It had been pre-empted and expected for many months and now it has happened. The RBA has lifted the cash rate and lending rates across all markets are now on the rise. Buyers in many markets including for truck loans have enjoyed the historic low rate scenario since November 2020 and complacency may have set in to at least a small degree. Now as we enter a new era of rate rises for the first time in 12 years it may be time for greater prudence when it comes to sourcing truck loans.
The RBA has stated in its May Monetary Statement that further rate rises will be coming as the central bank seeks to normalise the conditions as a result of the economy’s faster than expected recovery and the resultant surge in inflation.
Those RBA rate rises will mean that lenders will increase their rates on truck loans. But cost-effective truck loans are achievable in a rising interest rate climate especially for those using specialist lenders to source the cheapest interest rate loans on the market. This can be possible for all types of businesses including new operations seeking Low Docs and No Docs truck loans.
Exactly how? For starters we reiterate our commitment to assisting operators secure the cheapest truck interest rate possible for new vehicles. In addition, we provide this guide to what actions business owners can take towards their goal of securing cheap interest rate trucks loans that represent cost-effective finance to drive the business forward.
Take Full Advantage of Available Services
While doing everything by yourself in a business may be a noble ambition, on a more practical and prudent level, in some aspects of business operations it can be advantageous to call on the experts. When interest rates were at record lows, the need may not have seemed as important to get the cheapest rated truck loan as the general market was quite reasonable.
But as rates start to creep up the repayments on higher rated loans are higher and that starts to really impact the bottom line. At a time when general costs of living are also placing pressures on budgets. So now appears more critical than in the previous possibly 12 years, to refer to professional lenders to source truck loans.
As specialists in heavy vehicle finance, Jade Truck Loans has a team of experts with the knowledge, connections and the skills to source cheaper truck loans. Where in the past you may have simply rung your bank and taken whatever loan offer was made, we have the resources to delve much deeper in to the truck lending market.
Our accreditations include banks yes, but also non-bank lenders that specialise in this area. Lenders that operate only through their select group of brokers such as Jade. These are the lenders that can be more flexible when it comes to the loan conditions and more negotiable when it comes to tweaking the interest rate.
This comprehensive coverage of the truck loan market, done on your behalf, can be a business game-changer in securing a cheaper truck loan.
To look at the wider cost-effective factor when it comes to finance, business owners can also use the services of their accountant of financial advisor in regard to the choice of loan type. There is a truck loan products available – Chattel Mortgage, Leasing, Commercial Hire Purchase and Rent to Buy.
The interest rates vary on these loan types and with rates rising in general terms, it may be time to review your choice of loan type. The choice will depend on a number of factors including the accounting method used by the business and the approach to the balance sheet. Both issues which an accountant is best-placed to assist with.
Discussions may focus on if a loan type with a lower interest rate may be suitable for the business. This shift could result in lower repayments and a more cost-effective truck loan.
To see how truck loan repayments may vary from one loan type to another, refer to our Truck Finance Calculator.
Consider Tax Advantages
Another issue to factor into the cost-effectiveness of a truck loan is the tax advantages which can be realised by different loan types. Currently temporary full expensing is available for eligible businesses and eligible asset acquisitions. To utilise this accelerated asset depreciation measure, Chattel Mortgage is seen as the more appropriate form of finance.
Keep an Eye on the Score
An essential aspect to monitor is the credit rating or score of your business. For sole traders and certain SMEs, the individual credit score of the business owner and/or directors might also hold relevance. Lenders routinely evaluate credit profiles during the application assessment. In general, a higher or better credit score tends to lead to a lower or more affordable interest rate being offered.
Sustaining a favourable credit rating is facilitated by adhering to financial obligations and ensuring timely bill payments. While this holds importance for all businesses, it carries particular significance for those pursuing Bad Credit Truck Loans.
The factor of cost-effectiveness could significantly hinge on the terms and conditions of the truck loan. Even if an offer presents a low interest rate, if the loan term or specific conditions aren't suitable for the business, the overall outcome might not be truly cost-effective.
Rather than making compromises, it's advisable to engage with a Jade Truck Loans consultant. Besides securing the most affordable interest rate truck loans, our consultants engage in negotiations with lenders concerning various aspects of the loan. This negotiation may encompass options like a no deposit loan, the loan term's duration, the residual or balloon amount, and any additional security requirements set by the lender.
Considering the potential for further rate increases in the coming months, if you're planning a truck purchase with financing, it's prudent to prioritize careful consideration over complacency in securing genuinely cost-effective truck loans.
Contact Jade Truck Loans on 1300 000 003 for cost-effective truck loans.
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.