4 things to do before getting plant and machinery finance

Published on November 19th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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1. Speak to a professional

Being spoilt for choice when it comes to the various finance options that are available on the market, things can get a bit confusing. The last thing that you want is choosing a finance option that could end up draining your finances in the long run. Speaking to a financial advisor, lender, or broker that specializes in providing finance for plant and machinery equipment can help you walk away with the best deal suited for your business.

2. Know what your options are

The other benefit of speaking to a finance broker is that they will be able to show you finance options that you may have known about that are effective for your business. Financing equipment such as; excavators, dozers, concrete mixers, tower cranes, and more is not something that most businesses can afford upfront because it is expensive to purchase right off the bat.

Other finance options that are available can be things such as; taking out a commercial loan, leasing the equipment, or rental agreements. Checking that your loan will allow you wiggle room to get equipment that is suitable for your business is vital.

3. Check the loan features

Once you have established that you will not be able to afford the equipment through cash, the next best thing is to take out a loan. Most businesses in Australia tend to attach a loan when it comes to purchasing equipment. According to the Australian Bureau of Statistics, there was a 1.9% increase in commercial loans which reach a total of $44,081 million in September.

Before you sign your name on the loan contract make sure that you have checked the loan features. This means looking beyond the interest rate. Check if the loan has a repayment structure that matches your business cash flow, especially if you operate on a seasonal basis.

4. Do you want to own the equipment outright?

You will be faced with the age-old question as to whether you will be better off leasing the equipment or purchasing it. Both have their benefits and drawbacks. The outcome will be based on how you are planning to run your business, and which one will be the most cost-effective for it.

For example, having outright ownership of the equipment can be beneficial if you use it frequently. Therefore, purchasing it can be ideal. However, if you run a business that needs equipment that needs to be functioning at its optimal level and needs to be updated, you may be better off leasing it. Remember to weigh the pros and cons before deciding.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for commercial loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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