When it comes to getting finance for your new business vehicle/equipment there are so many different options and things to consider. Here are some of the things you may not know and may help you with your next car purchase.
1. Shop around for your car and your finance:
Most of you would have seen the 1% interest rates advertised by some dealerships on the TV and radio. They make it sound like a fantastic deal, however, this is where they trap you. In most cases, they mark up the price of the vehicle and you could end up paying a lot more than you would if you got a loan at 5%.
Do your research and shop around on the vehicle you are looking at purchasing and don’t simply get the finance from the dealership. Know what the car is truly worth and how much you can afford to pay per month.
2. You can get a pre-approval:
Before you even start looking at a vehicle we recommend getting a pre-approval so you know exactly how much you have to spend. Having an approval in place also puts you in a better position to negotiate on the vehicle price which can potentially save you thousands.
3. Less Interest vs Cashflow:
If you take out equipment finance over 3 years compared to 5 years you will pay less interest meaning your overall cost of the vehicle will be less. This usually means that your monthly repayments will be higher which can be an issue for some. If keeping your monthly expenses down is important to you, discuss your options for a balloon payment.
4. Financials and tax returns are not always required
Since the banks have relaxed their policies a little you will find that some lenders don’t even need tax returns and financials or are willing to accept only 12 months financials. If you have been in business for few years and have a good credit history, approvals may be automatic for loans of up to $150,000.
5. There are different tax deductions for each type of finance
Each method of financing your equipment has its advantages and disadvantages. These finance options can affect what you can and can’t claim on your tax returns. We work together with our accounting department to determine the best loan structure for your business.
If you are in the market get in touch with us today so we can help you get approved.