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Equipment Finance Calculator – Loan Interest Rates
When taking on any form of finance or loan, the critical factor for most people is the cost of the loan. You know the price of the goods or assets you are purchasing and you can probably have a good idea of current interest rates, but converting all that information into monthly repayments and total loan cost is what really matters in most instances.
A Loan Interest Calculator can assist you with that process. Online loan calculators are widely available on the websites for banks, finance brokers, lenders and other companies that offer finance such as car dealers and equipment manufacturers.
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Online calculators are usually presented as loan calculators as their primary purpose is to enable the user to calculate a rough estimate of monthly repayments on a total loan amount over a set term at the current advertised interest rate.
However, the data calculated can also be utilised and considered from another perspective – that is, to assess the total amount of interest you may pay on a certain loan and to assess what interest rate you need to be offered to achieve the repayment level and loan structure that works for your business. We’ll explain by stepping you through how a loan calculator works and then how to analyse the data in different ways.
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Simplify Your Loan Calculations
Using a Loan Interest Calculator
Online loan calculators are set out in standard online form layout and format with fields where you enter data, in this case, amounts pertaining to your proposed purchase/loan.
- Loan Amount: enter the total amount you want to borrow.
- Loan Term: enter the number of months/years you realistically think you would like to repay the loan. Being mindful that lenders do have guidelines which vary across assets/goods loan categories.
- Interest Rate: enter the current interest rate for the loan option you are considering, ie truck, equipment, car, business loan etc, as advertised by the lender.
- Balloon: this is an option for some loan category and presented as a percentage of the loan amount. For more information on balloons and residuals, refer to our Loan Type web pages.
- With all the fields completed, click CALCULATE and a figure will be displayed. This represents the estimate of monthly repayments based on the amounts you entered.
Analysing, Assessing, and Leveraging Insights
Analysing, Assessing and Utilising the Data
The main purpose of this type of calculator is to provide quick ballpark repayment estimates. The figure derived is only an estimate as these devices do not have the capability to allow for the fees and charges which may be applied to your loan by individual lenders.
- If the repayment is higher than you anticipated, you can change the total loan amount to get a different result but that may involve you paying a deposit or sourcing a cheaper purchase.
- You can also vary the loan term – increasing the term will decrease the repayments but will take you longer to repay the loan and increase the cost of the loan.
- You can also vary the interest rate and note how that changes the repayment amount. That may give you an indication of the interest rate that you will need to be offered on that loan amount to achieve roughly the repayment level that works for you.
- Now to calculate the total interest cost of the loan (less of course the lender’s fees and charges as mentioned above).
- Manually, not on the calculator, note the repayment amount and multiply that by the number of repayments add the amount of any balloon you have selected and the result will give you an estimate of the total cost of your loan. Allow extra for the fees and charges.
- Subtract the total loan amount from the total cost of the loan and you’ll have a rough idea of the amount of interest you will be paying on that loan.
In planning goods and assets acquisitions and purchases, loan calculators can be a very useful resource, and as we’ve just demonstrated, the data can be analyzed and assessed in a number of ways.
To find an Interest Rate Calculator that is quick, easy, and free to use, our specialised team can send you a link.
Connect with us to access a loan calculator now.
A vast range of equipment can be financed with a choice of several different finance options 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.