It may be hard to believe its April 2022 and we’re talking interest rate rises. Since lowering the cash rate to the historically low level of 0.1% in November 2020, the RBA consistently spoke about remaining patient. In the monthly monetary policy statements during 2021, Governor Philip Lowe mentioned patience to see that the targets of unemployment and inflation were met before raising rates. While no date or schedule was given, the timing of 2023/24 was regularly mentioned. So now that looks like 2022 and possibly June or even May. The burning question for some truck owners could be is it too late to refinance truck loans before interest rates start to rise?
Businesses looking to Refinancing Truck Finance Balloon or Residual at the current low interest rate climate will need to move quickly before the expected rate rise by the RBA in coming months. The RBA Board meets on the first Tuesday of the month to make decisions re interest rates. Many analysts and lenders including one of our largest lenders the Commonwealth Bank considered June to be the most likely timing. But this week, a senior economics writer for a major news outlet has published an article saying it could happen at the May meeting – that’s next week.
So the timing is tight, but for those looking to refinance, our consultants are ready to act quickly to assist. We cover what’s involved and the options around refinancing existing truck loans.
Refinancing Procedure
Refinancing entails replacing the current finance arrangement, such as a truck loan, with a new one. In the context of a truck loan, the refinancing process involves entirely replacing the existing loan with a new financing arrangement. The application procedure for refinancing closely resembles that of applying for a new truck loan.
Typically, the loan amount for the refinanced truck loan covers the entirety of the outstanding balance on the current loan. This encompasses all remaining monthly loan payments as well as any balloon or residual amounts, if applicable. Any charges associated with settling a loan before the agreed-upon term will usually be factored into the new truck loan.
Refinancing is accessible to businesses of all sizes and structures, including sole traders, partnerships, and companies.
During the refinancing process, you are not obligated to stick with the same bank or lender that initially provided the original truck loan. Jade Truck Loans consultants leverage our extensive network of lenders to secure the most cost-effective refinancing offer for you. This offer could originate from the same lender as your previous loan or from a different lender within our panel.
Upon accepting the refinancing offer we secure, we proceed to finalize the process, which involves settling the existing loan and implementing the new financing arrangement.
Refinancing Loan Types
The objectives for refinancing can be many and varied. But two of the common reasons are to achieve a cheaper interest rates or to achieve lower monthly repayments to ease the pressure on cash flow.
One of the considerations to achieve those objectives is in the choice of loan type. When refinancing a truck loan, the business does not necessarily have to request the same type of loan as the current truck loan. The selection includes:- Lease, Rent to Own, Commercial Hire Purchase and Chattel Mortgage.
By referring to the Compare Interest Rates table, you'll gain insights into how the interest rates fluctuate across these types of loans. It's worth noting that transitioning to a different loan type, such as Truck Lease & Financing Rates, might potentially secure a lower interest rate, presenting an avenue for cost savings.
Interest Rates for Refinanced Truck Loans
If the existing truck loan was acquired say several years ago when rates were higher, then refinancing at the current rates may achieve a lower rate and lower repayments. But there are a few factors to consider in this regard.
The truck loan interest rates advertised by lenders refer to new goods, unless otherwise stated. The truck being refinanced would be a few years old now and even if purchased new in the beginning, the refinanced truck loan would be quoted on used goods. This may attract a different interest rate.
Another issue is the credit rating of the business. The credit rating is assessed by lenders when preparing loan offers. If the credit rating of the business has improved over time, since the current loan was offered, that may give reason for a better interest rate offer.
An improved credit profile, possibly from a previous bad credit position, may also be a very realistic reason to seek refinance for an existing truck loan.
Applying for Truck Loan Refinancing
As mentioned above, our consultants are ready to assist with refinancing applications. We can provide quick quotes and fast approvals to ensure there are no unnecessary delays in the process. To make an application for refinancing, it is advisable to speak with one of our consultants over the phone to discuss the specifics of your requirements. During those discussions we can advise timeframes and any other issues pertinent to your individual requirements.
We don’t have any control over the RBA timing but we can assist our customers with timely action in regard to both new and refinanced truck loans.
Contact Jade Truck Loans on 1300 000 003 to discuss refinance for existing truck loans.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.
