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Motor Vehicle and
Equipment Finance
Motor
Vehicle and Equipment Finance For Business Owners and Professionals
CSA Capital are experienced
specialists who provide prompt and competitive funding for business
owners and professionals for the following types of vehicles and
equipment:
- Cars
including prestige, family, 4WD’s etc (also refer to
discount motor vehicle sourcing)
- Small
and medium and heavy haulage trucks
- All
types of earth moving equipment
- Equipment
for all types of industry including:
- Manufacturing
- Processing
- Printing
- Packaging
- Medical
- Construction
- Information
Technology
- Transport
- Materials
Handling
We work closely with many
accounting firms, and, as a result of our knowledge and experience we
can work with your accountant and you to set up the appropriate type of
finance and the correct documentation from day one. This then avoids
the prospect that there may be costly and nasty surprises for you (and
your accountant), further down the track. For example, getting things
wrong in terms of GST when financing a piece of equipment for say,
$110,000.00 over 48 months can cost you an extra $208.33 PER MONTH
The REAL COST of Finance
There are many reasons why Motor
Vehicle and Equipment Finance can cost you much more than you had
imagined.
Let’s think about this
for a minute – imagine you obtain finance for a car, truck,
or other equipment – you shop around for finance until you
get what you believe is the best quote. This would probably mean you
get the lowest interest rate and repayments, and that would result in
the cheapest deal, RIGHT?
Not necessarily . . . because
any or all of the following mistakes can cost you money without you
even knowing it:
- Choosing
an
inappropriate lending product sold to you by someone who
doesn’t
know (or doesn’t want you to know) the real costs of using
such a
product.
- Financing
equipment and vehicles with your primary business bankers.
- Obtaining
finance
related Taxation (GST, FBT, CGT) “advice” from
Finance
Company employees and their 3rd party agents.
- Obtaining
finance related Taxation (GST, FBT, CGT) “advice”
from your business bankers.
- Choosing
the wrong Lender and terminating your contract early (see below).
Have you ever paid out a vehicle
only to discover a large negative discrepancy between the payout figure
and it’s sale or trade-in value?
Have you always attributed this
to being “Depreciation”? That’s certainly
part of it, but do you want to know the WHOLE story?
Many people who enter a long
term contract expect that at the time of purchase they will keep the
vehicle for five years, others seek a five year term simply because
they cannot comfortably afford the payments over a shorter term.
The fact is, most car finance
transactions do not go the full term -
whether it be due to theft, insurance write off as a result of an
accident, sale of a business, change of employment, divorce, change of
circumstance or simply a change of mind, our lender’s
experience is that the average term of a lease, chattel mortgage or
commercial hire purchase contract is between 29 and 31 months.
Whenever a lease, chattel
mortgage or commercial hire purchase
agreement is terminated prior to the expiry of the contracted term, an
early termination calculation is made and the borrower is required to
discharge this payout figure. This early termination payout figure can
include some or all of the interest which is yet to be charged on the
loan!
That’s right - it doesn't
work like a home loan! If you
had agreed to a sixty month finance
contract and you pay it out after thirty-one months, you can be asked
to pay some or all of the interest which would have been charged on the
remaining twenty-nine months. We should be clear here that this
interest charge is technically not a ‘penalty’ for
early repayment and a lender can say as much. In fact it is you who is
terminating the agreement early, not the financier. To give them their
dues, finance companies and banks will often
“discount” this charge so you are receiving a
partial ‘refund’ on the total charges you agreed to
pay in the contract.
REMEMBER - you will not know how
much interest some financiers withhold
because they don’t have to tell you. You will be given a
single payout figure. This payout figure will NOT SHOW how much of it
is the financiers “break” or “early
termination” cost.
The big question is: Just how
much of a “refund”
are you getting and how much of the unearned interest is the Financier
holding back for themselves? The answer to this question lies in the
calculation methodology utilized by the financier. Please note that
different financiers use different methods to do the calculation.
Lenders generally use one of
three methodologies in the calculation of
early payout amounts:
- Rule
of 78
- Discount
or net present value (NPV) Method
- Actuarial
These methods can result in
significant differences in the amount you will have to pay to terminate
the contract early.
This can cost you a great deal
of money if you end up with the wrong lender.
CSA Capital can help you to
avoid these
costly situations.
Please remember to call us
BEFORE you commit to a finance contract. Our finance analysis software
can give you a clearer picture of the REAL cost of your proposed
finance arrangements.
Please don’t hesitate
to contact us with any
query you may have. If you are unsure, please ask your accountant to
contact us.
Banks
- Are
there better alternatives than your bank when it comes to vehicle and
equipment finance?
How do you feel about your
Business Banking relationship?
Do you absolutely value what
your bank does for you?
Does your bank value what you do
for them?
Does your bank really have your
interests at heart?
Does loyalty to your bank count
for anything?
The following information may
help clear the air:
Many business owners will use
their bank for vehicle and equipment finance, because they see it as
easy, convenient, simple and inexpensive.
Often all they need to do is
pick up the phone and talk to their relationship manager, tell them
what they are looking to finance and then the bank will arrange the
paperwork, and settle the transaction.
That all sounds pretty good, so
what is wrong with that?
Nothing, except that your bank
will most probably already have the following security charges over
your business:
- A
mortgage over property, which may include one (or possibly all) of:
- your
home
- your
factory
- your
office premises
- your
holiday house
- your
investment property/ies
- Security
over your business itself (often called a Deed of Fixed and Floating
Charge – some banks also call this charge an Equitable
Mortgage Agreement, or “EMA”. Some banks also call
it a Registered Mortgage Debenture, or “RMD”)
Have you been made aware of
what is a Deed of Fixed and Floating Charge, and what does it mean to
your business?
A Deed of Fixed and Floating
Charge is exactly what it sounds like – It is a fixed and
floating charge often registered by a bank over it’s
clients’ business undertakings and assets which can include
stock, debtors, goodwill, fixtures, fittings, plant and equipment owned
by the business NOW, OR AT ANY TIME IN THE FUTURE.
This means that where a bank has
taken a Deed of Fixed and Floating Charge, and its client decides to
buy some equipment or vehicle/s which are paid for using a company
cheque, then those goods will automatically be captured under the
security umbrella of the banks Deed of Fixed and Floating Charge.
This often comes as a very rude
shock to business owners who may not be aware of how far reaching the
ramifications of a Deed of Fixed and Floating Charge can be.
NOTE: Many Business owners who
are often very busy, will probably remember signing bunches of security
documents at various times during their Banking relationship, but many
of them will be unaware of how restrictive a Deed of Fixed and Floating
Charge can be to the ongoing growth and success of their business.
Quite simply, there are more
effective and less restrictive methods of acquiring equipment and
vehicle finance and overdraft /cash flow financing.
The message here is loud and
clear –
Obtain your business leasing and
equipment finance from sources OTHER THAN YOUR BUSINESS BANKERS.
CSA seeks to pledge as security
only the leased goods themselves. As a result, this debt (and therefore
the leased goods) can’t be captured or aggregated with any
existing bank borrowings your business may have.
Contact Us:
Phone: (02) 9499 5500
Email: CSA Relationship
Manager
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