What is Asset Finance?
Many business owners rely on their own cash flow to upgrade important assets such as cars and equipment. Combined with further ongoing costs like wages and rent, these costs can place a large dent in your cash capital. This is where asset finance comes in handy in order to help reduce the impact on your cash flow.
Asset Finance is a type of finance that is used by individuals in order to acquire the assets and equipment that are needed for their business to grow. It helps businesses buy or lease assets that are vital to the day-to-day operations of their business. Asset finance is a great way to secure funding as the vehicle or equipment themselves act as collateral for the loan, and approved individuals may essentially not require the need for a deposit. This means that you can maintain your business’ working capital.
Why Choose Greenline Home Loans for Asset Finance?
Greenline Home Loans can help you with your business as your needs as well as customer demands change. Our finance professionals can work with you along your asset finance journey to meet these shifting requirements, without the need for having to dip into your own pocket to pay for new equipment upfront. Rather than affecting your ability to pay off other bills, benefit from asset finance by financing your purchases and paying them off over time. Here at Greenline Home Loans, we will guide you through all the finance options available from a range of lenders in order to find you a flexible product that best suits your needs.
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Equipment Finance Loans
While most business loans can be used for the purpose of purchasing equipment, the Equipment Finance loan is specifically designed for that purpose as a secured loan backed by the piece of equipment as the collateral asset, which allows for a lower interest rate to apply to the loan.
Chattel Mortgage Loans
A chattel mortgage is essentially a car loan specially drafted for business purposes. In the same manner as a car loan, the lender will provide funds or “mortgage” to purchase the vehicle or “chattel” and will use the purchased car as a security. Once the loan is paid in full, you take full ownership of the car.
Novated Lease Loans
A novated lease is a type of loan that is sometimes offered to company employees as a salary packaging option as part of their employment agreement. Using a novated lease agreement also helps with managing and budgeting the vehicle running costs such as registration, servicing, petrol and insurance.
Frequently Asked Questions.
Do I Have to Provide Additional Security When I Finance My Assets?
Typically, the asset that is being purchased is used as security for your loan. Although, in some circumstances, you may be able to utilise your current fixed assets as security in order to help raise the funds that you need.
What Information Do I Require for My Asset Finance Application?
Here at Greenline Home Loans, your asset finance application will start off with an initial discussion that will allow our finance specialists to find out some more information about you, understand your wants and needs and begging to compile information that will assist your application. Such information will include your employment history, residential history, information about the assets you are seeking to finance as well as an evaluation of your income and expenses.
After we have a better idea of what your needs are and what lender will be most suited to you, you will be required to provide important documents to support your application. This may include a copy of your driver’s licence, bank statements or payslips. Each lender has various criteria, so our finance specialists will advise you throughout your application process if anything additional is required from you.
What is the Difference Between Secured and Unsecured Loans?
The main difference between a secured and an unsecured loan is whether or not your lender requires security.
Secured business loans do require security. This may be in the form of property, inventory, accounts receivables or other assets. If for some reason you cannot meet the repayments of your loan, the lender may depend on these assets in order to clear any remaining fees, balances or interest from the loan.
On the other hand, an unsecured business loan does not need any physical assets to be used as security for your loan. Alternatively, your lender will generally view the strength and cash flow of your business as security.
What Is a Balloon Payment?
Balloon payments are lump-sum amounts that you pay to a lender at the end of your loan after all your regular monthly payments have been made. You may choose to incorporate a balloon payment to your loan as it ultimately reduces your monthly repayments during the term of your loan.
Speak to one of our professional finance specialists at Greenline Home Loans to discuss whether or not a balloon payment is a right fit for you and your loan.
Am I Able to Schedule Repayments to Better Suit My Cash Flow?
The answer is yes. Payment terms are usually monthly, however, they can be rescheduled in a way to better suit your cash flow. For example, businesses that are in the agriculture sector or in other seasonal-based industries are generally paid on an annual basis. Therefore, these businesses are able to restructure their repayment period to suit their financial needs.
What are the Benefits of a Chattel Mortgage?
Some of the benefits of a chattel mortgage include:
- Interest rates: chattel mortgage loans are secured with an asset in which lenders view these loans to be of lower risk. Due to this, they often come with lower interest rates compared to an unsecured loan.
- Potential tax benefits: since you own the asset, you may be able to claim interest and depreciation costs depending on the percentage of business use.
- Less personal liability: as the purchased asset is used as collateral, lenders cannot repossess any of your other personal or business assets if you do happen to fail making repayments on time.
- Higher loan values and longer terms: chattel mortgages generally come with higher maximum loan values, as well as longer terms in which you are required to pay back the loan.
What is the Maximum Loan Term?
The loan term greatly depends on the repayment amount that you can afford. Loan terms generally range from 1-7 years. If you are purchasing a used or second-hand vehicle, the loan term may be shorter depending on the age of the vehicle. It is important to remember that the longer the loan term, the more interest you will pay over the life of your loan.
Is a Novated Lease Better Than a Personal Car Loan?
Novated lease loans allow you to use your pre-tax income in order to pay for your vehicle repayments. This is a tax-effective strategy that is not available with a standard personal car loan. By making repayments this way, it can also minimise your overall taxable income to give you more money in your pocket. A novated lease agreement provides you with more options at the end of your lease period. You are able to pay out a residual and own the vehicle, extend the lease for a further term or even upgrade to a new vehicle without the hassle of having to dispose of the vehicle yourself.
How Do I Qualify for a Novated Lease?
To qualify for a novated lease there are four simple prerequisites that need to be met.
- Must be permanently employed: you must be employed as a full-time or part-time employee. You may not be eligible for a novated lease as a casual employee as your salary can fluctuate.
- Must pay tax: with a novated lease you can save money by reducing the amount of income tax and GST that you pay.
- Must have completed your probation period: once you start a new job there is a probation period that you have to complete in order to secure your position within the company.
- Your employer must offer salary packaging: as a novated lease is a contract between yourself, your employer and the financier, without your employer’s approval you will not be eligible for a novated lease.
When Does My First Finance Payment Begin?
This can greatly depend on your cash flow preference. The repayments can be set up as payments in advance, which is the first payment that is taken at the settlement of the transaction or payments in arrears. This means that the first payment is due one month from the date of settlement.
What Types of Asset Finance Do Greenline Home Loans Provide?
Greenline Home Loans offers three types of asset finance:
- Equipment finance - secured loan backed by the piece of equipment as the collateral asset, which allows for a lower interest rate to apply to the loan.
- Chattel mortgage - known as a goods loan where you can borrow funds to acquire an asset
- Novated lease - a flexible, portable and convenient way to acquire a motor vehicle as part of an employee’s salary
Are you ready to rely on Greenline Home Loans asset finance solutions to help your business grow? Speak to one of our finance specialists today!
How Does an Equipment Loan Work?
When applying for an equipment loan, you are taking immediate ownership of the equipment and the lender takes a security interest. This arrangement may include an end-of-term balloon payment, meaning you will not be repaying the full principal of the loan over the life of the loan. The lender would release its security on the asset when the loan is fully paid.
Do you need Asset Finance?
Reduce the impact on your cash flow with the help of Greenline’s Asset Finance solutions. We’re here to help! Speak to one of our professional finance specialists today.