You require the appropriate equipment for your business growth. Unfortunately, especially for machinery intensive businesses, the cost of the equipment can be quite staggering. Even more, your business finances might be unable to fund such purchase without significant damage to your financial standing.
Not too worry, with the proper lender for equipment finance in Australia, you can have your worries sorted in no time.
Do You Need Equipment Finance?
Several advantages come with equipment finance. They include:
- Flexible payment structure
- Little or no collateral requirement
- Tax benefits
Who Can Give You Equipment Finance?
Various institutions offer equipment finance. They include:
- Financial Institutions: You can approach commercial banks, credit unions, investment banks etc. for the financing of your equipment purchase. The funding can come in the form of loans, overdrafts and lines of credit.
- Finance Companies: Finance companies are always willing to assist you in the purchase of your equipment. They are specialised institutions that supply credit and credit facilities. They can help you with instalment credits, credits or even finance.
- Retailers: Through store credits, you can also approach retailers for the finance of your equipment purchase. Most times, however, their interest is a little bit higher than what you get from a financial institution or company, but you can be sure to get still what you need in a pocket-friendly interest rate.
- Peer-to-peer lenders: You can also get the finance for your equipment purchase from those individuals who have enough cash to spare and are looking to invest money. You just have to get matched with them, often by a finance company.
Available Finance Options
There are various equipment finance options available for you. They include:
This is a secured equipment loan for businesses. The loan process is quite straightforward. The financier gives out the money needed for purchasing the equipment and places a mortgage on the machine until payment completed. The business takes ownership of the equipment from purchase.
Commercial Hire Purchases
An Offer to Hire or a Hire Purchase is when the institution financing the loan retains ownership of the business vehicle until the borrower can make full payment for the business equipment by paying fixed monthly instalments over an agreed period.
Choosing the Right Lending Company
It is vital to choose the right lender for your equipment finance. To ensure you can do this, here are the following guidelines put in place by the Australian Securities and Investment Commission (ASIC).
- Your Lender Must Be Licensed: It is one of ASIC’s guidelines that before a lender gives out money, it must have a license. So, before you make a pick, ensure that the actual lender has a license. To know this, you can check up your prospective lender in the list of ASIC’s licensed lenders in the ASIC’s Connect Professional Register.
- Your Lender Must Provide You with The Credit Guide: As a licensed lender, it must provide you with the credit guide and credit proposal disclosure document, so you can read and make informed choices.
- Your Lender Must Give You A Quote for Providing Credit Assistance: Unless you have agreed on the maximum amount, you will pay for your lender’s services.
Improving your credit profile
If you are looking to improve your credit profile, here are few tips as provided by ASIC.
Examine Your Credit Report and Score
The first thing you want to do is ensure there is no error or irregularity in your credit report before you apply for a loan. If you discover any error or inconsistency that could negatively affect your credit score, you can hire a credit reporter to fix it for you.
Discharge All or Some of Your Debt Obligations
Securing equipment finance is pretty much about the history of your past credit loans. If you have mismanaged or delayed in its payment, it could negatively affect your credit profile. Pay your bills on time, resist accruing debts and ensure your existing loan obligations are on track.
Make A Comprehensive Budget
You don’t want to take more than you can payback. If you do, it will affect your next loan application. So, make a detailed budget about your expenses and income for the time being. This would allow you to be prudent in your financial dealing.
Barriers to Enquires About Your Credit Profile
This is important if your lender decides to consider your credit report, you don’t want to make it difficult for them, do you? So, watch out for any barrier.
Requirements for Equipment Finance
You need to have your documents sorted out before seeking equipment finance to save time and energy. These requirements vary slightly from state to state, but they generally include:
- Identification paper
- Business budget and financial records
- Proof of business ownership
- Insurance proof
- Your financial records
DISCLAIMER: The data provided above is merely a GENERAL MATERIAL for your use and consideration. They do not, and should not in any way, be considered as financial advice or recommendation from CSHTA. Hence, we shall and do not take liability for faults or mistakes in the presentation or interpretation of the facts highlighted herein. Also, we do not accept responsibility for any analysis and commentary on data present within the public domain. We advise you to consult with an accountant or financial advisor if you need specific recommendations concerning your financial needs or circumstances.