With Victoria enduring yet another disruptive COVID-19 lockdown, the ‘new normal’ touted for the past year or so is shaping up as more like the new ‘anything but normal’. If there’s one thing business operators have taken out of the coronavirus pandemic, it must be to not presume or expect things will be normal or the same as before or even yesterday. In addition to what is happening in Australia, events across the globe continue to impact Australian businesses in many sectors.
In a landscape characterized by uncertainty and unpredictability, operators must cultivate agility, adaptability, and comprehensive readiness to confront whatever challenges lie ahead—challenges that are often unforeseen. Amid this ambiguity, a fundamental aspect of preparedness involves ensuring that the business maintains a robust financial position, particularly concerning loans and finance agreements.
The commencement of a new financial year within an environment of historically low-interest rates presents a prime opportunity to assess and reevaluate truck loans. Deliberating your alternatives, evaluating the advantages and disadvantages, and arriving at an informed decision ensures that you secure the optimal truck finance arrangement. This choice not only serves as a foundational support for your business but also furnishes the resilience needed to navigate the forthcoming years.
Truck Loan Refinancing Considerations
Truck loan durations can extend beyond 7 years, and in recent years, the official cash rate has been substantially reduced. Presently, the official cash rate has reached an all-time low, contributing to an environment of exceedingly low-interest rate lending. Individuals who secured a truck loan several years ago and are now midway through their loan term might find themselves paying a significantly higher interest rate than what is currently attainable.
Refer to your current truck loan contract and compare that rate against our truck loan interest rates comparison table to see how that shapes up in terms of your specific loan situation. A situation that could raise the possibility of improving your overall cash flow and bottom line through refinancing your current truck loan.
The interest rate plays a pivotal role in determining the monthly repayments. Opting for a loan with a lower interest rate translates to reduced monthly payments. Lower repayments can alleviate the strain on monthly cash flow. However, it’s crucial to assess both the advantages and disadvantages comprehensively to ensure that a refinancing arrangement places the business in a stronger overall position:
- Refinancing is the process of replacing an existing loan contract with a completely new finance deal. The new truck loan can be with a completely different loan type to the existing loan. Refinancing truck loans is available for Truck Leasing, Chattel Mortgage, Hire Purchase and Rent to Own. Refinancing presents the opportunity to take on a loan at a better interest rate as interest rates vary across the range of loan types.
- If your existing loan was established on the basis of a low doc, no doc or bad credit application and your situation has improved over the time of the loan so far, you may now be offered a better truck loan deal based on your current financials. Low doc and no doc truck loan applicants would have several years of docs now available and bad credit businesses may have improved their credit profile through consistently meeting their loan obligations.
- Break fees on finalising the existing loan before the end of the term would need to be paid out. These vary depending on the lender and conditions of the existing truck loan. Any penalties and fees involved in finalising the existing loan can be incorporated into the total loan amount of the refinanced deal.
- Even if the truck was initially purchased ‘new’, truck loan refinancing would be based on a used vehicle which may impact the loan offer.
- Business owners need to carefully consider how the interest saved on a lower interest rate truck loan balances out the costs of setting up a new finance contract. The usual loan establishment fees would apply to the new loan.
- Refinancing provides the opportunity to reconfigure financial commitments. It allows businesses to reduce their monthly repayments to suit the current business situation and strengthen their position to cope with possible uncertainties moving forward.
- If looking to take advantage of temporary full expensing through a new Chattel Mortgage on an existing owned vehicle that would not appear possible. The criteria for temporary full expensing is for the purchase of new assets, being brand new or for some businesses second-hand. Existing assets are excluded. More info here.
- Refinancing can be used to finance a residual or balloon on an existing truck loan at the end of the loan term.
Truck Refinancing Process
Our consultants are highly skilled in this area and we will never recommend refinancing if the outcome would not be of benefit to our customer. The refinancing process is essentially the same as applying for a new truck loan.
- Our consultants source the cheapest truck loan offer from across our extensive lender panel.
- The total loan amount sought can include the complete pay-out on the existing loan.
- A balloon or residual can be included.
- Rates and repayments are individually negotiated to best achieve the preferences of the business owner.
- We handle the complete process including settling the existing loan with your lender.
Buying New Vehicles
An alternate approach to evaluating financial situations and loan arrangements is to consider acquiring a new truck. Leveraging the array of tax advantages provided by temporary full expensing and loss carryback, alongside the prevailing low-interest rate environment, opting for new vehicle purchases could position your business favourably to navigate the upcoming financial years.
Jade Truck Loans boasts extensive expertise across all facets of heavy vehicle finance, and we are well-equipped to offer cost-effective interest rate solutions for both refinancing endeavour's and new truck acquisitions.
Contact 1300 000 003 to discuss reviewing your lending situation with a view to seeking a refinancing quote.
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.