1 July, a new financial year and time to act on plans to achieve business targets for the coming 12 months. Embracing the optimism in the economy following two years of pandemic disruptions while understanding and managing the downsides of supply chain issues, inflation and rising interest rates. Securing cost-effective vehicle finance with the cheapest interest rates to equip the operation with new vehicles can be critical to meeting business goals.
To achieve this, business owners and operators should focus on the combination of factors which work together and towards delivering workable, customised motor vehicle finance for business.
The keys to opening up improved prospects for achieving cost-effective finance include:-
- Accessing appropriate lenders
- Selection of finance product
- Finance structure
- Sourcing cheapest interest rates
- Maximising tax benefits
As specialists in business vehicle finance, we work closely with business owners on addressing all these aspects to deliver cheaper and more workable finance. We elaborate on each of these points to assist business owners establish a solid plan for moving forward with new vehicles with workable finance.
Accessing Appropriate Lenders
Simply reviewing websites for interest rates only reveals one aspect of what that lender may offer especially in regard to flexibility and being open to negotiating on terms. The Australian lending market, especially for business borrowers, is vast and growing with new lenders regularly entering the sector.
Many of these non-bank lenders can be harder to find as many limit their operations to working with their own select group of accredited finance brokers. Jade Car Loans is accredited with many such lenders and can open access to their loans for our customers.
While banks, large finance companies and dealer and manufacturer finance may be convenient sources of finance, they may not have the ability within their corporate set-ups to offer the flexibility required. Flexibility to negotiate on rates, loan terms, balloons and finance conditions. Aspects which may be critical in achieving a workable outcome.
Non-bank lenders are of particular importance for relatively new and start-up businesses that don’t meet all the requirements for finance with banks and some large finance companies. These businesses would be seeking Low Doc and No Doc business car Financing which is predominantly available through non-bank lenders and specialist broker-style lenders such as Jade.
The benefits of using our services include providing access to many choices in regard to lenders plus the bargaining power and expertise to ensure the best finance offer is received.
Selection of Finance Product
For the purchase of vehicles for use in a business, the selection of finance products include:-
- Vehicle Lease
- Sole trader car loan (Chattel Mortgage)
- Commercial Hire Purchase
- Novated Lease with Salary Sacrifice
The choice can determine the tax-effectiveness of the finance in regard to individual businesses and be instrumental in working towards specific goals. Finance products vary in regard to a number of aspects including suitability to the accounting methods of accruals and cash accounting; treatment of GST; when and which loan components are tax deductible; how the vehicle is treated in regard to the business balance sheet; and interest rate.
Making a choice based solely on the interest rate may overlook other benefits. This decision is extremely important and as it involves accounting methods, we strongly recommend that business operators enlist the assistance of their accountant in the process.
How the vehicle finance is structured can be critical to cash flow and meeting other financial objectives. Committing to monthly finance repayments which put pressure on cash flow are certain to cause pain points for the business over the loan term. Compromising the potential achieve performance, productivity and profitability this financial year.
Structuring the finance means addressing the loan term and the balloon/residual to deliver a workable repayment level. Some lenders will have set guidelines around terms and balloons and there may be tax regulations to consider in regard to residual amounts. But individual preferences in regard to how the finance is structured can be achieved in many instances through utilising our services.
To see exactly how these finance elements interplay to change the repayment amount, simply use our business car finance calculator. By varying any of the data entered, you’ll see how the monthly payment alters. By using this finance tool prior to applying for finance, business owners may be in a position to provide a more specific brief to our consultants and expedite the quote and approvals processes.
Sourcing Cheapest Interest Rate
The interest rate on any loan has and always will be a priority consideration. But the RBA’s recent rises in the cash rate has highlighted the importance of achieving the cheapest interest rate possible. A cheaper rate means lower interest payable over the finance term and reduces the real cost of the vehicle plus it results in a lower monthly repayment. An amount which can be critical to cash flow.
Achieving the cheapest interest rate goes back to lender selection but also takes in the credit rating of the business. Rates will vary across the market and we can assist in that regard by offering more choices and the bargaining power to negotiate for cheaper rates.
An assessment of the credit rating of the business forms an integral part of the application approval process and what interest rate will be offered. The better the credit rating the cheaper the rate.
Maximising Tax Benefits
Maximising the tax benefits which can be realised through different forms of finance can present a real saving to business and effectively reduce the cost of motor vehicle finance. Being aware of the programs and measures in place in this financial year to suit the individual business and knowing how to structure the vehicle finance to maximise the benefits on offer are key.
Temporary full expensing for eligible businesses is current through the 2022/23 financial year and can be implemented with Chattel Mortgage Vehicle Finance.
With the new financial year now underway, now may be an ideal time to set your business up to take best advantage of the opportunities as they emerge with new work vehicles with workable, cost-effective vehicle finance.
Contact Jade Car Loans on 1300 000 003 to discuss how we can assist you to achieve workable vehicle finance to start the new financial year.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.