Asset finance is a great way to get your new asset sooner. This allows you to acquire larger assets – often through hire or lease – without needing to purchase the asset outright. Whether it’s for personal or business use, asset finance has a few benefits.

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

Equipment finance is the perfect solution for businesses that rely heavily on machinery, tools, and equipment to operate. 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. It generally falls at the end of your loan period. While this may not sound like the best idea, it can aid the borrower in decreasing their monthly repayments throughout the loan. This can be negotiated with your lender.

A balloon payment differs from lender to lender. Generally, 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 $30,000 car loan, you will pay a balloon payment of $15,000 at the end of your loan.

There are many factors to consider when deciding what loan term you should go for. Lenders will allow you to have a 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.