Refinance your business loan balloon payment

Breaking news - Business owners can now access up to $150,000 to refinance balloon payments on business vehicles including cars, vans, and utes. The balloon amount can be refinanced for up to five years and lenders are willing to proceed with minimal financial information. This means you will not be required to provide bank statements or provide on-site valuations for standard assets. Asset backed individuals along with those who are non-property owners will be able to access this product.

This is all well and good if you already have a balloon payment included in your ABN business finance facility. But let us start at the beginning and explain what a balloon payment is and how it can benefit your business.

What is a balloon payment?

Business owners who finance their business vehicles and equipment can reduce the monthly loan repayments by including a balloon payment. This is a lump sum payment due at the end of the loan term. In other words, your loan is split into two amounts. The first is paid back via regular monthly repayments and the second is paid as a lump sum when the loan terminates. The balloon payment amount can be as much as 50% of the finance amount.

How can a balloon payment benefit your business?

There are 4 major benefits of including a balloon payment as part of your ABN finance.

1. Reduced monthly repayments to maintain cash flow.

2. Get the right vehicle or piece of equipment NOW to help grow your business.

3. The ability to refinance the balloon at the end of the loan term – up to 5 years later. There is no crystal ball and being able to refinance the balloon adds flexibility for business owners.

4. Ability to upgrade and update vehicles and equipment on a regular basis whilst maintain affordability.

Common business ABN finance scenarios

The asset - A business owner who needs a new vehicle or piece of equipment. This could simply be an upgrade to a new work Ute with all the required accessories to increase work efficiencies, a larger truck to cater for the rise in transportation demands across the country or the latest and greatest automated piece of factory machinery.

The finance - ABN finance is a very attractive option for business owners. No doc and low doc car loans negate the need for masses of paperwork and a balloon payment option reduces the monthly repayments. Further benefits include low interest rates, tax breaks, maintaining cash flow, and set and forget direct debit repayments.

At the end of the finance term business owners have 3 options.

Option 1 – sell the asset, pay out the balloon with the proceeds of the asset sale and upgrade to a new vehicle using ABN finance. Paying minimal monthly repayments the cost of continually upgrading to a new vehicle every 5 year or so is very feasible.

Option 2- keep the asset and refinance the balloon for up to another 5 years. Again, this has the many benefits of ABN finance – competitive low interest rates, tax breaks, maintain cash flow, monthly loan repayments. This is a great option for plant and equipment that have a long-life span.

Option 3 – keep the asset and pay out the balloon with business profits. You now own the asset outright. Please keep in mind that some businesses can experienced cash flow pressure created by making residual payments at the end of the loan term.

The beauty of balloon payments is that you can make the decision at the end of the loan term dependent on business growth and performance.

Finance calculator with balloon payment option

Want to know how varying the percentage of the balloon affects your loan repayment? This easy-to-use calculator with balloon payment option lets you do just that! You will need to input a loan amount, loan term (up to 5 years with a balloon) and interest rate. Your interest rate will be dependent on your credit history, profile and the age and type of asset. Rates have been at all-time lows and are just starting to increase. Now is the time to lock in your rate before further interest rate rises.

Benefits of balloon refinancing

Balloon refinancing can be very appealing to business owners who can choose to have the best of both worlds – retain the asset AND free up working capital whilst maintaining cash flow.

• * Up to $150,000.

• * Business vehicles including cars, vans, and utes.

• * 1-to-5-year terms.

• * Minimal financial information required – no bank statements or on-site valuations for standard assets.

• * Available to both property and non-property owners.

• * Free up working capital.

• * Maintain cash flow certainty.

Access business ABN finance and balloon option

Finding a finance broker that you can trust is an essential part of your business tool kit. You are an expert in your line of work, and you need a finance expert in your corner. An experienced finance broker will save you time and money whilst protecting your credit rating. A broker is there to listen to your individual scenario and find the best solution from a vast array of lenders to achieve your desired outcome.

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