different finance products attract different rates. Chattel Mortgage and Commercial Hire Purchase attract the lowest asset acquisition finance rates, Lease rates are slightly higher, and Rent-to-Own attract the highest rates in asset finance.
Choosing the finance product based purely on the one with the lowest rate is not advisable as the credit facility may not be suitable to the business structure and objectives. Credit facilities don’t just vary with rates. They also vary with their suitability to the different accounting methods and have varying structures relating to posting assets to the business balance sheet. Tax benefits available with all asset acquisition finance products provide deductions to reduce the cost of acquiring machinery and equipment. Deductions may be taken into consideration when assessing the most affordable finance option.
To achieve the lowest possible interest rate to keep your finance costs to the lowest possible, maintaining a good credit history is a very important factor, as is using a finance broker such as Jade. We have access to 80+ lenders and the resources to know which lender is currently offering the best rates to suit your profile. Compare our current rates as a guide.
Cheapest Equipment Loan with Lower Repayments
If achieving the lowest monthly payments is your interpretation of the least costly finance, there are a several factors to consider. Obviously borrowing a lower amount will reduce repayments. This may be achieved by selecting a lower priced unit or by paying a larger deposit. A lower loan amount may also contribute to being offered a lower interest rate to further reduce the overall finance costs.
In addition to securing a better rate, the structure of the finance can contribute to lowering monthly payments. The balloon available with Chattel Mortgage and CHP may be varied to achieve a lower payment schedule. But it is advisable to ensure the balloon is aligned with the end-of-life value of the asset.
The finance term is also key to the monthly payment schedule. Longer terms deliver lower monthly payments, shorter terms a higher monthly amount. But a larger total interest will accrue on longer term loans. Adding to the overall cost of the finance and the asset investment.
Get Estimates to Find Your Cheapest Equipment Loan
Operators can use our Finance Calculator to see how all the elements of the loan contribute to the cost. All values can be altered to calculate a different monthly payment estimate.
To secure your cheapest equipment loan contact Jade Equipment Finance 1300 000 003 for your best interest rate and finance structure.
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.
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