Want a Trailer to Take a Load Off Your Business?
You can’t be anything but excited and at the same time a little anxious. The right finance options will really make all the difference in your operations when considering the right trailer. So, take a deep breath because we are here to walk you through your options and guide you further to finding the best one that suits your needs.
Understand Your Trailer Finance Options
Let’s first break down the main types of trailer finance options available in Australia. Each will have its set of benefits and considerations, so it is really important to know what each one offers.
- Leasing: Leasing is a highly regarded finance option for businesses that wish to use a trailer but not own it. With leasing, you pay monthly and get to use the trailer for the agreed period. Once the lease ends, you can return the trailer, extend the lease, or sometimes buy it at a residual value. This is a good option if you want to maintain cash flow stability without paying a large sum upfront.
- Hire Purchase: If you want to own the trailer in the near future, hire purchase could be your choice. You pay installments over a period, and once fully paid, the trailer is yours. Hire purchase helps spread the cost without losing hope of ownership.
- Chattel Mortgage: This is a secured loan where the trailer serves as collateral. You own the trailer while making regular payments. Chattel mortgages are flexible and tax advantageous, making them a popular choice for businesses.
Analyze Your Options For Trailer Finance
Now that we have the basics in place, let’s dive into the advantages and disadvantages of each option to guide your decision.
Leasing
- Advantages:
- Lowers monthly payments compared to loans.
- No large upfront cost.
- Option to get new models after the lease term.
- Disadvantages:
- No ownership at the end of the lease (unless you buy out the lease).
- Mileage or usage restrictions may apply.
- May be expensive in the long run if leasing is continued.
Hire Purchase
- Advantages:
- You own the asset at the end of the contract.
- Fixed interest and monthly repayments.
- Tax benefits may apply.
- Disadvantages:
- Higher monthly payments compared to leasing.
- Maintenance and repairs are your responsibility.
- Early termination fees may apply if you end the contract early.
Chattel Mortgage
- Advantages:
- You own the trailer immediately.
- Choice of loan options and repayment terms.
- Tax benefits, including GST input tax credits.
- Disadvantages:
- Requires a good credit score to get favorable terms.
- The trailer can be repossessed if you default on the loan.
- Higher upfront costs compared to leasing.
Making the Right Choice For Trailer Loan
Whether you choose a trailer finance option depends on your business needs and financial status. Here are a few tips to guide you in making the right choice:
- Analyze Cash Flow: Determine how much you can afford to pay monthly without putting too much pressure on your business. Leasing may benefit you if you prefer lower monthly installments.
- Have Long-Term Projections: If you plan to use the trailer for a long time, consider hire purchase or a chattel mortgage.
- Consider Flexibility: If you anticipate upgrading your trailer frequently, leasing allows you the flexibility to switch to newer models without the hassle of selling your old trailer.
- Consider Tax Benefits: Consult your accountant, as chattel mortgages provide significant tax benefits.
Why LJ Asset Finance?
At LJ Asset Finance, we recognize that every business is unique, and so are your financing needs. Our experts are here to guide you through the process, offering tailored advice and flexible financing solutions designed to best suit your business. Whether leasing, hire purchase, or chattel mortgage, we’ve got you covered.
So, what are you waiting for? Contact us now and let’s get your business rolling with the perfect trailer finance option!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.