What are Asset Finance Options for Vehicle Purchases?

For contractors across Australia, having reliable work vehicles is essential for business operations. Whether you're in construction, trades, or professional services, the right vehicle can make the difference between winning contracts and missing opportunities. Asset Finance provides contractors with flexible loan options to acquire the vehicles they need without depleting working capital.

Understanding Asset Finance for Vehicle Purchases

Asset Finance allows contractors to purchase vehicles while preserving cash flow for day-to-day operations. This type of commercial equipment finance enables you to acquire work vehicles, trucks, trailers, and other essential transport equipment through structured repayment plans. The vehicle itself serves as collateral for the loan, which typically results in more favourable interest rate terms compared to unsecured borrowing.

When applying for Asset Finance, lenders evaluate your business needs, financial position, and the specific vehicle you intend to purchase. The loan amount is generally based on the vehicle's value, your repayment capacity, and the lender's assessment criteria.

Types of Asset Finance for Vehicles

Chattel Mortgage

A chattel mortgage is a popular finance option where you own the vehicle from day one while the lender holds a mortgage over it as security. This arrangement offers several advantages:

• You can claim GST credits on the purchase price
• Interest payments and depreciation may be tax-deductible
• You have full control over the vehicle's use and maintenance
• Fixed monthly repayments help manage cashflow effectively

Hire Purchase

With Hire Purchase agreements, you make regular payments over the life of the lease and gain ownership once all payments are completed. This option suits contractors who prefer:

• Lower upfront costs
• Structured payment schedules
• Protection against vehicle depreciation during the contract period
• The ability to upgrade equipment at contract end

Vehicle Types Covered by Asset Finance

Asset Finance can accommodate various vehicle types essential to contracting businesses:

Light Commercial Vehicles:
• Utes and vans for general contracting
• Service vehicles with specialised fitouts
• Passenger vehicles for client meetings and site visits

Heavy Commercial Vehicles:
• Trucks for transportation and delivery services
• Trailer combinations for freight operations
• Specialised vehicles with custom modifications

Construction and Earthmoving Equipment:
• Excavators for earthworks and demolition
• Tractor units for agricultural contractors
• Graders for road construction and maintenance
• Cranes for lifting and construction projects
• Dozers for land clearing and site preparation

The Application Process

The streamlined application process for Asset Finance typically involves several key steps. Initially, you'll need to provide financial documentation including recent tax returns, financial statements, and proof of income. Lenders will also require details about the specific vehicle you wish to purchase, including quotes from dealers or auction houses.

Most lenders can provide preliminary approval within 24 to 48 hours for straightforward applications. Once approved, the finance can be arranged to coincide with vehicle delivery, ensuring a smooth transition from purchase to operation.

Benefits for Contractors

Asset Finance offers contractors several advantages when buying new equipment or upgrading existing equipment:

Cash Flow Management: Spreading the cost over multiple years preserves working capital for other business expenses, payroll, and unexpected costs.

Tax Efficiency: Depending on your business structure, you may be able to claim depreciation and interest as business expenses, reducing your overall tax liability.

Fleet Renewal: Regular vehicle upgrades ensure you maintain a professional image while benefiting from improved fuel efficiency and reduced maintenance costs.

Scalability: As your contracting business grows, Asset Finance allows you to expand your fleet without significant upfront investment.

Choosing the Right Lender

Different banks and lenders across Australia offer varying terms and conditions for Asset Finance. Some specialise in specific industries or vehicle types, while others focus on particular loan amounts or repayment terms. Working with finance specialists who understand the contracting industry can help identify the most suitable finance options for your specific circumstances.

Consider factors such as interest rate competitiveness, loan term flexibility, early repayment options, and the lender's understanding of your industry when making your decision.

Making Your Vehicle Purchase Decision

Before applying for Asset Finance, evaluate whether you're buying new equipment to expand operations or replacing existing vehicles. New vehicles typically attract lower interest rates and longer repayment terms, while used vehicles may require higher deposits and shorter loan periods.

Consider the total cost of ownership, including insurance, maintenance, and depreciation, when determining the appropriate loan amount and repayment structure.

Secure Me Finance specialises in helping contractors access appropriate Asset Finance solutions for their vehicle requirements. Our team understands the unique challenges facing contracting businesses and works with multiple lenders to find suitable finance options that align with your business needs and cash flow requirements.

Call one of our team or book an appointment at a time that works for you to discuss your vehicle financing requirements.