Renting or leasing equipment removes the need to purchase large tick items, enabling business to manager their cash flow. Some financiers may take into account seasonal income variations when planing the finance repayment schedule.
Equipment finance cannot be used to cover trade, property or other operating expenses. However it can be used to purchase industrial machinery, plant and assets, vehicles, forklifts, IT equipment and telephone systems.
The type of finance arrangement you choose will depend on your business operating structure and cashflow. Your ACA Mortgage Broker will get to know you, your business and research the right solution for you.
Hire Purchase – spreads the cost of purchasing expensive items over an extended period of time. This kind of finance will suit businesses that wish to eventually own the assets at the end of the contract.
Equipment Finance Lease – allows businesses to rent equipment for a contract period of time. At the end of the contract period, rather than owning the asset, businesses can negotiate to continue lease the same item or opt to lease a new item; allowing the business to access the latest equipment without sacrificing capital.
Equipment Loans or Chattel Mortgage – are commonly used to fund the purchase of movable personal property like cars, commercial vehicles and other business equipment. A mortgage over the asset is secured by a fixed interest loan, as with a normal house mortgage, the legal ownership is transferred to the purchaser at the time of the purchase and the mortgage is removed once the loan has been repaid. Loan repayments on Chattel Mortgages in Australian do not attract GST.