As discussions continue regarding the outcomes and implications of reaching target vaccination levels, business owners and operators are primarily concerned with their individual priorities. For many, this involves assessing the influence of both domestic economic indicators and global events on their financial decisions related to investing in new trucks. Such investments hold the promise of capitalizing on the current historically low interest rates and the available accelerated asset depreciation measures.
The question arises: Should you, could you, would you take the step to invest in new vehicles in the present circumstances? We address several factors that could potentially shape your considerations regarding your current plans for purchasing trucks.
Local Breakthrough
After enduring months of frustration for interstate and cross-border truck drivers, a ray of relief has emerged in the form of a new freight management code and accompanying protocols. Deputy Prime Minister Barnaby Joyce has unveiled a set of streamlined measures tailored for freight operators, recognizing the pivotal role that this sector plays in the nation's economy.
The new Freight Movement Protocol and Code should provide greater efficiency for many in the sector and overcome the multitude of different state regulations which have created delays and other issues for operators. The full detail is available at https://www.infrastructure.gov.au/infrastructure-transport-vehicles/road-transport-infrastructure/road-transport-legislation/heavy-vehicle-regulation
Latest Jobs Figures and Interest Rate Impacts
The most recent jobs and unemployment data, unveiled in the past week, has caught many by surprise with a significant 0.3% decline from 4.9% to 4.6%. As the Reserve Bank of Australia (RBA) has consistently emphasized that lower unemployment figures and higher inflation rates are the factors that could prompt a shift in the official cash rate, the release of unemployment data is being closely monitored.
However, it's important to note that the July figures were compiled at the beginning of the prolonged lockdown in New South Wales and as the outbreak in Victoria was just starting to unfold. Therefore, while the 4.6% figure is noteworthy as the lowest since 2008, it's unlikely to be sustained.
Federal Treasurer Josh Frydenberg anticipates a contraction in economic growth for the country during the September quarter, but he expects a rebound once the lockdowns are lifted. Given the unemployment rate in the current range and the persistently high underemployment figures, it's not realistic to anticipate any imminent changes to the RBA's interest rate policy in the upcoming months.
For those contemplating an investment in a new truck at this juncture, it's reasonable to expect that the current environment of historically low interest rates will continue.
International Influences
On the global stage, there exist numerous events and conditions that could have an impact on the Australian finance sector. One significant concern for those contemplating a new truck purchase is the issue of global supply chain disruptions. The COVID-19 pandemic has affected manufacturing plants around the world, leading to a shortage of computer chips and reduced production in various factories. Moreover, severe weather events in Europe and North America may also disrupt the flow of components and parts from those regions.
For those eager to take advantage of temporary full expensing, opting for existing "showroom stock" could be a practical choice, given potential delays in new model releases.
An intriguing development in financial news recently was the speculation surrounding the New Zealand Reserve Bank's potential interest rate hike at its August meeting. Ultimately, the official cash rate was maintained, which doesn't directly affect the Australian status quo.
Events unfolding in Afghanistan are a source of concern on multiple fronts and may lead to reactions in the US stock markets.
While Australian lenders typically align their lending rates with the official cash rate, the lending landscape is diverse, encompassing both banks and non-bank lenders that source funding from international finance markets. Consequently, global events do have the capacity to influence the interest rates set by certain lenders.
Jade Truck Loans maintains a vast and diverse lender panel with accreditations with both banks and non-bank lenders. This provides us with the flexibility to access the cheap truck loan interest rates for our customers from many sources.
Facilitating Truck Investments
Amidst the external challenges affecting the present business landscape, we fully recognize the importance of our customers not letting opportunities slip by when it comes to considering investments in new trucks.
Business owners and operators must remain conscious of the potential benefits that can be harnessed through tax-effective investment strategies that are currently available. Specifically, the temporary full expensing provision offers eligible businesses the chance to fully deduct the value of qualifying assets as an expense in the same year of purchase.
For those wishing to optimise this measure in their business, we provide Chattel Mortgage for truck & trailer financing. For businesses which are not suited to that form of finance, we provide Rent to Buy Truck Loans and truck lease finance, both of which offer tax deductions to eligible businesses.
For operators which are just starting up or have not been trading for a long enough period to have accumulated the financial records to meet the loan applications required by some lenders, we may be able to assist with Low Docs and No Docs Truck Loans.
Contact Jade Truck Loans on 1300 000 003 to discuss an off-balance sheet truck loan.
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.
