Asset finance is the perfect way to get your new asset sooner. It allows you to acquire larger assets – often through hire or lease – without needing to purchase the asset upfront. Whether it’s for personal or business use, asset finance has plenty of benefits.

•   Can reduce more considerable loan costs
•   Frees up capital
•   Improves your cash flow
•   Gets you your new asset sooner

Equipment finance is a great solution for businesses that rely heavily on machinery, tools, and equipment for daily operations. It can be used for a range of things, including:

•   Work tools
•   Trade tools
•   Office computers
•   Heavy machinery
•   Farming equipment

A balloon payment is a lump sum of money owed to the lender at the end of your loan period. While this may not sound particularly appealing, it can aid the borrower in decreasing their monthly repayments throughout the loan. This can be negotiated with your lender.

A balloon payment differs between lenders. Commonly, the maximum cost that lenders cap balloon payments at is a maximum of 50 per cent of the total loan amount. This means if you have a 50 per cent balloon on a $40,000 car loan, you will pay a balloon payment of $20,000 at the end of your loan.

There are several factors to consider when choosing what loan term you should go for. Lenders allow you to have a loan term between one and seven years for any asset finance. Keep in mind that the longer the loan, the more interest you’ll pay.

The main aspects of a car loan and novated lease are: 

•   Both have regular repayments.
•   Both have the chance to include a balloon amount at the end of the loan.
•   A novated lease is a three-way deal between you, the lender, and your employer.
•   With a car loan, you own the vehicle from day one.
•   With a novated lease, you own the vehicle when the term ends, and you pay the balloon.
•   A car loan is paid with after-tax earnings and a novated lease from pre or post-tax pay.