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Equipment Finance Calculator – Business Equipment Loans
The purchase of commercial equipment can be a major consideration and require planning and budgeted. Knowing what your repayments on your equipment finance may be, before you commence the purchase or the finance process may be of great assistance to many businesses.
An Equipment Finance Calculator can be used for that purpose as it allows businesses to calculate a rough ballpark estimate on monthly repayments for equipment finance. The calculators are an online function, available on the websites of most providers of equipment finance and quick and easy to use.
You will find an Equipment Finance Calculator on most bank, finance broker and lender websites. Using one is easy but utilising the result properly requires an understanding of limitations of the resource.
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Using an Equipment Finance Calculator
Each calculator may have its own unique features, but most follow a standard online form format and layout with fields where you can input data, such as loan amounts.
"*" indicates required fields
- Equipment Loan Amount: enter the total amount of your loan in this section. The amount might be 100% of the purchase price, the price less any deposit you may choose to pay, or the price plus and additional expenses incurred in the purchase such as installation and commissioning.
- Loan Term: this may be represented as months or years. Select the timeframe you would like to pay off the loan. Some equipment loans are available for up to 7 years/84 months.
- Interest Rate: the website should indicate the current interest rate being offered on equipment finance by that lender. Enter that amount for the purpose of this calculation.
- Balloon/Residual/Payout: equipment finance products allow an option for an amount of the loan to be paid as a lump sum at the end of the loan term. For Chattel Mortgage and CHP it is a balloon, for leasing it is a residual and for rent-to-own it is a payout.
- Ensure all fields have been completed. Some calculators will request additional details and essential fields (information) indicated with a red asterisk.
- Finally, simply click on CALCULATE and a repayment figure will appear.
- If you would like a higher or lower repayment, vary the loan amount or loan term and click calculate again, and you’ll see how those changes affect the repayment.
- To compare different prices of equipment say from different manufacturers or different models, just enter the different amounts and you’ll see how that changes the repayment estimate.
This is a great resource for planning but must be used with caution
- No allowance is made for the fees and charges which equipment finance attracts from different lenders. These would be extra.
- The interest rate that you are actually offered, may be higher or lower than the one advertised. Your finance broker may be able to negotiate you a better rate which will affect the repayment.
- Using such a device is not a loan application, it is not an offer of a quote or a loan approval. It is purely a rough ballpark estimate to be used for planning and general information purposes.
- Read the disclaimer and terms and conditions relevant to the calculator you are using.
Used correctly and for the intended purpose, an Equipment Finance Calculator is a very useful resource for many ventures in making decisions around major equipment purchases.
A vast range of equipment can be financed with a choice of several different types of finance which is available through multiple banks and lenders. With so many options and decisions to be made, questions can arise when businesses embark on financing new equipment. We’ve addressed a selection of typical questions to assist you. For further information, please reach out to us.
The main asset acquisition finance products are Chattel Mortgage, Leasing, Commercial Hire Purchase and Rent to Own. These are secured funding products. The machinery is accepted as the security against the funding. With some applications, the lender may request additional collateral. This may take the form of a personal guarantee or other property. The security required may be determined by the credit assessment. Low Doc, No Doc and bad credit applicants may be required to provide additional security.
Yes. Funding arrangements for plant, machinery and equipment used in an enterprise may be refinanced. Refinancing is the process of replacing existing funding arrangements with new contracts. The refinancing may be with the same or a different product and with the same or a different lender. Fees typically apply when a loan is finalised prior to the scheduled end of the term.
No, deposit funding may be requested. This refers to the entire purchase price forming the amount borrowed. Approval of all loan amounts is subject to individual lender decisions. With some machinery, the costs of delivery, installation and commissioning may also be included in the total amount requested.
Where an individual is setting up a new business, they usually do not have all the documentation required to complete the application form. In these instances, the individual may seek No Doc or Low Doc options. This is a description of the type of application and not specific funding products. If approved as a Low Docs or No Docs applicant, the applicant may have their choice of Chattel Mortgage, Rent to Own, Commercial Hire Purchase and Leasing products.
The interest rate offered by individual lenders will be determined after an assessment of the application. Considerations include the creditworthiness of the business, the owner in some cases, the age and condition of the goods being purchased and the total amount requested. The rates advertised by lenders are typically for funding new goods and for operators with a good credit profile.
Yes. This general category of funding encompasses all types of plant, machinery and other goods to be used in and by an enterprise. It encompasses virtually all industry sectors including the fitness sector. The interest rates offered can vary depending on the industry sector. Some lenders may offer funding to specific industry sectors only. Others will have a broader offering across a wide spectrum of sectors.
The tax deductible elements of funding products vary with the exception of interest charges. The interest charge portion of all repayments are deductible. With Leasing and Rent to Own, the monthly payments are treated by the ATO as expenses and are tax deductible. With Chattel Mortgage and Commercial Hire Purchase, the interest portion is deductible but the balance is not. These products realise a tax deduction through depreciation of the asset.
Yes. All types of enterprises may be eligible for funding equipment for their operation. This includes small and medium enterprises. Where a SME has been operating for a reasonable timeframe, they may have acquired all the documentation required to complete the application form. Where a SME is a relatively new enterprise without all the documentation, they may seek out a lender that offers Low Doc and No Doc options.
A balloon payment relates to the Chattel Mortgage funding product. It is a part of the total loan amount which is set aside for payment at the end of the term. It is usually expressed as a percentage of the loan amount. The balloon amount is subject to lender approval. The balloon is paid in a lump sum when all monthly payments have been finalised. A balloon may be finalised by the enterprise using existing funds or by sourcing a new financing arrangement. Effectively refinancing the balloon.
The terms for funding equipment will vary according to the lender’s criteria and details in the application. These may be in relation to the creditworthiness of the applicant, the age and condition of the goods being acquired, and/or the amount being requested. Terms of up to 7 years are available through a range of lenders.
Lenders will set the minimum amounts for their own portfolio. There is no general rule across the sector for minimum funding amounts. There are many lenders offering this type of funding and businesses may canvass a range or utilise a broker to assist with identifying a suitable lender. Where the amount is below the threshold for asset acquisition finance, operators may consider other options. These may include secured or unsecured funding or overdraft.
Yes. Getting approved prior to attending an auction can be arranged. The pre-approved process involves processing an application through to the stage of being approved for the amount requested. As the amount of the purchase may not be known prior to auction, it may be estimated for the purpose of the application. When the purchase is made and the exact amount required is known, this is conveyed to the lender and a specific offer for that amount prepared.
No. Rates generally vary for new and used goods. The rate for used goods may be higher than for new. The decision will be based on an assessment of the age and condition of the goods and lender criteria. Rates also vary across the range of funding products and for different industry sectors. A quote should be requested to receive a specific rate.
Yes. Holding an Australian Business Number (ABN) which is current, is a pre-requisite for eligibility for commercial funding. Where an operation is setting up, the ABN should be obtained prior to a funding application being submitting. Identification is also required. It is not essential that an enterprise be registered for GST.