News/Press

1. The Four C’s of Credit

INTRODUCING THE FOUR C’S

Ever wondered why the banks and finance companies ask for the things they do when assessing your finance application?

At Ecolease, we live and breathe small business finance. Our role is to pull together your finance application, like joining the pieces of a puzzle, and presenting it in a clear and concise manner to our lenders to ensure a successful outcome.

No matter how big or small, or whether we use your financials or not to get your finance approved, there is a framework that lenders apply when deciding whether or not they are going to part with their cash and invest in you. It’s called the 4 C’s of Credit.

So next time you are applying for finance the summary below may explain the rationale behind what we may be asking you for.

In Summary the 4 C’s:

1. Character: It’s about who you are, your reputation and integrity when it comes to repaying a loan

2. Collateral: What is the asset being financed and what’s it’s value now, and in the future

3. Capital: This is about your financial position and any funds you have behind you and in your business

4. Capacity: Is all about the numbers and ensuring you have the ability to repay the loan

READ MORE…

Character
Before lending, banks and finance companies want to know who they are lending to. This is all about your reputation, integrity and willingness to repay debt.

The things lenders consider include your credit history (past loans and repayments), your savings history, and general stability (for example the length of time you have been in business). There is a much bigger focus on your credit history these days and the new positive credit reporting system (more about this later in another 3 Things Edition).

Collateral
Collateral refers to the type of asset that is being financed (property, land, equipment, vehicle). It’s what helps secures the loan.

For example, in equipment finance, lenders rate Cars, Trucks and Yellow goods (such as forklifts) very highly. This is because there is a good second hand market and these assets hold their value well (particularly yellow goods).  So, if things were to go bad, the lender can quickly sell the asset and recoup some of their cost.

Capital
Even if you’re not offering them as collateral, having cash or assets within your business & personally provides lenders with some level of comfort that even if the worst happens, you will be able to draw on them if needed. It also is an indication of your business profitability over time and also your savings history.

Capacity
Also known as serviceability, this is perhaps the most important factor of all in assessing your loan application; whether or not you’ll have enough money available to cover your repayments.

To assess this, the lender will look at your business profits and cash flow projections, as well as your regular expenses (rent, wages, insurances, utilities, etc.) and any other existing obligations such as vehicle or equipment finance.

There are a number of finance options where we don’t need to go through this process, and this is where we can help you work through your options.

2. HUGE savings to be had on your energy bills

A SIMPLE FORMULA

At Ecolease we have helped various clients to save on their energy costs through financing solar power installations, irrespective of whether the premises are leased or owned.

Most clients, once they have installed solar, find that the savings they make on their energy bills more than offset the cost of the installation and is cash flow positive.

Here’s a simple way to look at how savings can be achieved and whilst not specific to every business provides a guideline.

1. Most SME businesses in all likelihood require no more than a 30KW solar system
2. A 30KW system generates about 120KWh of power a day, on average over a year.
3. Approximately this could provide about $2,000 per month in power cost savings if the power is self consumed.
   
   OK, so far so good, but how much is the installation and what are the financing costs?
   
   
4. Our experience tells us that the cost of installation equates to approximately $1,000 per KW of solar generation installed, so a 30KW system would cost approximately $30,000 (net of the STC discount that most installers would apply at time of quoting).
5. The cost of financing a 30KW system installation would be approximately $600 a month (depending of course on length of term).

So, in this scenario, add $600 a month to operating costs and save approximately $2,000 a month in power costs, a net cash positive outcome of $1,400 a month which increases at the end of the finance term as the loan is paid out and in all likelihood power costs generally increase (solar panels have a shelf life of around 25 years).

Please note the above is an example based on industry averages and our own experience but here’s what one of clients had to say who installed solar.

3. Nationally, property values continued their recovery in August

If you are thinking of buying or re-financing property, is now a good time?

Home values increased by 0.8% in August this year with housing values in five of the eight capitals increasing and over the last quarter the national change in home values has seen an increase of 0.6%.

This recent growth appears to be a continuation of the trend throughout the year where value falls have been losing momentum and have now started to rise according to property market analytics source Core Logic.

As can be seen by the below index, the national change in values across all areas on an annual basis is still -5.2% but the trend appears to show that property prices are recovering consistently and as we begin to enter the property “Spring sales season”, if you are considering buying and or refinancing, now is a good time to start the planning process and Ecolease can help.

We can advise you of the sort of information you will need to show in your financials and identify the best structure for your loan according to your circumstances.

1. What difference does Ten Years make?

A BIG ONE!

Ecolease has just turned ten and what a ten years it has been. Unbelievably, we started right at the time of the GFC which, logic would dictate, would not be the ideal time to start a business, especially in the area of finance.

However, Ecolease have never shirked from a challenge and have always maintained a can do attitude. It is this attitude that we bring to our clients financing needs. That’s because we’re with you and know the complexities that SME businesses face.

Now, more than ever, with the ever changing landscape of asset financing, it’s critical to work with a broker that is well connected with lenders and who understands how to navigate SME business finance.

Over the last ten years we have expanded our portfolio of lenders from an initial three to now over thirty, all of whom we have strong relationships with. We have also secured finance for thousands of applications and all kinds of assets from equipment, to cars, to property and more for SME businesses.

We know who and we know how, so Ecolease should always be your first call.

2. How SME businesses can finance a property purchase.

Order your free guide now.

Two friends who own separate businesses of similar size and revenue discover that both are interested in purchasing a property based on their business earnings. One successfully secures a mortgage whilst the other fails to do so, despite applying to several different lenders. Discover the difference.

The Three W’s is an easy to read guide book on how SME businesses can finance property purchases, full of insights and simple to understand examples. So if you are considering purchasing a property at some point, secure your FREE copy of The Three W’s now, hot off the press.

EMAIL US NOW to receive your hard copy in the mail and a link to our pdf version which you can download at your own leisure.

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3. For those attending Printex19…

How you can order on the spot at PrintEx 2019?

PrintEx is one of the most comprehensive and relevant business-to-business events serving the evolving needs of print, sign, display, label and packaging. With over 6,000 square metres of state-of-the-art equipment and technology systems on display, it will no doubt be a shopping smorgasbord for those that are considering purchasing or leasing new equipment.

Here are two ways we can help you acquire that new piece of kit whilst at the trade show:

1. we can organise for you a pre-approval for finance for a specific piece of equipment you have already identified or
2. we can secure you a pre-approved dollar amount so you can shop with confidence at the show knowing you already have the finance in place

Ecolease will also have a stand at the show so if you need to organise finance whilst there or need anything additional you can talk to us on the spot.

PrintEx 2019 will be held in Sydney from the 13th – 16th August, 2019.

Looking forward to seeing you there!!

1. It’s TAX time…no need to stress

The end of the financial year is just around the corner.

The end of the financial year is just around the corner so now’s a good time to ensure you have everything in place to lodge and maximise your tax benefits for the year ending June 30th 2019.

So here are a few reminders and pointers:

1. Business lodgement:
   If you are a small business and preparing your own return you must lodge by 31 October. If you are using a registered tax agent they will have different lodgement dates. If you are using a tax agent for the first time or using a different tax agent you need to let them know before 31 October. However, income and deductions must of course be reconciled up to the cut off date of June 30th.
2. PAYG lodgement:
   If you have employees, you should lodge the PAYG payment summary annual report to the ATO by 14 August each year.
3. Depreciation:
   Make sure you review any amortisation schedules and if you need any copies of finance contracts from Ecolease, please get in touch. Importantly, don’t forget that if you want to take advantage of the extended and expanded Instant Asset Write-Off scheme this financial year, the assets must have been purchased and installed between April 2nd and June 30th 2019.

For further details on this refer to our recent Instant Asset Write-Off article.

2. The Election and Instant Asset Write-Off. Will the election result make any difference?

In a nutshell…NO!

If your business turnover is less than $50M p.a, it doesn’t matter who wins the election this month in terms of the recently expanded and extended Instant Asset Write-Off scheme.

This is because the bill has already passed through both houses of the reps and senate and the ATO have featured the new scheme in their information to tax agents.

So how does it work again?

If you acquire and install a new or used asset between April 2 2019 and June 30 2019 of $30,000 or less you can instantly write-off the TOTAL asset value this financial year.

For example, if your business is on track to deliver a $100,000 taxable (net) profit this financial year and you purchase two pieces of equipment, say one for $30,000 and the other for $25,000 (GST exclusive), you “write-off” a total of $55,000 reducing your taxable profit to $45,000. This means you pay tax on $45,000 rather than $100,000.

At the company tax rate of 27.5%, that means a tax saving of $15,125 on top of having two new pieces of income generating equipment!

Additional Instant Asset Write-Off features:

• for businesses with turnover of $10 million, you can instantly write-off the asset value of new and used equipment costing $25,000 or less, if it was acquired and installed for use between 29 January and 1 April 2019
• for businesses with turnover of $10 million, you can instantly write-off the asset value of new and used equipment costing $20,000 or less, if it was acquired and installed for use between 1 July 2016 and 29 January 2019
• any business related asset including equipment, cars and solar panels can be ‘written-off’
• the equipment can be used/second hand

To take advantage of the Instant Asset Write-Off this Financial year with your next piece of equipment get in touch with us now. Remember the asset (car, solar panels, equipment etcetera) must be acquired between April 2nd and June 30th 2019 to qualify this fiscal year.

3. New Kit, New Car, Earn Business Rewards Points

Earn up to 100,000 points with your next finance contract.

Ecolease work with many different lenders to bring our clients the very best value in financing including Business Reward Points. With one of our lenders you can earn 1 Qantas point per $1 dollar financed up to 100,000 points per finance contract.

You can even get a free Qantas Business Rewards Membership, saving $89.50, and can transfer Qantas points from the business account to any Frequent Flyer account for business or leisure. Not only that, but the total value of the points are allocated upfront, so you can jet off somewhere sooner.

So if you need new equipment and or a new vehicle and would like to take advantage of earning business reward points on the value of the financing then get in touch.

1. Everybody likes a ‘freebie’, here’s yours!

Instant Asset Write-Off, compliments the Government.

It’s official. The Government in its Budget proposed an increase and extension to the Instant Asset Write-Off scheme to assets valued up to a threshold of $30,000, and increased the threshold of company eligibility to a turnover of up to $50M p.a.

What does it mean and how does it work?

If you acquire and install a new or used asset between April 2 2019 and June 30 2019 of $30,000 or less you can instantly write-off the TOTAL asset value this financial year.

For example, if your business is on track to deliver a $100,000 taxable (net) profit this financial year and you purchase two pieces of equipment (say, one for $30,000 and the other for $25,000 – GST exclusive), you “write-off” a total of $55,000 reducing your taxable profit to $45,000.

This means you pay tax on $45,000 rather than $100,000. At the company tax rate of 27.5%, that means a tax saving of $15,125 on top of having two new pieces of income generating equipment!

What assets qualify?

Any business related asset including equipment, cars and solar panels.

Can I acquire more than one asset and still claim?

Yes as long as each individual asset(s) is $30K or less.

Does the asset have to be brand new?

No, it can be a used or demonstration model asset.

Don’t delay. CALL NOW!

To take advantage of the Instant Asset Write-Off this Financial year don’t delay, as the equipment must be acquired and installed ready for use between April 2 and June 30 2019 to qualify this fiscal year.

2. Turn Easter downtime into a convenient time.

Shopping with confidence for a new vehicle.

Everyones busy and finding time to find that new vehicle that’s been on the cards for a while always seems to take a back seat but Easter downtime can be a really convenient time.

Motor dealerships will be promoting Easter sales and you can take advantage by securing a quick instant pre-approval ahead of the break so you can shop with confidence for whatever the reason. Recently we even financed a 1967 Mercedes 250SL, valued at $160,000 for a customer’s 50th birthday, the car was made the year he was born.

Or maybe it’s a Green machine you are after, a qualifying energy efficient vehicle can enjoy an additional 0.70% reduction in interest rate and what’s more this doesn’t just mean hybrids, it refers to vehicles that are classified as fuel efficient for both passenger and light commercial with over 600 models new or pre loved that qualify.

Whether a workhorse, a family set of wheels, or something unusual we can get your pre-approval in place in 24 hours, so when the Easter Bunny arrives, you can literally hop to any dealer secure in the knowledge that you are in the best negotiating position and ready to drive away.

DON’T FORGET THE INSTANT ASSET WRITE OFF ALSO APPLIES TO VEHICLES.

3. Show me the MONEY…

Solar energy installations means I can save money and quickly? Prove it.

OK, we all acknowledge that having solar energy access is cheaper than conventional energy especially with rising energy costs, but many probably feel that the cost of installation and the time it takes to recover that cost more than likely offsets that benefit. Actually not so, here’s three good reasons why:

1. Once installed you will benefit from instant savings on your power bills which could more than offset your regular repayments for equipment and installation.

2. Tax savings, small to medium sized businesses will be able to access an accelerated tax concession, which can provide an immediate tax deduction on assets.

3. You can get an upfront point-of-sale discount by assigning Small Scale Technology Certificates (STCs) to your installer. Alternatively, you can also sell your STCs on the market. Either way, you’ll receive money to reduce the cost of your installation.

Let me share with you the experience of one of our clients…

“Our business has two buildings and wanted solar panel installations put on both. Ecolease were excellent to deal with and made the financing process simple and fast and our reduction in energy costs is around 70% p.a since the system was turned on”. Sign and Badge, Bayswater, Victoria

DON’T FORGET THE INSTANT ASSET WRITE OFF ALSO APPLIES TO SOLAR PANELS.

1. “I didn’t know you were into that!”
YES…we can help you finance the whole Kit and the Kaboodle.

On a recent interstate business trip I was surprised to hear on a number of occasions the words “I didn’t realise”, which were usually followed by words like “you financed equipment that cost over $500,000” or “you did property finance”, or “you were into solar financing”.

Well, here at Ecolease we do because we are very diversified in what we can finance in terms of type of equipment, type of property, type of vehicle AND the value of the asset.

Here are some examples:

• in property a client wanted to finance the purchase of a farm in Cowra for over 2.5 million dollars, we did it.
• another client needed to finance a specific Mezzanine level in a warehouse for 250k, we did it.
• in equipment a client wanted to purchase two Turf Harvesters at a cost of 700k, we did it,
• another client needed a flatbed printer and cutter at a value of 500k, we did it,
• and a customer’s 50th birthday we helped finance a 1967 Mercedes 250SL, for 160k, the car was made the year he was born.

For equipment in Manufacturing, Hospitality, Printing or just about any category, if you need it, we can help finance it.

For property, whether it’s Commercial, Industrial, Residential, Regional, Rural, or a Farm, we can help finance it.

For vehicle whether it’s a Tractor, a UTE or a Luxury Car, we can help finance it.

And, whether it’s an asset that is worth $5,000 or $5,000,000, we can help finance it.

So, don’t hesitate to let us know.

2. The bullet that got dodged
The final recommendations from the Banking Royal Commission.

Whether it is big or small finance you are after, it pays to work with someone that knows your business in this Post Bank Royal Commission world. Relationships with people that know you, your business and your industry are more critical than ever, to ensure finance success.

Why so?
Although the commission has recommended that there be no further regulation applied to the Small Business finance sector (i.e. Commercial), lenders are in “conservative mode” when it comes to assessing business finance applications.

If we wind it back 9 years, the commercial lending space dodged a bullet when the world was rewriting how banks should be assessing loans for individuals (such as Home Loans). At that time, the National Consumer Credit Protection Act (NCCP) was passed and the term Responsible Lending became critical in the banking sector.

The laws were put in place to protect individuals from unethical lending practices and placed much more onus on the lenders to ENSURE the borrower could repay the debt. Information that needs to be collected from and also supplied to the borrower has become quite onerous. Despite its irrelevance in the commercial sector, some politicians wanted to drag small business finance under the NCCP Act and each year since. The consequences would have been disastrous for small business access to finance, and the economy at large. Commissioner Hayne has largely put this to bed… and we sigh with relief.

Yet still, the banks are nervous and don’t want to be pointed out as doing the wrong thing. Working with someone that knows your business has never been more crucial to work through these issues and present your business in the best possible light to lenders.

So, don’t forget, we can assist with “Big and Small” finance from $5000 and upward including:

• All kinds of equipment, big and small
• Vehicles, Forklifts, trucks
• Solar and eco energy finance
• Property – commercial and homes

3. Is now a good time?
If Interest rates are low why are property values softening and is now a good time to buy?

Interest rates are pretty good at the moment for borrowers and yet property values are softening. According to latest data, residential property values can be a bell weather indicator for property in general and as shown in the below table of Australian capital cities only Adelaide, Hobart and Canberra are bucking the trend with Sydney and Melbourne leading the charge south.

So the question is why? Clearly there are a number of contributing factors but a big one according to analysts is the fact that lending criteria has tightened significantly due to The Australian Prudential Regulation Authority (APRA) putting in place new guidelines in mid 2017 for lenders, such as reducing certain types of loans and reviews of “serviceability” criteria, i.e a borrowers capacity to service the debt.

Other things like rising construction in major cities such as Sydney and Melbourne has also created more supply with developers exposed to longer holding costs leading to reducing prices.

OK, so is now a good time to buy? The truth of the matter is that it doesn’t really matter what the market is doing, because you’re not buying “the market”. You are buying an individual property in the market, at the right price, so the key thing to remember is planning your purchase well.

Firstly, do your research on the right property/area etc. Secondly, don’t leave your financing to the end, start the conversation with your lender or broker ASAP. Here at Ecolease we have a team who can work with your Financial advisors and Accountants to ensure the best financing solution ahead of your actual purchase.

1. Apples for Apples

As you can imagine, in our role at Ecolease one of the most common questions we are asked is “what is the interest rate?”.

To be honest, it is not something we want to advertise or answer without fully understanding your specific situation and requirements a little more as there are so many variables that will impact the rate you eventually pay. So, in keeping with our mantra of SIMPLICITY, our focus in this article is to demonstrate what you should expect from an equipment finance quote, and what information you need to make a true “Apples for Apples” comparison.

My Team and I are often surprised at the rates some of our clients have been quoted elsewhere. It is one thing to merely quote “a rate” – it’s a whole other thing to deliver timely approvals with reasonable conditions and documentation to match. Unfortunately, sometimes, it is not until you have travelled the road to get an approval in place to find out that the rate or payment you were quoted is no longer available. This scenario can happen in the most genuine of cases and in the current banking environment I expect we may see this more often. Put simply, the lender (who’s interest rate you were quoted) doesn’t want to approve your application.

This happened recently with a client of ours, who had been quoted a better rate by another broking firm. I knew I could not offer the rate that the other party was promising and I was baffled as to how the other party would deliver on it. All I could do was wish my client well and was of course sad to see them go.

About a week later, I received a call from this client saying “I couldn’t believe it Marian, when I received the finance contract to sign, the repayments were higher than you quoted me!”. Case in point. Needless to say, we were thrilled to have the opportunity to arrange their finance and within a couple of days had their supplier paid and equipment installed! Happy Days.

A second potential pitfall in the Interest rate conundrum is the difference between being quoted the Base or Simple Interest rate and the Effective rate. The effective rate represents the all up cost of the finance, and will equate to the actual dollars you will be paying each month. This in my opinion is what should be quoted as standard but unfortunately it is not so in the commercial lending space.

The way to get around this, is by asking for the Effective Interest rate to be quoted, but more importantly ensure you are given in writing a quote that includes the following five essential components:

• Amount financed (inc or ex gst)
• Balloon/Residual expressed in dollars (inc or ex gst)
• Term – how many repayments there are, such as 36 or 60 months
• Repayments expressed in dollars (stated as monthly or weekly and inc or ex gst)
• Additional fees and charges (and if they are financed or not)

When you are armed with all this information, you can confidently compare different finance quotes and ensure you are comparing Apples with Apples.

2. Tax Minimisation Strategies

As a business owner one is effectively self employed and lenders for property financing have greater focus on income verification. So whilst it makes absolute sense to engage in tax minimisation strategies for your business in general, when it comes to financing a property it’s important to question this strategy and to plan ahead.

Naturally you will want to give yourself time to research the market for the right property, equally important you need to give yourself and your accountants time to prepare your financials so that they reflect the true performance of the business. Tax minimisation is fine most years, but not in the year or two prior to seeking investment in property. Tax Minimisation and Finance don’t go hand in hand, particularly in the current environment.

This means ensuring that you have at least a good twelve months of trading where less tax minimisation strategies are apparent – it’s a bit of short term pain for longer term gain.

We talk with many business owners about what they need to be able to show in terms of income to service new debt and can advise on what to think about and ensure, like moving to an online accounting system, making sure BAS, Superannuation and PAYG is in on time etc, things that can be easily overlooked as part of the planning process.

So if you are considering financing a property, don’t leave thinking about the financing to last, make it first and let us to help you plan.

3. Greener is Leaner

A qualifying energy efficient vehicle can enjoy an additional 0.70% reduction on interest rate and what’s more energy efficiency doesn’t just apply to electric or hybrid cars only. It refers to vehicles that are classified as fuel efficient for both passenger and light commercial, including models from:

BMW, AUDI, FIAT, FORD, MAZDA, SUZUKI, NISSAN, LEXUS, CITRON, SKODA, MERCEDES, ALFA ROMEO, JAGUAR, TOYOTA, MITSUBISHI, HOLDEN, TESLA, LAND ROVER, SUBARU, FIAT, RENAULT, MINI, VW, PEGOT, JEEP, VOLVO, PORSCHE, TATA, ISUZI, HYUNDAI, SsANGYONG.

Brand new or pre loved, there are literally over 600 options of make, model and year of manufacture that can qualify. So if you are looking for energy efficiency and have a vehicle in mind call us to check. We can usually get you approved in twenty-four hours.

Ecolease Industry News

Once a month, Ecolease is going to share some helpful tips, tricks, and trends in equipment finance. We want to help give some insight into some of the benefits: demystify the processes and share some of what we have to offer. So please have a read and get in contact with us to find out more.

Banking Royal Commission Update. 

Ecolease Industry News

Once a month, Ecolease is going to share some helpful tips, tricks, and trends in equipment finance. We want to help give some insight into some of the benefits: demystify the processes and share some of what we have to offer. So please have a read and get in contact with us to find out more.

Government making moves to support Small Business in Australia.

Recommendation 3: APRA prudential measures
Australian Prudential Regulation Authority (APRA) to move from the one-size-fits all model and allow regulated institutions to apply risk weightings to specific risk factors.

Recommendation 4: Capital Enhancement Fund
Australian Government to establish a capital fund to provide tier two capital instruments to banks. This will address the funding differential that is known to exist between tier one banks and other banks.

Recommendation 5: Personal Property Security Register
Australian Financial Security Authority (AFSA) to overhaul the register – at a minimum the public interface – to make it fit for purpose so a non-legally trained individual can accurately register title, to best utilise assets as security against lending.

Recommendation 6: Finance-ready SMEs
SMEs to work with their trusted advisers to get their business finance-ready.

Recommendation 7: Open banking reforms
Australian Government to implement and promote government initiatives of comprehensive credit reporting and the consumer data right in banking – part of Open Banking – in line with the Government’s schedule and the benefits widely promoted to SMEs.

Recommendation 8: SME guide to financial products
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) to develop a short guide on financial providers, the range of financial products available and what stage of a business cycle each product is designed to fit. The guide will be distributed through the networks of SME advocates and publicised through social media.

To read the entire report, please click on the PDF icon below. This document was created by ASBFEO and was sourced from www.asbfeo.gov.au.

 

 

 

Did you know you could get free rego?

The NSW Government is reducing the cost of living for frequent toll users with the introduction of Toll Relief. This is for private vehicles, not for company or fleet vehicles only, but still well worth a read.

Toll Relief provides free vehicle registration for frequent toll users who spend on average $25 per week or more in tolls, or $1300 over the year. Toll Relief provides savings of up to $715 (if you have a four-wheel drive) or $127 (if you have a motorcycle).

The program started on 1 July 2018 and if you meet the eligibility requirements, you’ll be entitled to one free 12-month registration for your car, ute, 4WD or motorcycle, for registrations due between 1 July 2018 and 30 June 2019.

To ensure you receive your free rego, visit your toll provider online and check your contact details are up to date. Add all your vehicle license plates to your toll provider account.

 

Property Finance now available.

Ecolease likes to offer our clients peace of mind with all elements of their equipment finance and we bring this same mentality into property finance. So here are a few of the additional benefits that you will see with Ecolease property finance;

• Commercial lo-doc loans up to $1mil
• High loan to value ratio (LVR)
• Access to a variety of lenders and package options.

So give Ecolease a call today on 1300 322 092 to discuss your property finance needs, or learn more about our other services.

 

Ecolease Industry News

Once a month, Ecolease is going to share some helpful tips, tricks, and trends in equipment finance. We want to help give some insight into some of the benefits: demystify the processes and share some of what we have to offer. So please have a read and get in contact with us to find out more.

 

Vehicle Finance can be confusing. What should I look out for in an excellent finance product?

There is an absolute plethora of vehicle finance products on the market these days. There always seems to be a new shiny offering that promises low rates and simple approval processes. Unfortunately, it is a bit of a minefield as well, with many finance providers hiding costs and confusing would-be buyers.

When buying your new car, you want to get the best deal possible for the least money. This is where Ecolease can steer you through the shiny offers to find the one that actually makes the most financial sense over the term.

There are a few ways that we help steer our clients away from potential pitfalls.

Advertised Rates Versus Reality

Super low-interest rates seem great on paper, but often they are used as “click bait” to get you interested in talking to the dealer finance manager.  Do your homework first to make sure you are onto a good thing.

Things to watch out for:

• Beware of added loan application fees and/or monthly charges as they soon eat into the benefit of low interest
• Generally, low-interest finance offers are for selected entry-level models or unpopular stock: you may not get your fully optioned vehicle if that is what you are after
• Often these offers require an upfront deposit and take the finance over a shorter term which will bump up your monthly payment. Check the terms suit your cash flow and how long you plan to hold on to your car
• Don’t expect to get much for your trade-in, where you save on the finance; you will more than likely lose on the trade.

New Versus Second Hand

When considering which way to go, don’t forget to factor in potential higher running costs of used vehicles compared with benefits of manufacturer warranties and servicing offers on new vehicles.  There is a lot of value in a reliable fleet of cars.

Application Success

Quite often with small businesses – credit ratings can make or break your ability to maintain cash flow. When you make multiple loan applications, it can potentially lower your credit rating, even if you’re just shopping around and not taking up the loan. This where using a broker like Ecolease will give you all the advice before we get to the application phase

Term savings or immediate cash flow

For any loan, you need to balance the availability of cash against longer-term savings. Generally, by opting for a longer term, you can reduce monthly repayments and free up cash flow. You also will benefit from tax deductions during the working life of the vehicle. This, of course, will come at the cost of interest savings.

Balloon or no balloon (also known as a Residual)

Balloon payments or Residuals help with cash flow by reducing the monthly repayments over the term of the loan. You can pay out the balloon at the end of the term, trade the vehicle or refinance for another year or two. It is important however to match the balloon with the anticipated value of the vehicle at the end of the term; you don’t want to be stuck owing more than what the vehicle is worth

 

How does “no financials” loans actually work?

No financials applications, or “Low doc loans” as they are commonly referred to, were designed to increase access to finance for small to mid-size businesses and reduce the cost and time in processing applications.

Criteria
The criteria for approving these types of loans was developed on the premise that if a business had traded for more than two years, had a clear credit history and if the business owners were asset-backed (e.g. home-owners), then the chances that they would repay a loan on an asset such as a car, were very high. The statistics have proven this theory.

Rates
In the past with this type of finance, it generally meant you would pay a higher interest rate. This isn’t necessarily the case these days, particularly on car finance.

Self-assessment
We are not assessing your financial statements for your ability to pay the new loan repayments.  The onus is on you, the business owner, to know your business and its ability to make the repayments. As part of the documentation, some lenders ask you to sign a letter confirming that the business can afford the repayments, known as a “declaration of affordability.”
If you are unsure, this is where Ecolease can assist. We are happy to review your financial statements and do an assessment on whether or not your business can afford new equipment and vehicles.

Pre-approvals you can use at ANY dealership
We can also help with Pre-approvals so that when you go out to buy, you have the confidence and the convenience to sign on the spot at any dealership.

 

Rent to Own

At Ecolease we offer a range of equipment finance options, but the Rent to Own offering is one of our most popular. For a variety of reasons.

• 100% tax deductible – Rental payments are 100% tax deductible when equipment is used for business purposes.
• Simplicity and speed – A short phone application, simple documentation and approval within 24 hours… plus transactions less than $55,000 inc. GST don’t require financial statements*
• Conserves cash – Small monthly payments rather than one large upfront payment.
• Fixed monthly rental payments – make budgeting easy.
• Stand-alone facility – the equipment is the security, not your home
• Own it – for one extra month’s repayment at the end of the term you own the equipment!

* Subject to 24-hour credit approval and criteria; settlement conditions apply. Installation time is subject to agreed delivery date with the supplier. Finance Application Criteria: Australian Resident; hold a current ABN minimum 24 months; have a clear credit history; own property (if not, ABN minimum 5 years); no financials required for transactions up to $55,000 inc. GST.