Interest rates remain at the front of peoples’ minds and the centrepiece of media reports. Australiawide Finance’s Colin Cooper points out the outlook is actually fairly bright.
In the week leading up to Melbourne Cup Day money markets increased their rates in anticipation of the Reserve Bank of Australia decision, which came through as expected, the fifth rate rise this year, but the first since June, part of the effort of the RBA to knock out inflation.
We can only hope rate rises are coming toward their end, but the RBA has since repeated it will do whatever it takes to get inflation down – a difficult job – but the message is it will ultimately work. US markets (which are often the drivers) lifted rates more quickly than Australia to their highest level (currently 5.25 per cent – 5.5 per cent) in 22 years, but now have some drastic cuts priced in for next year, as predicted for Australia toward the end of next year.
Despite the constant rises, we still enjoy rates which are a massive three or four times less than those of the heady times of the lead up to the 1990s recession. Coupled with a vast number of lenders competing for loan business, you can still expect a modest cost of borrowing for equipment to power your business, and many business owners report the difficulty of attracting and retaining labour as a bigger and more expensive problem, both on the supply side attached to completing work, as well as the cost side.
The importance of cashflow protection for businesses large and small is intensified by the combination of higher interest rates and inflating prices. The big-ticket purchases helped by 100 per cent tax writeoffs from the past few years often led to more efficient income and reduced running costs, but fully expensed depreciation can result in delayed tax bills, ultimately putting a squeeze on cashflow. If you’re targeting your cashflow consider a few simple measures related to financing your business:
• Equipment financed with balloons due in the next several years (or even without), can be refinanced early to reduce monthly commitments
• Your new purchases could be financed over a short period with a higher balloon, assisting cashflow, while benefiting from expected future rate decreases timed to the balloon rollover
• 100 per cent writeoff remains for new and used business equipment up to $20,000 plus GST, creating a significant deduction, in limitless multiples.
Finance out of left field
Commonly thought of as the purchase of a piece of equipment, vehicle or machinery, financing assets can extend to repairs, maintenance and upgrades for longstanding businesses and for new business startups. The addition of a tipper body and chipper canopy to the cab chassis you’re buying from an auction house can be settled smoothly and easily.
One Australiawide Finance customer in heavy haulage carries mining equipment across the country and needed a tail-mounted Icepack air conditioner to keep the cab cool and quiet. He often tries to rest up in 50-degree heat in the middle of the day during his 4000km journey, and he had it fitted in Perth, paid for with a finance agreement of $15k over three years, before setting off for Queensland.
Another customer financed the refurb of a chipper engine and recertification of a tower bought privately, sourced from Facebook marketplace.
If you have industry experience, you’re starting a new business of your own and just need a vehicle or piece of equipment to start off with, we have a variety of methods to get you up and running, for new or used equipment, regardless of how big or small.
If you’re thinking of purchasing vehicles or equipment – whether new or only new to you – we have access to a wide variety of simple and cost-effective finance structures from more than 30 lenders, each of which specialises in their own market niche, usually without asking for financials. We’re always happy to answer any questions you may have, send you an obligation free quote, or simply have a chat about your future plans. You can find us through our website australiawidefinance.au.
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With the holiday season in full swing, many turn their attentions toward enjoying some leisure time and holidays. We also organise loans for caravans, boats, motorbikes, jet skis and private cars through a variety of consumer finance lenders – several of whom have some summer specials. Get in touch any time if you have any questions! Lastly and most of all, Australiawide Finance wishes you and your family the very best for the Christmas and New Year period, and we hope you’ve enjoyed reading our Arbor Age articles this year.
To learn more about cost-effective financing, log on to australiawidefinance.au.