Inflation is surging which is creating a number of concerns for both households and businesses. It is increases the probability that the RBA will move sooner than expected on interest rates and it is driving up the cost of many goods and services. Fuel prices, while often controlled by other sources including global markets, are on the rise which is putting pressure on budgets. When buying a new car or truck, the full effect of fuel price increases can be offset by selecting a fuel efficient or EV vehicle. But those options are not on your radar, then focus on securing cheaper car finance and truck loans to provide a buffer against the effect of rising fuel prices on budgets by reducing regular monthly outgoings.
For business operators with vehicles under finance, rising costs of both fuel and materials may be motivation to review current loans with a view to reducing repayments. There are a number of economic factors including a probable interest rate rise by the RBA and other impacts which are also presenting cost and cash flow challenges for business.
We examine how buyers of new vehicles can secure cheaper finance and what options are available for existing loan holders to refinance to reduce monthly loan commitments.
New Vehicle Purchases
Securing cheaper interest rate business vehicle finance which also represents attractive tax benefits can be pivotal in the quest to reduce essential business expenses. The interest rate is the key component to the overall cost of the finance and the monthly repayments. The objectives of business operators may be to reduce repayments to lower regular, recurring business expenses or to reduce the total interest payable on a loan to increase ROI and value at resale.
Achieving the cheapest interest rate offer is influenced by both the lender and the loan applicant. When approached directly by the loan applicant, most banks and finance companies are not in a position to negotiate on interest rates. Whereas a broker-style lender such as Jade Finance, with our bargaining power in the motor vehicle finance market, has greater potential to achieve cheaper interest rates.
The choice of lender can also be a factor, which is why we have acquired accreditation with a large number and range of banks and non-bank lenders. Lenders will set their vehicle finance rates based on their own settings and guidelines and rates do vary across the market. The difference in interest rates from one lender to another may only be small. But when that difference is calculated over the entire finance term, the true impact becomes clear.
Achieving preferred finance terms can also be critical to achieving lower outgoings. The loan term in conjunction with the loan amount and the interest rate determines the repayment amount. If the objective is a lower monthly repayment then sourcing a lender that will agree to the preferred loan term can be critical. Some lenders will have set guidelines on minimum and maximum loan terms they will approve. Your Jade consultant can negotiate on this aspect in addition to the interest rates.
On the application side, businesses can improved their possibilities of being offered cheaper interest rate vehicle finance and preferred terms by addressing issues around their application. Having a good credit profile is very important and that can be connected with existing debt levels. Reducing other loans and commitments to improve the balance sheet may be beneficial.
Refinancing as a Cost-Reducing Strategy
Operators with existing loans, especially truck loans, may consider refinancing as a way to achieve lower loan repayments to ease the pressure on cash flow from rising prices. While there are costs to take into consideration with the process, refinancing can be highly effective.
The process entails sourcing a new loan to encompass the remainder owing on the current loan including any balloon or residual and including any fees for early payout. As this is a new loan, a different finance product can be selected and the current interest rates would apply.
If the existing loan was secured when interest rates were higher than the current historic lows, the outcome may be significant. The refinanced loan may be structured over a different timeframe and with a new balloon amount. By restructuring, a lower monthly repayment may be achieved which can reduce monthly outgoings and ease cash flow pressure from rising prices in other areas.
Rising prices for fuel and on other goods and services are very real and global events and impacts may continue to impact prices and supply for some time. Reviewing finance and loans to reduce the costs to business may present a workable strategy for many businesses.
Contact Jade Finance 1300 000 008 to discuss how we can assist with cheaper new vehicle finance or refinancing solutions to act as a buffer against price rises which are pressuring cash flow
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.