With over 30 years of experience financing both vehicles and equipment for a diverse range of clients in many industries, we thought it might be helpful to take the BS out of the equipment finance stories we’ve heard over the years.
Interest rates
If you’re a solid company with good trading results, the interest rates available at present ranges from 7-8 per cent, depending on the asset and term. If you’re paying more than this, it may be a case of what your provider would LIKE to charge you, as opposed to what is actually available in the market. Although interest rates have essentially doubled in the past 6 months, the effect on the actual monthly payment for equipment and vehicle finance has been much less than for home loans.
When the payments don’t seem to reflect the interest rate
We’ve seen circumstances where the interest rate quoted by another financier is not actually reflected in the monthly payment. The problem here is that unless you have a finance calculator to work it out, you’re none the wiser. There are plenty of “online” calculators where you can check, including one on our Finlease website.
Take heed, unless you actually check, there’s really no way of knowing, so it’s worth spending five minutes online to ensure you’re getting what you have been told.
Banks don’t finance used or private sale machines
There are plenty of competitive financiers who will finance used machines at good interest rates. Often, there are significant savings to be made by going down this track.
Yes, there are extra steps in the finance process, including an inspection of the asset, but these are easily arranged. Care needs to be taken to ensure that the asset being purchased is not currently either under finance or under a GSA (fixed and floating charge). This is easily checked through a company search on the vendor.
My bank won’t provide any further finance until they have reviewed my accounts
That may be the case with your bank, but there’s plenty of other competitive financiers out there who will finance vehicles and equipment at good rates without the need for financials. Where assets are being upgraded, there are no financials policies that can finance replacement equipment up to $500,000.
We use our bank, as brokers are more expensive
This is simply not the case and easily tested by obtaining finance quotes so you can compare the monthly finance costs. Larger broking firms place large volumes to market ($700 million p/a in our case) driving substantial discounts.
Any decent broker should be looking for a 20 year relationship and will act in a manner to ensure that. Brokers should have plenty of feedback from clients on independent review websites, such as Product Review and Google.
Money is a raw material, no different to fuel. It must be accessed in the easiest, cheapest manner, backed by good service. In a world where margins are tight, it’s more about the leftover than the turnover, so it’s essential to keep all costs under control, including finance costs.
A good equipment finance broker will gladly help give you clarity around the options available to you as a business. At Finlease, we pride ourselves on taking the BS out of equipment finance so ensure you talk to an expert who has your best interests front of mind.
Visit finlease.com.au for more info.