Most people when looking for a great asset finance deal will associate a great deal with a great rate as they do for most finance they obtain which is a great place to start. However, with asset finance, you need to keep in mind the following before signing a contract:
Exit Fee
Some asset finance contracts can lock you in and you may be required to pay a substantial amount of penalties to pay this finance out early or pay lump sums onto your loan during the contract term. We’ve seen contracts even have a clause for you to pay the total amount of interest under the contract regardless of when you decide to payout the loan. and it’s always beneficial to ask what the implications are if you decide you want to exit from your contract early.
Hidden Fee
It may seem like you’re getting a great deal when your rate is lower than all other rates but again you need to look at the other fees and charges payable under the contract. A great rate isn’t that great if you’re paying fees to compensate for the discount you’re receiving. Be wary of the fineprint it’s where most people get caught out and if you are unsure it’s always best to seek legal advice even it costs you upfront it could save you money in the future.
Dealer Contracts
Car dealerships can have what seems like a great rate to offer you to get finance with them (e.g 2.9%). However, you need to confirm that you are not paying for this through the price of the car as many dealers have a end profitability for your purchase and even if they make a loss on the car finance as they would at that rate, they make it up through either the car price or the addon’s they may sell you. It’s always best to find out the price of the car and negotiate and do your homework by shopping around. If you work for a large organisation and have employee benefits, often we find they have dealer partners where they have partnered up with certain dealers where you receive a staff discount.
Our advice is to always have a healthy deposit of 20 – 30% handy when looking to purchase an asset or equipment as banks are more stringent on asset financing as a result of the Royal Commission. With the current government announcing a $30,000 instant asset write-off for SME turning over annual revenues upto $50 million it’s a great time to take advantage before the EOFY. For many small businesses to take advantage of this write-off, it will give small businesses a boost by allowing your local café’s to get a new fridge or grill, a plumber to buy new tools or a courier to purchase a new work van.
If you are looking to purchase a new asset or equipment and need advice from an experienced broker to assist you, give our team at BlueCherry a call on (02) 9897 1039 to book an appointment or email ozgur@bluecherryloans.com.au if you have any questions.
