Percentages are an integral part of many aspects of business and private life. But right now, they seem to have reached a new level of significance. Watching the share market percentage fluctuations, the monthly unemployment rates, assessing quarterly GDP growth rates, keeping an eye on house price rise increases and more currently, closely following COVID-19 vaccination rates across the globe. In Australia, many are waiting (im)patiently each day in lockdown for the latest vaccination percentages as they edge, or race depending on your state, to those magic targets. Targets which should signal the reopening of the economy and your chance to either get back to working in your business full-on or to start implementing those business growth plans.
Percentages are a big part of business in many ways. Achieving that ideal balance of income to outgoings to deliver a positive bottom line is key to profitability and success. Productivity and performance percentages provide indications as to how our businesses are achieving targets. And then there is what we consider the most significant percentage – the interest rate percentage.
As business finance lenders, percentages our business. Interest rate percentages specifically. If you’re a business owner looking to invest in new plant, machinery and equipment, then your eyes should also be fixed on the interest rates on equipment finance. Jade Equipment Finance has all eyes on the percentages with this interest rate update.
The Reserve Bank of Australia (RBA) set the official cash rate in Australia based on its assessment of the Australian economy. This rate then essentially determines how the banks and other non-bank lenders in our market establish their interest rates across their lending sectors. The RBA board meets each month with the exception of January to determine any moves in the cash rate and the business community amongst many others keenly watch for the announcement.
Significance of Small Increments
Currently the RBA has left the official rate on hold at 0.1% since November 2020 when it cut the rate from 0.25% Interest rates vary across different loan types, in different sectors and across the lending market. Lenders set their individual rates to be competitive but also to reflect their assessment of the risk of a particular industry or sector and their preparedness to lend in that area.
When comparing interest rates say from one lender to another, that small incremental difference may appear on the surface to be inconsequential. But as the classic Paul Kelly song goes along the lines that big things from little things. A seemingly little difference in interest rates from one lender to another can grow into a big difference in total interest paid over the term of loan on even a medium priced item of equipment or machinery.
To see exactly how small incremental differences in interest rates may play out in regard to the item of equipment you are currently considering, use out Equipment Finance Calculator. Enter the interest rate we are currently displaying for equipment finance with the price of the equipment and the balloon and term you would prefer. Note the repayment amount.
Now, keep loan amount, term and balloon the same and input a higher interest rate you may have sourced from another source and see how the repayments increase. Multiplied over the full term of the loan and you’ll quickly realise the huge significance of achieving even the smallest interest rate reduction on equipment finance.
It is this significance, the benefits to business in achieving cheaper finance, that drive our team to negotiate hard on interest rates with our lenders to ensure we deliver the cheapest rate possible.
Equipment Finance Interest Rates
The rates offered for equipment, plant and machinery finance will vary across different industries and across the types of finance products. The cheapest rated finance products are typically Chattel Mortgage and Commercial Hire Purchase. Leasing attracts a slightly higher rate and Rent to Own higher again. These variations reflect the ways these different products are structured. This a standard trend across the lending sector and not a feature only of Jade Equipment Finance loan products.
To see the difference interest rates we are currently achieving on equipment finance, please refer to our Interest Rate Comparison Calculator. This clearly shows the rates for a range of business finance products.
While we have stressed the significance of small incremental differences in interest rates to the overall cost of a loan, it should also be noted that the cheapest rated finance product, that is Chattel Mortgage and CHP, are always suited to all businesses.
There are a range of issues to consider when selecting the most appropriate loan type for a business and for the purchase of a particular piece of equipment. These include, but are not limited to, the overall financial objectives of the business and the accounting method that the business implements. Which is why we strongly recommend that our customers consult with their accountant when selecting a loan product.
The Importance of Low Interest Rate Equipment Finance
When Australia does reach those vaccination targets and the economy is back into full swing, the percentage-watch will still need to continue. Not only watching but actually being offered the cheapest interest rate percentage on finance required to acquire new equipment. The cost of finance can be a major expense to business and keeping that cost to a minimum can be critical to the success and long-term viability of the operation.
Regardless of the loan type selected, cheap interest rate finance can be achieved by all types of businesses. Be assured that low interest rate equipment finance is not the privilege of large operations. Our customers include all sized businesses including micro and SMEs and even new start-ups. We keep on top of the percentages on interest rates to assist our customers achieve the percentages they are seeking on their bottom line.
Contact Jade Equipment Finance on 1300 000 003 to discuss low interest rate 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.