Tips For Commercial Machinery Finance

Machinery for construction or farming isn’t cheap; and that’s why it’s big business to get it all on finance. That may mean leasing it for a time or buying it outright. But what’s right for your business? Do you only need a truck for a special project or is it better to own outright and modify it as the need fits? When it’s time to add an additional dumper or if you’re looking to invest in a telehandler, we have all the top tips to make the most of commercial machinery finance.

Is Buying Better Than Leasing?

You must first choose if leasing or buying your machinery will be better for your company. If you’re buying, you can use a business loan for your machinery.

Both a chattel mortgage and a hire purchase are options for financing this equipment. Similar to car or vehicle loans, chattel mortgages require you to acquire possession of the equipment and make monthly loan payments until the mortgage is fully repaid. Similar principles apply with a hire purchase, except that your lender "hires" the equipment to you rather than selling it to you after the loan is repaid and you become the owner.

This type of finance also means you can borrow more than 100% of the purchase price so you aren’t using working capital to pay for on-road costs or insurance. That means it won’t bite into your cash flow, so your business can seize upon opportunities quickly. You’ll also be able to modify your plant as you see fit.

This type of finance also means you can claim back the GST, depreciation, and interest on your activity statements.

Importing Machinery: What You Need To Know

Australia doesn’t make much plant here, so you may have to import new machinery for specialised roles. They are subject to biosecurity controls before coming on shore, and you’ll also have to pay for cleaning if the government says it’s necessary. This can also add to the cost of buying your machinery outright. For all the guides and checklists, click here.

Why Leasing Can Be A Good Idea

Leasing can make financial sense as you pay a fixed payment, and most incidentals are included such as scheduled servicing, installation, and insurance. It also means your plant are operating expenses instead of capital expenses, which may make more sense from an accounting or tax perspective.

You won’t be able to modify your plant, but at the end of a lease, you can trade in your machinery for new models and start again. If you opt for a finance lease, your business has the ability to pay the residual value and take ownership if you see fit.

Working with a broker that specialises in machinery finance can help tailor leases or loans that suit your business needs. You may be able to access better terms with a broker, who has access to many different lenders.