Persisting high rates of inflation are having wide-reaching impacts across the economy including in the business sector. Many operators across many industries are feeling the pressure of rising costs eating into their profit margins. The start of a new financial year can be the ideal time to review financial arrangements and investigate ways to reduce operating costs. Truck loan refinance can be one of the options that operators may consider for reducing outgoings and easing pressure on cash flow.
As specialists in commercial vehicle financing, Jade Truck Loans works with operators to source truck loan refinance solutions to reduce operating costs. Reducing monthly finance repayments is a reason that many operators can seek refinancing. Repayments on heavy vehicles can be significant and the largest single monthly expense for many small businesses. Reducing that expense may provide the business with the necessary leeway to better manage cash flow and realise greater profitability.
Refinancing can be an extremely effective tool. But operators should appreciate and understand the full scope of what the process involves in order to make this important decision around their business finances. We provide refinancing expertise for all business set-ups, for all types and brands of heavy vehicles.
The Basics of Truck Loan Refinance
The process of refinancing essentially involves replacing existing heavy vehicle finance with a new finance contract before the end of the current fixed term. The aim is to include the total amount due on the current contract plus lender fees and charges, in the new finance but with changed rates, repayments, terms or other conditions, dependent on individual goals. The financing amount aims to encompass the remaining repayments, interest accrued and any balloon or residual.
The new financing arrangements may be with the same credit facility as the one being replaced or with a different facility. The choices being Lease, Rent-to-Own, Hire Purchase and Chattel Mortgage. A residual, balloon and buyback option is included. The same decisions around choice of credit facility would apply, including suitability with either the accruals or cash methods of accounting.
Subject to meeting ATO guidelines, the relevant tax deductions can be realised on the new finance. The new finance may be sourced through the same lender as the current arrangement or through a different provider. With our access to a vast lender base, we work towards sourcing the best interest rates and most workable solution currently available in the market.
A key issue when considering refinancing is that the vehicle is now used and the relevant used vehicle interest rates, terms and conditions would apply. This is particularly relevant in regard to the vehicle being accepted as collateral. Our brokers will be working with lenders to achieve the best outcome.
Another consideration is the size of the finance required to finalise the current arrangement. Lenders can charge exit fees for early finalisation and these, plus the new establishment fees, would need to be included with the balance due.
Reducing Repayments with Truck Loan Refinance
Reducing monthly payments through refinancing may be achieved by being offered a lower interest rate, varying the term, and/or increasing the balloon. Achieving a lower interest rate, considering the vehicle is now assessed as used goods, will depend on the rate applying to the current finance.
For example, if an operator has exhibited an improvement in their credit history over the term to date, there may be a possibility of now being offered a lower rate. Good credit histories and scores attract better rates. Where the current arrangements were sourced as a start-up operation with low doc or no doc financing and the business is now flourishing, the prospect of more workable rates may be good.
However, if interest rates in general, across the market, have increased since the current finance was arranged, the prospect of a lower rate may be less realistic. Depending on the interest rate scenario, our experts may work towards a longer term or larger balloon to reduce the monthly finance commitment.
Your Jade broker will be working with our lenders to negotiate a new finance arrangement that delivers the target goal. Operators then have the opportunity to consider any offer and make the decision on proceeding with refinancing.
Calculating Truck Loan Refinance Estimates
Operators can use our heavy vehicle financing calculator to obtain estimates before commencing any discussions around refinancing. The calculator can be extremely useful, but with many queries around what rate would apply and the exact loan amount required, contacting us for a quote may expedite the process.
Apply for Truck Loan Refinance
Operators can apply for refinancing at any time during a heavy vehicle financing term. The same finance application process applies as when requiring funding for new vehicles. Documentation on the financial credentials of the operation is required.
Online applications can be made, but it is advisable to start the process with a discussion with one of our refinancing experts.
If seeking to reduce costs by reducing truck loan repayments, contact Jade Truck Loans on 1300 000 003 to discuss the prospects available with refinancing.
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.
