Purchasing Equipment from a Private Vendor
Most Lenders prefer to finance new equipment from established reputable suppliers.
That said, opportunities often arise to purchase quality equipment by way of private sale and there are Lenders who will cater for this market:
- An inspection of the goods will be required before payment can be made
- A valuation may be required
- If there are multiple pieces of equipment, invoices for each piece will need to be provided
- The interest rates will almost certainly be higher than for new equipment
Importing equipment from overseas, direct from suppliers is increasingly common.
However, it is not without its pitfalls:
- Potential savings can be quickly eroded by exchange rates movements
- Incorrect documentation can lead to issues, delays or even loss
- Problems that arise are less easily rectified than may be the case with a local supplier
- After sales support and servicing may be lacking
The foregoing said, there can be advantages and savings to be derived by importing the equipment you need.
If you intend to pursue this option, it is important to use a specialist who understands both equipment and import finance. Not a generalist financier.
We suggest to our clients that a Letter of Credit be established that converts to a Leasing Facility, after the goods have arrived in Australia and have been inspected.
This approach can provide suppliers peace of mind and help avoid many common pitfalls.
Seek Accounting and Tax Advice
Finally, it is important to seek input from your Accountant to ensure from an ownership, structure, and tax perspective, the purchase will provide the maximum benefit for the business.
It may only take a quick phone call, but it is something that can help you avoid costly mistakes and later regret!
Financing Equipment Summary
Assisting clients with finance for the equipment they require is something I love!
Every business and its circumstances are unique! Tailoring the finance to suit their situation is something I find truly rewarding.
As I have outlined there are many elements that need to be considered to ensure maximum benefits are derived and mistakes avoided
If you are thinking about Equipment Financing and would like to learn more, don’t hesitate to get in touch.