You are well aware that having the timing right in your truck engine can deliver better fuel efficiency and overall better performance. Applying that same approach, getting the timing right, to purchasing a new truck may also pay dividends. Advantages can be realised in regard to taking out a truck loan and the purchase itself. Act now or wait, that is the question?
From our lending point of view, the question is whether or not there is a good or a better time to take out truck finance? Is now one of those ‘better’ times to buy and borrow?
With COVID stimulus measures such as JobKeeper wound down recently, outbreaks and snap lockdowns still a reality in some areas, new waves of the pandemic devastating countries like India and Brazil, changes in the US economy with the new Biden administration and budget time in Australia, there is a greater focus on economic conditions. Focus on the financial climate and as always, on interest rates.
There are numerous considerations for buyers to stay across. There are both sides of your balance sheet to take into account with timing: benefits in regard to what you can save in your own costs and what you could gain in terms of income.
We bring you our update and perspective on a number of key areas which we see as being relevant to watch by our Jade Truck Loans customers to increase awareness and interest.
State and Federal Budget Gains
For truck operators, there are two sides of the Federal Budget to consider – what’s in it directly for your business by way of tax cuts and other cost reductions plus what additional work could be available to you through government investments in your customers’ sectors. Looking at what’s in it for you and what’s in it for your customers or market sector.
While the focus at this time of year is heavily on the Federal Budget, smart operators will also be keeping a close eye on state budgets. State budgets usually include specifics about infrastructure projects which can mean work for you and the need to upgrade your vehicles. The states also handle payroll tax which can be a major cost for some businesses. In response to COVID, all states either waived or deferred this during 2020/21. Keep an eye on state budgets regarding their ongoing plans in this space.
Note on budget-watching – timing! Many spending announcements have a timeframe and could be spread over multiple years which may reduce the urgency factor. Others may not be introduced immediately. Case in point the Federal announcement around cutting the costs of childcare attracted wide attention. Looking at the timing and it doesn’t come in till 2022. If you were counting on the cost-saving in your household, sorry, you’ll have to wait a while.
The NT Chief Minister delivered the territory’s 21/22 budget on 4 May. $120m has been allocated for local jobs and $15m for new releases of land. This could be a signal for increased home building activity over the coming years. More info.
The Victorian budget is due on 20 May, NSW and Queensland mid-June with other states and territories due in a similar timeframe.
The Federal Budget will be delivered on 11 May with the Treasurer not giving much away in his pre-budget speech on 29 April. But since then, some measures have been released including a significant boost to small brewers and distillers in regard to excise tax.
Stay across the announcements and/or check-in with our articles for updates. If it’s looking like you could be getting a lot more work as a result of budget measures, then acquiring a new truck or adding to your fleet might place you in a better position to get the contracts and complete the work more efficiently.
Timing relates to action and also to doing nothing. Complacency can be a real threat in so many ways including allowing complacency to creep in around the current low-interest-rate situation. Yes, lending rates are currently at historic low levels and have been for some time. But can you confidently expected rates to stay low over time while you delay your truck purchase?
There have been some economic commentators who have cast some doubt around that and have opined that a rate rise may come sooner than many expect. As well as conditions in Australia, economic movements on a global basis need to be considered, especially with our trading partners including the US. The RBA has stated it is not continuing what is known as its term funding facility to the banks beyond the end of June. In simple terms, that is the cheap funding program the RBA announced in March 2020 to encourage banks to lend to SMEs and stimulate the economy. Read more here.
The RBA upgraded its forecast for the economy in regard to inflation and jobs at its May 2021 meeting and left the official cash rate on hold at 0.1%. It is standing by its previous comments about holding rates low until inflation and unemployment meet their targets.
But it’s all in the timing. Jade arranges truck finance at fixed interest rates. So when you lock in your loan at the current low rate, it will remain at that rate over the loan term and be protected from any unexpected rises in lending rates.
The end of the financial year is a major timing consideration for truck buyers. Capturing discounts with EOFY sales and realising any accounting gains through tax deductions in the current financial year. Or should you buy after 1 July and realise the tax gains in the next financial year?
Getting the timing right when purchasing a new truck can deliver significant gains for your business so watch the clock!
Call 1300 000 003 for lending enquiries today.
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.