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New Normal, New FY21/22 – Consider New Truck Finance Arrangements

With Victoria enduring yet another disruptive COVID-19 lockdown, the ‘new normal’ touted for the past year or so is shaping up as more like the new ‘anything but normal’. If there’s one thing business operators have taken out of the coronavirus pandemic, it must be to not presume or expect things will be normal or the same as before or even yesterday. In addition to what is happening in Australia, events across the globe continue to impact Australian businesses in many sectors.

Operators need to be agile, flexible and well-prepared on many fronts to cope with whatever is coming next. Without knowing what is coming next. An important part of that preparation is ensuring the business is on a strong financial footing especially in regards to their loans and finance contracts.

The start of a new financial year in a historic low-interest rate climate is an ideal time to review truck loans. Considering your options and weighing up the pros and cons to be confident you have the best truck finance deal which will underpin your business and provide resilience to cope with the years ahead.

Truck Loan Refinancing Considerations

Truck loan terms can be up to 7+ years and the official cash rate has been cut significantly over the past few years. The official cash rate is now at the lowest ever and this has created an extremely low-interest rate lending market. Operators that took out a truck loan some years back and are mid-term, could well be paying an interest rate much higher than is currently achievable.

Refer to your current truck loan contract and compare that rate against our truck loan interest rate comparison table to see how that shapes up in terms of your specific loan situation. A situation that could raise the possibility of improving your overall cash flow and bottom line through refinancing your current truck loan.

The interest rate is the major determinant of the monthly repayments. A lower interest rate loan means lower monthly payments. Lower repayments can mean less pressure on monthly cash flow. But the positives and negatives need to be considered in their entirety to ensure the refinancing deal puts the business in a better position overall:

  • Refinancing is the process of replacing an existing loan contract with a completely new finance deal. The new truck loan can be with a completely different loan type to the existing loan. Refinancing truck loans is available for Truck Leasing, Chattel Mortgage, Hire Purchase and Rent to Own. Refinancing presents the opportunity to take on a loan at a better interest rate as interest rates vary across the range of loan types.
  • If your existing loan was established on the basis of a low doc, no doc or bad credit application and your situation has improved over the time of the loan so far, you may now be offered a better truck loan deal based on your current financials. Low doc and no doc truck loan applicants would have several years of docs now available and bad credit businesses may have improved their credit profile through consistently meeting their loan obligations.
  • Break fees on finalising the existing loan before the end of the term would need to be paid out. These vary depending on the lender and conditions of the existing truck loan. Any penalties and fees involved in finalising the existing loan can be incorporated into the total loan amount of the refinanced deal.
  • Even if the truck was initially purchased ‘new’, truck loan refinance would be based on a used vehicle which may impact the loan offer.
  • Business owners need to carefully consider how the interest saved on a lower interest rate truck loan balances out the costs of setting up a new finance contract. The usual loan establishment fees would apply to the new loan.
  • Refinancing provides the opportunity to reconfigure financial commitments. It allows businesses to reduce their monthly repayments to suit the current business situation and strengthen their position to cope with possible uncertainties moving forward.
  • If looking to take advantage of temporary full expensing through a new Chattel Mortgage on an existing owned vehicle that would not appear possible. The criteria for temporary full expensing is for the purchase of new assets, being brand new or for some businesses second-hand. Existing assets are excluded. More info here.
  • Refinancing can be used to finance a residual or balloon on an existing truck loan at the end of the loan term.

Truck Refinancing Process

Our consultants are highly skilled in this area and we will never recommend refinancing if the outcome would not be of benefit to our customer. The refinancing process is essentially the same as applying for a new truck loan.

  • Our consultants source the cheapest truck loan offer from across our extensive lender panel.
  • The total loan amount sought can include the complete pay-out on the existing loan.
  • A balloon or residual can be included.
  • Rates and repayments are individually negotiated to best achieve the preferences of the business owner.
  • We handle the complete process including settling the existing loan with your lender.

Buying New Vehicles

Another form of reviewing finances and loan situations is to purchase a new truck. With the range of tax benefits on offer through temporary full expensing and loss carryback as well as the low-interest rate climate, buying new vehicles may put your business in a strong position to take on the new and many financial years ahead.

Jade Truck Loans is extremely experienced in all aspects of heavy vehicle finance and can provide cheap interest rate deals on both refinancing and new truck acquisitions.

Contact  1300 000 003 to discuss reviewing your lending situation with a view to seeking a refinancing quote.

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.

 

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