We keep low doc Grader Finance simple. To start, we just need your ID, your ABN and a statement of your assets and liabilities.
Generally speaking, your last two years of financials, individual tax returns, a schedule or register of your current loans (if any), your personal assets and liabilities, recent BAS statements and potentially also tax portals. If you are borrowing in excess of $500,000, we may also need additional items such as aged receivables and payables and some recent bank statements. We can help take the workload off you by contacting your accountants for what we need with your permission. Allowing us to do this for you will also open the door for us to go to your accountant with any queries relating to your financials, so you can sit back and watch it all come together.
You can pay off your loan any time at your request!
Usually, there are no early exit fees. With equipment loans, you just have to pay out your remaining loan balance to get out early. Here's some good news - when you request an 'early payout', most lenders discount some of the remaining interest in your loan balance, so you're saving money. If you ask to pay your loan out within it's first year, some lenders (not all) might charge an 'early termination fee' of a couple of hundred dollars, but it's nominal compared to the interest waived in a payout with some interest waived.
Note that all equipment loans with every lender are fixed interest loans. This means the total principle and interest you'll repay in your loan is fixed, no matter whether you make extra payments each month. Extra payments only speeds up the time it takes you to repay your fixed principle and interest in full. Equipment loans don't function the way home loans do, so you're better off making additional payments towards home loans or any debt that has interest charges calculated monthly on the principle balance owing to save interest there.
To save interest on an equipment loan, request an early payout to access a discount on the fixed interest remaining in the loan. You'll notice a 'payout' figure will be less than your loan balance at that point in time.
All lenders are happy to finance the full cost of equipment without any deposits.
But, if you're a start-up, applying for your first business loan, or buying a unique 'non standard' asset, they might ask for a deposit. In these cases, lender deposits usually start from around 5% and go up to 20% depending on the lender we're engaging and your application scenario. As your brokers, if you have a loan scenario that is going to require a deposit, we can talk to multiple lenders to see who is the most likely to offer up the lowest deposit option, or any alternatives that can help your cashflow.
You can request your loan to run anywhere from 2 to 7 years, but 5 years is the most common. Note that asking for 6 or 7 years is a special request from most lenders and it may only be offered at their discretion depending on the equipment they’re financing for you. Ultimately if we can’t get a 6 or 7 year loan term, we can arrange a balloon at the end of 5 years and this will offer you similar monthly repayments you might expect on 6 or 7 year terms.
A balloon payment is a set percentage of your loan, say 30%, due at the loans very end. Applying a balloon lowers your monthly payments since you're deferring a chunk of the loan to the end. When it's due, you can clear it with cash, or by selling or trading your bulldozer to cover the amount due. While it makes monthly payments lower, it could mean more interest over time, as you're still financing the full equipment cost and paying off your loan balance slower (and being charged interested on a higher principle amount) than you would structuring with no balloon. Essentially, you're delaying part of the total loan payable, not reducing the loan amount like the way an upfront deposit reduces the amount borrowed.
Absolutely, and in fact, we usually recommend doing this up front so you can work out how much money you can finance. This will help you shop for equipment in a price range similar to that of your finance approval amount. Having your finance pre-approved also means you can negotiate pricing on your new equipment with confidence knowing you have finance already arranged. Once you find the equipment you want to buy, we simply need to request a formal tax invoice from the seller, and then we can start the process of having your seller paid.
