Need a Mortgage Broker for Equipment Finance?
No matter if you are just starting out your small business or already have a well-established company that’s expanding rapidly, chances are you will need new equipment at some point. First Choice Mortgage Brokers can assist you in determining the right financing choices for your required equipment.
While most people relate Equipment Financing for obvious business equipment like trucks, forklifts, refrigerators, trailers, conveyor belts and garbage compactors. Equipment Financing can also be used for less obvious equipment purchases such as solar panels, accounting programs, telephony systems and IT software.
The main requirement for utilising Equipment Financing is, the investment must aid in equipping your company with its needs to expand or better operate.
Please call First Choice Mortgage Brokers to discuss your business equipment finance opportunities and for any assistance in accessing the business equipment financing application process. Our finance brokers offer adaptable and attentive services to our clients seeking a loan for small business, providing exceptional value through a stress-free and straightforward process.
Types of Equipment Finance
Commercial Hire Purchase
A commercial hire purchase (CHP) is an agreement between a leaser and a financier, where the financier owns a vehicle or equipment during the hiring period but is used by the leaser. CHP agreements vary from a finance lease, as the goods automatically become yours once all terms of the agreement have been met – typically, this takes place when the final instalment is paid.
Simply put, a commercial hire purchase is financing obtained by a company in order to buy commodities and is accounted for on the balance sheet.
Depending on your financial needs, a CHP may be structured with or without a final balloon payment at the end of the loan term. With the repayments fixed for the entire duration of the CHP agreement, but it is optional to pay an upfront deposit or trade-in to reduce your rental commitments.
Chattel Mortgage
A chattel mortgage is a similar arrangement to a hire purchase, but with additional specific GST benefits. In certain circumstances, the GST incentives can allow the entire GST proportion to be claimed in the first BAS period after purchase. A loan arrangement can be tailored in a similar fashion to a CHP or finance lease.
Equipment Finance Lease
An equipment loan lease is similar to a hire purchase agreement, except that instead of accepting deposits with the intention of owning the equipment, the company negotiates a new lease deal at the conclusion of the lease contract, and then keeps leasing the original item or opts to lease a new item. This allows a company to have access to cutting-edge technology without having to actively expend money.
Equipment Finance FAQs
What is the Interest Rate on Equipment Loans?
Interest rates and repayment amounts differ according to a variety of reasons. Some examples include:
- The financing solution you choose,
- The asset’s type and age,
- The agreement’s terms and conditions,
- Your credit scores,
- How long you have been in business for.
As a general rule, interest rates on equipment loans usually vary between 2% and 20%. Your interest rate will be better if you have a good credit score.
Can I Get an Equipment Loan with Bad Credit?
Yes, it is possible to apply for a standard or heavy equipment loan even if you have poor credit. Although the better your credit score, the easier your loan application process will be, as you have more options available to you.
People with bad credit will need to spend more time looking at lenders who partner with businesses with poor credit ratings. You must be prepared to accept higher interest rates and tougher leverage conditions from business lenders if you have bad credit. For example, lenders may be more inclined to demand a lien or pledge, a large down payment or the use of the equipment as collateral.
Even if you are flexible enough to obtain equipment financing with poor credit, make sure you can afford the costs and are comfortable with the risk involved.
How Soon Can I Get Equipment Finance in Australia?
Compared with property finance, equipment finance applications have a relatively fast turnaround. With a mortgage broker, you can get approved for equipment financing within a few days and with competitive rates depending on your situation.
Speak to a Mortgage Broker
You can make an appointment with a First Choice Mortgage Broker consultants by calling 1800 111 455.