Tak­ing the BS out of equip­ment fi­nance

In a world where mar­gins are tight, it’s more about the left­over than the turnover

Australasian Timber - - NEWS - By Mark O’Donoghue CEO & Founder of Fin­lease

Hav­ing spent 30 years fi­nanc­ing equip­ment for a di­verse range of long term and new clients in many cap­i­tal in­ten­sive in­dus­tries, I thought it would as­sist to take the BS out of some of the sto­ries I have heard over the years.

In­ter­est rates

If you are a solid com­pany with good trad­ing re­sults, the in­ter­est rates avail­able at present range from 4.5% to 5.25% de­pend­ing on the as­set and term. If you are pay­ing more than this then it may be a case of what your provider would LIKE to charge you more than what is ac­tu­ally avail­able to you in the mar­ket.

When the pay­ments don’t seem to re­flect the in­ter­est-rate

Un­for­tu­nately there are cir­cum­stances in the mar­ket where the in­ter­est rate quoted to the client is not ac­tu­ally re­flected in the monthly pay­ment. The prob­lem here is that un­less you have a fi­nance cal­cu­la­tor to work it out you are of­ten none the wiser. There are plenty of “on­line” cal­cu­la­tors where you can check, in­clud­ing one on the Fin­lease web­site: https://www.fin­lease. com.au/equip­ment-fi­nance-cal­cu­la­tor.html) Take heed, un­less you ac­tu­ally check it, there is re­ally no way of know­ing, so it is worth spend­ing five min­utes on­line to en­sure you are get­ting what you have been told.

Banks don’t fi­nance Used or Pri­vate Sale ma­chines

This is sim­ply not the case, there are plenty of com­pet­i­tive fi­nanciers who will hap­pily fi­nance used ma­chines in­clud­ing pri­vate sales at good in­ter­est rates and of­ten there are sig­nif­i­cant sav­ings to be made by go­ing down this track. Yes, there are a cou­ple of ex­tra steps in the fi­nance process in­clud­ing an in­spec­tion of the as­set but th­ese are eas­ily ar­ranged. Care does need to be taken how­ever to en­sure that the as­set be­ing pur­chased is not cur­rently ei­ther un­der fi­nance or caught up un­der a GSA (for­mally known as a fixed and float­ing charge), but 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 are a swag of other com­pet­i­tive fi­nanciers out there who will fi­nance ve­hi­cles and equip­ment at good in­ter­est rates with­out the need for fi­nan­cials pro­vided the com­pany has been go­ing for 2 to 3 years and has a clean credit his­tory. 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 very large vol­umes to mar­ket ($500 mil­lion p/a in our case) and this drives sub­stan­tial dis­counts. Any de­cent bro­ker will be look­ing for a 20 year re­la­tion­ship and will act in a man­ner which en­sures the con­tin­u­a­tion of that re­la­tion­ship. Th­ese bro­kers should also have plenty of feed­back from the clients on in­de­pen­dent re­view web­sites such as Prod­uct Re­view, Google Re­view or True Lo­cal. Money is a raw ma­te­rial no dif­fer­ent to fuel and 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 is es­sen­tial to keep all costs un­der con­trol in­clud­ing fi­nance costs.

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