| With interest rates so cheap these days, most small | | | | with doing so. |
| – medium sized businesses are choosing to | | | | 1. Lock in a fixed interest rate for up to 5 years |
| finance their business assets rather than paying cash. | | | | depending on the asset being financed. These rates |
| These assets include Cars, trucks, plant and | | | | vary but at present are approximately 7.5% fixed |
| machinery. | | | | depending on what asset is being financed and term |
| These assets are increasingly being turned over | | | | of loan |
| every 4 – 5 years as technology improves, | | | | 2. Use a particular finance product such as Chattel |
| general wear and tear increases from demanding | | | | Mortgage, Hire Purchase, or Finance Lease. With a |
| work loads and the taxation life of assets shortens. | | | | Chattel Mortgage – customer owns the asset |
| So why not just pay cash!! It’s been a great | | | | from the day one, can claim GST up front and |
| year in business, we have plenty of cash and we | | | | interest / depreciation over the term of loan. Hire |
| may as well just pay for the asset outright. | | | | Purchase – Hire it now with an option to own |
| Well this might be true, but what happens next year | | | | later. Claim interest / depreciation over the term of |
| if sales slow and funds are not there to cover | | | | loan. Finance Lease – Finance company purchases |
| business overheads and expenses. This is where | | | | the asset; you enjoy full benefit of asset for regular |
| financing becomes a valuable part of any business | | | | repayments, with finance company disposing of asset |
| and following are many of the benefits associated | | | | at end of term. |