When an employee of a small business applies for finance of a motor vehicle, a lender is generally satisfied with a few payslips from their employer to help satisfy capacity to repay.
Ironically, the employer, who could be deemed responsible for the income of that same employee, if applying for motor vehicle finance, is frequently put to far more scrutiny by a lender.
A lender when considering finance for a business employer, before making approval, will commonly seek comfort in the businesses standing by sifting through varying types of data which can include everything from their business financials, personal tax returns, bank statements, BAS statements, and both business & personal ‘assets & liabilities’.
Whether it be pursuing finance from their own bank or perhaps via a motor dealer, for the employer the application process is slower, more complicated and perhaps more difficult to obtain an unconditional approval.
There is an easier way
The goods news is that there is range of major Australian lenders who offer competitive motor vehicle finance for businesses without the hassle of having to provide extensive financial information, in fact, in many cases they require no financial information at all.
However these lenders requirements are all different which can make it difficult for a small business to find the best competitive solution that suites their individual scenario.
Requirements for no-financials finance applications vary between lenders based on factors such as:-
- Is the motor vehicle New or Used?
- If the vehicle is used, how old is it?
- Is the vehicle being purchased from a dealer or from a private supplier?
- How long has the business been operating?
- Does the business or business owners have some equity in real estate?
Is there a catch?
So why do some lenders require extensive financial information where others don’t?
In many cases these lenders assess motor vehicle finance on 1) a full assessment basis with financial information required OR 2) on a non-financials basis where no or little financial information is required.
Whilst some lenders do charge a higher interest rate for a perceived higher risk, most choose to remain competitive regardless of how they assess the application.
These tick and approve style applications require little to no financial analysis, reducing staff costs and speeding up approvals. The lower running costs of the no-financials product gives lenders the opportunity to remain interest rate competitive and fast to approve in a market that demands it.
When a proposed no-financials application doesn’t fit the lenders policy, the lender can optionally take safe guards by requiring additional information to undertake a full application assessment.
Finding the right lender
As previously mentioned lenders have varying application requirements. These requirements frequently change based on factors such as competition, market demand, historical data & the state of the economy.
Business owners can do the leg work & search the internet to try and sort through the many financiers for their application requirements. Their search may help identify a small selection of possible lenders. But this will not be easy as unfortunately many lenders do not advertise or even publicly disclose their application policies.
An alternative approach would be to utilise the services of an experienced equipment finance broker firm such as Broadlink who specialises in business finance, with strong relationships with business lenders, and access to the application policy requirements of those lenders.
Broadlink’s familiarity with lender application policies is not the only reason you might take this approach, Broadlink also has a strong understanding of the lenders that:
- currently offer the most competitive interest rates
- require the minimum of information
- provide the easiest & fastest path to approval
And why not enlist the help of an experienced business equipment finance broker like Broadlink. The customer in most cases is charged no fee for the service, rather the lender pays the broker for work that the lender themselves would have otherwise had to bear the cost of.
See here for more information about how an equipment finance broker is paid.
It’s a win for the customer, with the broker doing the leg work for them, and gaining access to a full range of lenders competing for their business.
You can get more information about No-Financials Motor Vehicle Finance here
Disclaimer: The information in this article is not intended to, and should not be relied upon, to provide tax, legal, investment or accounting advice. You should consider whether the information is appropriate to your needs, and where appropriate, consult your own tax, legal, investment or accounting advice.