Equipment is a very important contribution to the growth of your business. However, it can be difficult to outlay large amounts of money to purchase the necessary equipment, while still upholding a steady flow of cash and the capital required to run your business each day. That’s where equipment and vehicle finance can be your much-needed solution.
Certain businesses, require a large variety of machinery and equipment by necessity, in order to grow and succeed. Regardless of whether it’s a truck, specialised dental equipment or office supplies required, receiving equipment finance can provide you with the money you need to help your business get all that it needs to be able function professionally. In order to stay competitive in the marketplace you need to keep a steady level of momentum, you definitely don’t need the frustration of stalling your business growth due to lack of essential specialised equipment.
If you are looking to secure funds to purchase equipment or vehicles for your business, contact us today to discuss your options.
WHAT IS EQUIPMENT AND VEHICLE FINANCE?
Equipment and vehicle finance, allows you to access money in order to buy all of the necessary and specialised equipment for the running of your business. If that means purchasing dental equipment for your private practice or a dump truck for your construction company, it is all available through equipment and vehicle finance.
Equipment and vehicle finance is available via a wide number of banks as well as other lenders, with a variety of equipment finance solutions at your disposal. Depending upon your current financial situation, tax requirement and budget, we can guide you towards the best option for your business growth.
HOW DOES IT WORK?
Equipment and vehicle finance works by granting you the ability to obtain any of the vital industry equipment you may require without the stress of paying upfront for it. A bank or another lender will loan you the necessary funds which you can then pay off the purchase, over a determined period of time.
This allows you to grow your business with the necessary growth-building equipment before actually owning it. There are various financing options you can decide upon or together with your finance advisor you can decide on the options best suited to your business needs. Your main choices include:
- Chattel Mortgage: Under this option the equipment belongs to you from the start and the lender has a ‘charge’ over the equipment that secures the loan until the final repayment has been made. A major benefit of a chattel mortgage is that you can claim the GST on the purchase on your next BAS claim.
- Commercial Hire Purchases: By choosing a commercial hire purchase, the finance lender purchases the equipment required, and with each repayment, your equity increases. After you have made the final payment, you become the official owner of the equipment. Basically, the equipment works as the loans security agent. This enables you to use your other property free for other means of financing.
- Finance Leases: In this agreement the lender will completely own the equipment and you rent it from them for as long as you need it. The benefit of this, you are free of any ownership obligations and initial outlay of cash.
- Novated Leases: A lease is novated with a three-way agreement between an employee, employer and the nominated finance business. The employee takes out a lease on a vehicle from the finance business, with the financier and the employer agreeing that the employer will take on the employee’s responsibilities under the terms of the lease.
WHAT ARE THE BENEFITS OF EQUIPMENT & VEHICLE FINANCE?
This type of finance provides you with a large variety of choices to match various business and budget needs. Having access to money in order to purchase much-needed equipment will not only keep your business functioning but actually ensure its growth, is a major benefit. Without this option, it may be impossible for you to access the cash for essential items to maintain a competitive hold in your industry. In addition to this, you have access to flexible repayment plans, as equipment and vehicle finance affords you the luxury of a tailor made repayment plan to match your current budget.
If anything, there may be too much variety to choose from. With the variety of options and the potential taxation benefits available to you, you may find the process overwhelming. The main thing though as a business owner, is to not to take on any finance that you can’t afford to repay. It’s best to really think about how much you need any equipment before entering into any financial agreement.
The team at Mortgage World are available to discuss all of your queries and assist in helping you make the best choice for your business needs.
INTEREST RATES AND FEES
Most equipment finance has fixed interest rates (starting at around 4.09%) and a set term with regular monthly payments. By having the certainty of a fixed monthly payment plan, you can be better equipped at your budgeting and business planning. Another benefit of financing your equipment is that it frees up your capital to be used as working capital and towards your business growth.
Most businesses have a great chance of qualifying for equipment and vehicle finance, including start-ups and individuals with an unstable credit score. There are many prequalification tools available online to discover what types of business loans you are eligible for.
WHAT YOU NEED TO HAVE READY WHEN APPLYING
To avoid delays in your application, it’s important to ensure you have all the necessary documents on hand when you apply for equipment and vehicle finance. To start the application process, you will generally need to provide:
- Your Driver Licence number
- Details of equipment
- Your business ABN
- The account number and BSB of your main business account
For large loans you’ll also need some general banking statements, in order to assess your business health and determine what type of repayments your business can handle without putting it under too much strain. These would include a list of your assets and liabilities, as well as a profit and loss statement.
FREQUENTLY ASKED QUESTIONS
What can I finance?
Generally, any equipment that can help generate income for your business can be financed. These include:
- Office equipment
- General business equipment
- Motor vehicles
- Commercial vehicles
- Engineering equipment
- Computer and technology
- Medical and dental equipment
What would be the best finance option for me?
When considering the finance option best suited to you, it is best to consider a variety of factors. Once things to consider is your taxation practices and your accounting practices in general. Your accountant will be able to guide you towards the best financial option to suit your situation.
What fees and charges should I be aware of?
It is important to thoroughly read all of the product documents, so you are aware of any late payment fees, set up fees, and if you will be charged if you pay out the loan early. You should also be aware of annual fees or recurring monthly charges.
How should I compare the various products available?
When comparing the various equipment finance product available there are a variety of things to be aware of. These include:
- Discovering the interest rate: Your interest rate will influence the amount you will end up paying over the duration of your loan. Ideally then you should find one offering the lowest interest rate. Think about if you would prefer a variable rate or the safety of a fixed interest rate.
- Comparing the charges and fees: Fees and charges gain greatly impact the value of any finance product buy into therefore, it’s wise to research this aspect any deal you enter into. Ensure you thoroughly read all the relevant product information, ask questions regarding your finance option comes with a set-up fee or a fee should you make early repayments.
- Determine what are the loan terms: How long can you take to pay off your asset? Terms typically range from 12 months to seven years, so look for equipment finance that offers a term suited to your financial situation.
- Establishing if there are any taxation benefits: Around tax time, the vast variety of equipment finance choices are looked at differently. There are possible taxation benefits with every approach. Getting advice from your accountant will help you decide on your best option.
- Find out if there are flexible repayment options: Look at the various options surround how you can make your vehicle repayments. Ideally, you should focus on any option that allows you to make those repayments best suited to your budget.
Am I required to have insurance on the vehicle/equipment for a loan?
To be able to receive vehicle or equipment finance solutions, you must hold a valid insurance policy that fully covers your vehicle and equipment. You would not get finance for any truck or equipment that is currently not covered.
CONTACT THE EQUIPMENT FINANCE EXPERTS
Here at Mortgage World Australia, we have been helping Australians with their loans for years. We have both the experience and expertise to quickly assess your situation and determine which lenders can approve your application. We know which loans will save you the most money and which lenders are less conservative when assessing their equipment and vehicle financing.
Contact us today to discuss your options with one of our finance experts.