Strategies to Expedite Debt Reduction

The coronavirus pandemic has left many lessons learned and many possibly regretting past finance decisions as they have struggled with meeting existing loan and finance repayments during a time of pressure on their income. This scenario has likely been faced by both business owners and individuals and is not necessarily confined to or defined by any particular group, region or category. The pain has been felt across the nation.

When the economic crisis phase of the pandemic started to hit back pockets across the nation many were no doubt contemplating how great it would be to not have such financial commitments to meet each month. With the key vaccination target rates approaching and the prospect of some version of another normal emerging, many will now be considering new purchases. Personal purchases such as boats, cars, caravans and motor bikes to get away and enjoy life or business equipment to upgrade the operation for the next phase.

When approaching the loan application process for those purchases, the ‘lessons learned’ may be top of mind. Achieving a loan deal that enables the debt to be reduced faster may be a key objective.

General Considerations

Whether you’re a business or an individual, there can be very significant reasons for wanting to reduce debt levels by paying off loans faster. Businesses may seek to improve their balance sheet by finalising existing loans prior to taking on new commitments by way of further investment in new plant, machinery and equipment. Another reason may be to reduce pressure on cash flow to allow for recovery or for less stressful trading during seasonal trends.

There can be tax advantages and benefits on business finance which can be realised dependent on the type of finance product and how that finance is structured that influence timing decisions.

Individuals buying cars, boats, caravans might want to own their goods sooner so they can be relieved of the financial commitment and/or so they can proceed to purchase other goods. When applying for a loan, lenders will take into account existing loan commitments.

So how can we assist? Jade Finance offers wide-ranging lender services which include refinancing existing loans to achieve a preferred position and sourcing and structuring new finance and loans with cheaper rates and negotiated terms to assist with meeting individual debt reduction objectives.

Interest Rates

Yes, we do bang on endlessly about our cheap interest rates. But we do so for a very good reason – we’re saving our customers money! To pay off a loan as fast as possible, a basic requirement is to ensure the total cost of that loan is as low as possible.

The major cost component of a loan is the interest charged. So the lower the interest rate, the less money overall is payable. So sourcing the cheapest interest rate loan should be a key driver for those seeking both personal and business finance.

To see how our interest rates compare with other lenders refer to our Rate Comparison Chart for our different loan sectors.

Deposit or No Deposit?

We offer no deposit finance across our loan portfolio. This allows approved borrowers to include the full price of the goods in the loan. This is different from any deposit requested from the seller to hold the goods or confirm the sale.

This can be a great advantage to conserve existing finances and for businesses it may present tax advantages depending on the loan product. But in opting for not making a down payment the loan amount is higher which may mean it will take longer to repay the loan.

This is a very individual choice as is all decisions around personal finances. However, it is worth considering. If the objective is to own the goods faster, then having a lower loan amount to start may assist.

The Highs and Lows of Loan Terms

When seeking a loan, many will simply want the lowest possible repayment. It sounds like a natural reaction. While we can achieve lower repayments through our cheap interest rates, there are other factors to consider.

Time to consider the highs and lows and that brings in the topic of the loan term. The longer the term of the loan the lower the monthly repayments will be. Conversely, the shorter the term the higher the monthly commitment.

While it is tempting to go for low repayments by requesting the longest loan term possible it can mean you will take longer to repay the loan and own the goods. Lenders will have a say in what loan terms they will approve.

If you are seeking a swifter way to reduce debt, then higher repayments over a shorter loan term could be the way to go. Short term pain for long term gain applies aptly to loan structuring. To see how this would work with the loan you are considering, use our loan calculators. Vary the loan term and see how the repayments change.

Refinancing Option

Refinancing is an option for those seeking to change existing loans and finance. Please refer to our information on this works and what implications are involved. Some existing loans will attract break fees and they need to be taken into consideration.

Our consultants work with individual customers to source quotes for refinancing existing loans based on our cheaper interest rates. Where a refinanced deal will not benefit a customer we do not recommend the option.

There is no obligation attached to requesting a quote and having a discussion with us about refinancing an existing finance contract or your options for a new loan. So if you are interested in adopting a more strategic approach to your next finance deal, start the conversation with one of our consultants.

Contact Jade Finance 1300 000 008 to discuss the finance solutions available to assist in achieving your financial objectives.