Consider this checklist from Australia’s Commercial Capital Group before you sign a loan for equipment finance.
If you’re considering an upgrade of capital equipment, what are your best finance options? There are a number of factors that can impact the loan you qualify for or even the type of loan you can be offered.
Starting with:
- The type of equipment — does it have a serial number?
- Is it a fixture? (attached to the floor or wall).
- Do you quote ‘soft costs’ such as electrical, demolition, plumbing and carpentry?
- Are you registered for GST? If so, for how long?
- Is your tax up to date?
- Does your business have up-to-date financials?
There are only a few actual funding products (finance lease, chattel mortgage, operating finance lease (rental) and commercial hire purchase, but each lender can have different terms and conditions and requirements.
Consider these points:
- Are the loans you took out at the beginning of the business the best type of loan now you’re established?
- What is the lifecycle or usable life of the equipment? Does it match the term on offer?
- Do I want ownership now or in the future of this equipment? How does that work?
- Can I payout early and get a discount on unpaid interest or costs? Are there any penalties?
- What is the final payment (balloon/residual) if any on my proposed loan?
- You have been given the option to hand it back at the end of term, but you couldn’t afford the downtime to replace it. Is the loan the best option?
- Most suppliers need to be accredited — do they have a website and are they well established?
- Will the loan really suit my cashflow need?
For more information, visit the website or call 02 9167 7910.
