Many businesses are already experiencing the fall-out from the growing number of cases of the Omicron variant of COVID in multiple states with staff numbers drastically reduced as they need to isolate and recover. A situation which has forced some businesses to close temporarily and/or be unable to operate at full capacity or for their usual trading hours. While the economy in general has been recovering well, many business owners will be assessing their financial situation and considering refinancing to strengthen their operation for 2022. Reducing outgoings by achieving lower repayments on loans through refinancing can be a sensible strategy to ease cash flow pressures in uncertain times. Jade Finance supports businesses of all sizes to secure cheap interest rate refinancing for asset and equipment loans and commercial finance arrangements.
What Refinancing Entails
Refinancing essentially means to set up a new finance arrangement, a new loan, to replace an existing finance contract. Refinancing involves the similar loan application and sourcing process as for new loans. The refinanced loan can be with a different bank or lender to the existing loan or negotiated with the existing lender.
When handling refinancing for our customers, our consultants first discuss the client requirements before proceeding to source the cheapest quote from across our lender panel. As with original loans, lenders will assess the application based on risk and other factors in structuring an offer.
The loan amount sought will typically include the total due on the existing loan which can include payout fees to the existing lender. When a finance contract is concluded prior to the agreed fixed loan term, a fee may be charged by the lender. These charges should be factored into refinancing plans.
The purposes and objectives of refinancing will be determined by the individual goals of the business. These may be to reduce the repayment amount to ease cash flow, to take advantage of the current historic low interest rate situation, to bundle several loans into one to streamline payments or for several other reasons.
In handling refinancing on behalf of our customers, if the offer received does not improve the situation of the business, our consultants would not advise proceeding with refinancing.
What can be refinanced?
Jade Finance provides refinancing across our loan categories. Asset refinancing is one of the most popular categories. This includes motor vehicle loans, trucks loans and equipment finance. As we provide finance across multiple industry sectors, this can involve a massive range of different types of equipment – construction, earthmoving, general business equipment, IT, computer, aviation, marine, agricultural machinery, engineering plant and machinery and many more.
It must be noted that when refinancing assets the goods will be assessed as used, even if purchased new originally. Used goods may attract a different interest rate and loan conditions to new goods.
Commercial loans can also be refinanced. These include overdrafts and both secured and unsecured business loans. Jade has access to non-bank lender overdraft products which may present an attractive alternative to a bank overdraft for some operators.
Who can refinance?
All types of business set-ups can consider refinancing. Our service is available to SMEs, large corporations, sole traders, partnerships, family enterprises and others. To source business refinancing, operators must hold an ABN as a minimum requirement for all types of business finance.
A business may have secured the original loan as a bad credit loan application and over time they have worked to improve their credit rating. As bad credit loans typically attract a higher interest rate, businesses may seek mid-loan term, to refinance to a better and lower interest rate loan.
While businesses typically seek to refinance, individuals are still welcome to consider the process if personal secured loans for cars, boats, caravans and other goods require review. On personal secured loans, minimal break fees usually apply when a loan is finalised prior to the agreed end of the loan term.
Refinancing Loan Products
Businesses can select from the full range of finance products to refinance existing loans. The loan type can be the same as the existing finance contract or for a different product. As the features and benefits of business finance products are tied into accounting measures and strategies, it is always advised that business owners consult with their accountant when selecting a loan type.
The range of finance products available for asset refinancing include:-
- Chattel Mortgage
- Commercial Hire Purchase
- Rent to Own
Refinancing Interest Rates
If a loan has been taken over say a 7 year finance term and is mid-term, the interest rate on the original loan may be significantly higher than current rates. The RBA has reduced the official cash rate to historic low levels over the past nearly 2 years in response to the economic impacts of the pandemic.
Refinancing quotes would be sourced by our consultants at our cheapest achievable interest rates. Being mindful, as mentioned above, that if an asset loan, the finance would be for used goods which can attract a different interest rate to new goods.
Those considering refinancing can review our current rates achievable across our portfolio and compare these to their current loan.
Jade Finance provides a comprehensive range of services to support businesses to achieve workable, cost effective refinancing which meets their key objectives. Our consultants handle even the most complex refinancing deals, covering all stages for customers from initial quotes and negotiations through to settlement with the existing lenders and issuing of new finance contracts.
If you consider your business may benefit through refinancing and be better-placed to sustain any challenges in 2022, please reach out for an obligation-free, confidential discussion with one of our consultants.
Contact Jade Finance by phone 1300 000 008 to discuss your refinancing objectives.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.