A range of Australian Equipment Financiers & Banks provide a stream-lined application & assessment process for businesses to replace their business equipment and motor vehicles via replacement finance.

If you business is currently making repayments on equipment or motor vehicles using chattel mortgage, hire purchase or lease, an opportunity often exists to make application for replacement finance. Your application may be stream-lined and approved with relative ease, usually without the provision of business financials.

Under what conditions may replacement finance be used?

Depending on the financier, replacement finance may be available in the following scenario’s:

• Replacement of equipment with SIMILAR equipment
• Equipment currently under finance, regardless of whether the finance is nearing finance term end.
• Equipment currently under finance, where finance is expiring and the last payment is falling due.
• Equipment is not under finance, where the finance was paid out or completed in recent months.
• Replacement of equipment with a DIFFERENT type of equipment
• Equipment currently under finance, regardless of whether the finance is nearing finance term end.
• Equipment currently under finance, where finance is expiring and the last payment is falling due.
• Equipment is not under finance, where the finance was paid out or completed in recent months.

Under the above scenario’s where the existing finance is still current, it must be paid out before, or upon financing of the replacement goods. Businesses would perhaps choose to payout the existing finance with trade-in proceeds, or from private sale of the equipment, or through existing cash resources.

The financier policies vary considerably on whether an application can be stream-lined:-

• Some allow qualification based on replacement of finance of another finance company, others do not.
• Funding different equipment is OK for some, but not others.
• The equipment type approved under this policy varies.
• The maximum amount financed varies and can depend on the goods type, the previous amount financed, and the repayments of the previous amount financed.
• If the finance to be replaced is still current, the amount of payments made so far.

So what are the benefits of using replacement finance?

• No-fuss easy finance application, usually without the need for the provision of business financials.
• The ability to upgrade equipment that is starting to show it’s age and perhaps become costly to run and maintain.
• When financial information is not yet completed by your accountant, replacement finance is an ideal way to apply for finance.

Does it cost more to use replacement finance?

In most cases, no it does not cost any more, financiers choose to remain competitive regardless of how they assess the application. Financiers use replacement finance to encourage sales and compete with others.

These tick and approve style replacement finance applications require little to no financial analysis, reducing staff costs and speeding up approvals. The lower running costs of the replacement product gives lenders the opportunity to remain interest rate competitive and fast to approve in a market that demands it.