Truck Loans vs. Cash Purchase: Which is better?

Should you consider truck loans or just purchase outright?

Whether you own one truck or have a whole fleet of heavy vehicles, it’s crucial to have a balanced approach to managing your business cashflow and debt level.

In our current climate of low-interest rates, choosing to purchase your next truck through one of the many truck loans instead of paying with cash can benefit your business.

Here’s why.

1. Cash can earn you money.

If you’re in the fortunate position of choosing between purchasing your next truck outright or securing finance with truck loans, you might be inclined to avoid debt.

After all, debt is a trap, right? Well, it’s more complicated than that.

Savvy investors frequently use debt to facilitate investment growth.

In other words, if you can get a low-rate loan to avoid using your cash and then invest your money in a high-return investment, you can make more money off the investment than you would lose by repaying the debt.

But each financial situation is unique and comes with its own risks, so it’s best to crunch these comparative calculations with your financial advisor or taxation accountant.

They’ll know which option is more likely to be profitable for your business.

2. Accidents happen.

Vehicles break down, accidents happen and someone has to pay the bill at the end of the day.

In times of emergency, cashflow is king.

Having access to cash for an expensive engine repair or parts replacement is essential because idle vehicles won’t earn you money.

You’ve got to get your business back up and running as soon as possible. 

Cashflow access can also be vital in times of sickness when you may need to contract out your haulage or service.

While only a temporary cost, it wouldn’t be possible without a healthy reserve of cash in your business.

3. Payments can be late.

I doubt there’s a business owner in the world who hasn’t at some point had to chase unpaid invoices.

Late payments can become a massive inconvenience if you don’t have cash reserves to carry your business until payments come through.

Always allow a cash buffer that’s equivalent to several months of income to ensure you have your bases covered.

4. Balance is crucial.

Too much of anything is bad for you, be it physical or financial health you’re focusing on.

The way to keep your business finances healthy is to ensure a balanced diet of profit and debt.

If deciding between paying for a heavy vehicle outright or using finance, the happy balance for your business may be doing both.

For example, use some of your money to pay a deposit on the vehicle and finance the remaining amount.

This way, you can keep your debt levels under control while ensuring you still have adequate cash reserves.

5. Truck Finance Lenders are ready to do business.

The appetites of Australian lenders have changed after the unprecedented year of 2020, which saw long approval delays within many major financial institutions.

Now, almost mid-way through 2021, lenders are back on track with financial approvals and have a broad selection of low-doc finance & truck loans available for fast and stress-free transactions.

Tax time is coming.

Dont forget that the financial year is coming to a close, and the federal government is currently allowing instant asset write offs to the value of $150,000.

If you are considering purchasing new or used vehicles some time this year, it may be beneficial to your business to act before June 30.

Talk to your accountant to discuss your best options, then phone our team of finance experts about low-interest finance opportunities, call 1300 664 687 today.

Things to Consider When Expanding Your Trucking Fleet

Whether you’re reasonably new to the trucking industry, or you’re a seasoned veteran with an already impressive fleet; every business reaches a point where expansion is necessary.

If you are considering expanding your trucking fleet now, or in the not too distant future, there are certain things you should consider first to ensure the process is smooth.

Finance Options

When it comes to selecting the right truck finance option for you and your business, our highly skilled team of experts can provide advice specific to your circumstances and guide you through the entire process.

In essence, they will be helping you through one of two options: low document (doc) finance , or a full document finance application.

Here’s the difference.

A low doc application requires no proof of financials, but you must have a GST registered ABN that has been active for a minimum of two years, a good credit record and property assets to back you.

In the absence of property, you will need to provide a 20 per cent deposit.

One of the significant advantages to a low doc application is the turn around time.

Because of our excellent business relationships with more than 40 different Australian lenders, we aim to provide our clients with low doc finance results in only 24 hours.

A self-managed low doc application would have wait times of up to two weeks.

Alternatively, a full documented finance application might be your best opportunity to secure low-rate finance.

However, to make the application process smooth, our finance team can assemble your application and step you through the process while ensuring you don’t hit any lender exposure limits.

Meaning, we will ensure your loans are dispersed through multiple lenders to allow for maximum finance opportunities, avoiding any exposure limitations imposed by individual lenders.

Timing

Being under-resourced and having to turn down opportunities or retire some of your fleet before sourcing a replacement are not ideal situations for any business.

To avoid short-changing your business and missing out on opportunities, be on the front foot with your finance application.

Depending on your unique circumstances, this may mean seeking finance pre-approval to ensure you are prepared when the right truck or trailer becomes available.

Or, it could mean taking advantage of generous tax incentives currently available to Australian businesses.

Until June 30, 2021, the Australian government has provided unprecedented incentives designed to stimulate the economy: Australian businesses can instantly write off new or used asset purchases to the value of $150,000.

If you were planning on purchasing a truck or equipment later this calendar year, seek financial advice from your tax accountant to determine whether it’s beneficial to bring this purchase forward.

You might be surprised at just how much you could save.

Type of Equipment

Because of our long and established history with more than 40 different lenders, we can provide finance options for trucks, trailers or equipment of any age while still ensuring the best possible rate.

Having this option to purchase both new or used means you don’t have to be limited and can instead focus on getting the right equipment for your business at the right time, allowing you to meet the needs of your customers, now.

Contact our team today for more information on how you can expand your trucking fleet; call 1300 664 687.

Avoid Delays and Secure Your Pre approved Finance Today

At AGM Finance, we have always been proud to provide finance approvals to you in the fastest possible time.

Our highly skilled team can quickly determine the right type of finance for each client, and work with them every step of the way to quickly and easily assemble your application.

Highest Success Rate

This means we can turn around your application quickly and have a 98% success rate because we only submit finance applications we are confident will be approved.

This year has been a time of big and small changes for everyone across the world, and the finance sector has not been immune to changes.

Because of variations to the way lenders are managing their workforce, workload and internal processes, all lenders now have significantly longer approval wait-times.

Finance Experts in Australia

Our finance experts at AGM will still be able to process your application as quickly as before, but the application assessment process at banks and lenders has increased from one day to five business days.

This means it could take one to one-and-a-half weeks for our clients to purchase a truck, heavy vehicle or equipment for your business.

In light of these changes, we are encouraging any of our clients who are considering purchases, to  arrange their finance pre-approval now.

Your approval will be valid for up to three months and will make your purchasing process faster when it comes time to make the sale.

We still have access to over 40 different lenders across the country, and will still work to secure you the best rate as quickly as possible, keeping you informed and updated every step of the way.

If you are thinking of making any major purchase in the next few months, contact one of our team members today to arrange your pre-approval on, 1300 664 687.

New Venture Finance: A Case Study

Navigating the world of finance can be difficult as well as time-consuming.

You need a level of assumed knowledge just to complete the paperwork, and it’s highly beneficial to have a strategic understanding of the differences between each bank.

Of the 40-odd Australian lenders available for your loan application, only a handful will consider a new venture finance application.

To complicate things further, of those few lenders, each will interpret your risk factors in slightly different ways, and of course, each lender has a preference for the sort of investments they like to make.

Without an understanding of how each bank considers applications and the foresight to present your personal situation in a way that your chosen lender will favour, your application can be jeopardised.

At AGM Finance, we do the hard work for you.

We take the time to develop a personalised strategy to give you the best chance of success for your loan and your new business. Here’s an example of how we helped a client achieve their new business goals.

Last year, a young Brisbane-based truck driver, John Webster, came to us when he was offered the opportunity to become an owner/driver with Toll.

John had previously spent four years as a PAYE driver for Toll.

On average, John had been earning about $1,500 a week during his time as a PAYE driver, and he had almost $30,000 in personal savings, but no other significant assets like a home.

He was also in his early twenties, which means some banks could consider him to be a higher-risk.

When John came to see our team, he had located a prime mover he was eager to buy for $120,000.

It was a 2015 Volvo FH540 Globetrotter with low kilometres, available through a private seller.

Because the truck was relatively new, and because John had a reasonable amount of savings, we determined we had a good chance at securing a loan for John.

Our goal, however, was not just to get John a loan, but to get his truck using the minimum deposit, at the best possible rate.

Together, we began to prepare a cash flow projection for John’s new venture, estimating his business expenses like insurance, fuel and maintenance, as well as his loan repayments and earnings.

This projection would help the bank to assess his case and determine an outcome.

While we prepared John’s financial documents, we advised him to get a letter from Toll, formalising their offer, and also provided advice on how the letter should be drafted to give him the best opportunity with the bank.

Understanding that only a select few banks would consider John’s application, we chose one of the major four banks who had previously demonstrated an appetite for new venture finance.

And it paid off.

John was granted a $100,000 loan, using $20,000 of his savings as a deposit. The finance was secured at a rate of less than 5%, and crucially, John had $10,000 in his personal savings leftover to use as working capital.

Our goal of getting John his Volvo Globetrotter at the lowest rate, using the minimum deposit, had been achieved.

These days, John turns over $25,000 a month and has a gross profit of $180,000 annually.

His new venture finance kickstarted a new business and a new life that wouldn’t have previously been possible.

If you have found yourself in a similar position to John, and need assistance to get your loan application off the ground and to secure the best rate, give us a call on 1300 664 687.

We can help you make the most of your opportunity and achieve business success.

Should I Rent or Buy My Own Business Equipment?

Purchasing equipment for your business can be dauntingly costly, however, once your business is settled, buying your own gear seems to make more sense than keep on paying to hire.

Here’s the manner by which to decide when you have achieved that tipping point.

Weighing up the advantages

Equipment renting offers a few favourable conditions for business owners.

You can get the gear with next to zero initial instalments, which implies negligible effect on your income.

Being a cost of doing business, lease instalments are expense deductible – and you won’t need to stress over equipment devaluation and the muddled duty bookkeeping that accompanies it.

Besides, you can just move up to a more up to date model when it’s out of date, rather than selling it at a noteworthy misfortune.

The huge drawback when you rent business equipment is that in the end you need to hand it back.

When you purchase, it’s another business resource that you retain.

The thing can likewise be sold or discarded whenever, rather than requiring that you break out of a renting contract, which ordinarily brings about penalty charges.

Furthermore, the acquired equipment is yours to adjust or update.

Working out the expenses

When you are choosing whether to rent or purchase for business reasons, it’s essential to do money saving assessment.

One obvious thought here is its price tag.

Consult with a loan specialist in your specific industry who can offer assistance with exact numbers based on your individual circumstances.

You will likewise need to consider the expense of transfer when the equipment achieves the end of its valuable life, alongside expense of replacement.

This is typically a greater amount of an issue with cutting edge equipment, for example, heavy duty trucks, which get to be out of date and lose the vast majority of their resale value after just a couple of years.

The expense of getting money is another critical thought when you are investigating purchasing versus renting.

Tax reductions and deterioration

Organizations that go into renting plans aren’t the main ones that can appreciate tax cuts.

Both alternatives accompany their own potential pitfalls, so a thorough danger evaluation is totally fundamental when you are doing your money saving examination.

What’s more, remember that no two organizations are precisely similar.

Despite what your rivals are doing, no one but you can know whether renting or purchasing is ideal for your business.

When you have your own equipment, it’s imperative to watch out for new innovations that can help you stay current.

At whatever point you make a major buy, you’ll have to ensure you’re secured in the event that something goes wrong.