A Cautionary Tale

Some people who are in the process of buying a new car might be a bit sceptical about the whole thing. They might be coming from the angle that you pay less if you can buy a car for cash and if you don’t have a whole lot of money saved up, you have to be content with buying yourself a more humble car rather than some flash new thing. Well, this idea does have some merit to it. It is certainly that the less you borrow, the less interest you’ll have to pay. And it is also true that if you aren’t rolling in bucks, you are wise not to buy the new flashest car in the sales yard.

But you can go too far in this direction. Sometimes, what you’ll pay in interest when repaying a personal car loan turns out to be less than what you can end up paying if you buy a car that’s too cheap and a bit dodgy. Here is a true cautionary tale that happened to someone this writer knows. Names of people and a few identifying details, such as the make of car, have been changed for privacy reasons, but apart from that, this is a fair dinkum story.

Tony had managed to land a regular job in the building industry and was getting a steady income. Nothing stellar but enough to pay the bills and have a bit left over to pop in the bank. At this point, Tony didn’t have a car but used the good old pushbike to get to work. So far, so good. But Tony wanted to get himself a car, as it was getting a bit much to bike to work and then slog away all day doing physical manual labour and then bike back again when he was tired. Winter was approaching, too, and although biking on a sunny day makes you feel virtuous, healthy and financially savvy, biking in the rain is pretty miserable and sets you up for being soaking wet all day unless you have somewhere to change. So it was time to head down to the second-hand car yards.

Now, Tony could have used the money he had saved up as a deposit and then found a loan package that let him pay off a manageable amount per week. But Tony thought he was far too smart for that and decided to use the amount he had in the bank as his maximum price limit. Now, this would have been OK if he had a bit more tucked away in the bank  you can pick up a reasonable and reliable car for a four-digit price if you shop around. However, Tony didn’t have that much tucked away. It was four digits, but it was in the lower end of the four-digit figures.That was the first snag. The second snag was that Tony had a particular fancy for one particular make of car and wanted to get that sort and no other.

Tony found a car of the type he wanted for the price he wanted and felt very smug for a while. But then the problems started. Now, the sort of car that Tony loved wasn’t a sports car or anything of that sort but good examples of that car tend to cost a bit more than Tony wanted to pay. If you pay what Tony paid for his, you can expect problems. And the problems certainly came. What’s more, the cost of labour and parts at the local garage to fix the darn thing were well beyond what Tony could manage comfortably, and the mechanic wasn’t as flexible about weekly repayments as a loan company would have been. So it was DIY time.

At the time of writing, Tony’s car is up on blocks in his garage getting worked on during the weekend. All the spare money is going towards buying spare parts, and probably costs him as much as the loan repayments would have done if he had taken out a loan and got a better car. And Tony’s still biking to work every morning!

The moral? If you’re on a budget, it sometimes can be wiser in the long run to buy a slightly more expensive car and get a loan out for it than to buy a cheap old banger that falls to bits and costs you more in the long run. Either that or put up with the pushbike for longer until you have the funds to pay cash for it.

Coffee Beans and Counting Beans

Business loans are good things for small start-up businesses and larger outfits alike. Usually, it’s the larger people who come to talk to us about setting up novated leases for vehicles or taking out a business loan to purchase some new equipment. And we know how to handle that. We also know how to handle things if we’re approached by one of the little people (and we don’t mean habbits) about business loans to get a vehicle for a small business.

Now, with a number of small businesses, you can use your usual vehicle for most of the work, and you might need to have a chat to a friendly accountant about what you do regarding claiming expenses back against tax, GST and all that sort of thing. But there’s one small job that offers a lot of flexibility and fun that requires a vehicle to get started: mobile coffee baristas.

Mobile coffee baristas are becoming more and more common, and the job usually requires having a special vehicle set up to do this. Not many of us have a spare car of the right sort sitting around ready to convert into a mobile coffee shop, so if you want to work for yourself, are keen about coffee and like getting out and about in your community, you are probably going to need to borrow a bit of cash so you can buy the car and kit it out with all the bits and bobs needed to make great coffee.

You’re going to need a fairly sizeable vehicle to start up a mobile coffee service. For a start off, you need something that has a fifth door so you can open up the back and make the coffee, but a little hatchback just isn’t going to do the trick. You need something with a bit more space than that. Nor will a ute do the trick, as it’s best to have all your stuff under cover  you’re going to need paper cups, remember. The best thing to look out for is a large MPV, an SUV or a 4×4. You might want to consider getting signage on the side of the car, so don’t forget to include the cost of this when you think about the amount you want to borrow.

You also need the coffee making equipment. Naturally, this means a caf quality espresso machine and probably a small bar fridge as well to keep all the milk in (and maybe the flavourings so you can offer flavoured coffee options). These will need to run on something, so look out for a vehicle that has power outlets sprinkled around the place.Petrol/diesel generators are pretty noisy and are likely to put your customers off, and although we get a lot of sunshine in our part of the world, you probably aren’t going to be able to power your equipment off the size of solar panel that can fit in or on a large car  assuming that you can fit one at all.

After these basics, it’s up to you. You probably need a good supply of paper cups and tops to go on them, ordinary milk, trim milk, soy milk, sugar, chocolate, marshmallows, tea and possibly some herbal tea into the bargain. You might also want to sell biscuits. Don’t forget a chalkboard or whiteboard to advertise your prices!

Where do you go with your mobile coffee machine? Just about anywhere that people gather: sports matches, markets, skate parks, malls Where two or three people are gathered together, somebody probably wants a coffee!

Why You Might Need A Bike Loan

Hands up all those who think that this article is going to be about motorbikes and being approved for a loan so you can buy yourself a new motorcycle  or so you can get the school leaver in your family a form of transport that’s relatively cheap to run so he or she can get to that first job next year. Well, we can certainly help you with this process and some of our posts earlier this year have covered issued to do with motorbikes and how to choose them.

But that’s not the only sort of bike you might need a loan for. These days, if you want a really good one, you might even need to take out a loan to buy a pushbike. Yes, a pushbike. While you can still find bikes of the sort that most readers knew when they were kids (and at the same sort of prices that won’t break the bank or require a loan), a really good bike can cost more than a second-hand car.

Bikes have come a long, long way in the last twenty-odd years, and they’ve been developing much faster than cars have. Twenty years ago, a really good bike had 12 gears and a car had five. Now, a really good new car has eight gears but a top-range bike can have 24 or more. Bikes have got lighter, too, with the best ones being made of pure carbon fibre. Add in suspension and you have something lighter, faster and capable of tackling rougher terrain than the old BMXes we used to muck about with. No wonder these bikes cost well into the thousands  and why you may need to take out a loan to buy one for yourself this Christmas.

Why are bikes getting so good? These top-notch bikes aren’t just the domain of professional mountain bikers, stunt cyclists and Olympic racers. These bikes are being used for commuting; hence the demand for better, more efficient machines. There’s also a bit of a prestige thing going on  if you do decide to ditch the car and cycle to work for whatever reason, and you’re the manager, it looks a bit better if you have a very, very good bike parked in the workplace parking space rather than the rusty old clunker you’ve had since high school. Lighter bikes are also more compatible with other forms of public transport, as it’s easier to get a carbon fibre bike onto a bus or train than a big steel or even aluminium one.

The one big advantage that a bike has over a car is that it will eventually pay itself off in savings  you don’t need petrol to fuel a bike (and you’ll probably save on gym memberships). This means that if you do take out a loan to buy a good bike, you will be able to put the money you would have spent on petrol into the weekly repayments. This brings out another advantage of taking out a loan to buy a good bike rather than saving up and getting one in six months time: having to make those weekly or fortnightly repayments helps you stay motivated to keep using the bike for your commute so you don’t have to pay for petrol as well as the weekly repayments.

When you buy your bike, don’t forget the other bits you’re going to need. You will need a good helmet and possibly some high-viz gear for daytime.You’ll definitely need lights for night-time and you will also need a very heavy-duty security lock. There are tons of other accessories to consider to make your bike commute better, from gloves to rainshield for backpacks, so you might like to allow for purchasing these if you are considering a loan for a bike.

OK, we probably aren’t going to see people doing a salary package involving a top-of-the-line pushbike in the near future. But if you’re considering your transport options for the year ahead and a cycle commute (with or without public transport for part of it) is feasible for you, then why not think about getting one of the great new bikes that are out there these days and taking out a loan for one of these instead of buying a second-hand car? But car, bike or motorbike (or boat, or ride-on lawn mower, etc.), remember to talk to us about the sort of loan you need so you can find the best deal possible.

Bigger, Better, Brighter and Cleaner

A lot of people who want to start off their own businesses look at cleaning services and starting their own contracting service. After all, everywhere gets dirty and needs a clean!There have been a number of stories about people who started off small but who ended up with big companies that take care of some of the big commercial cleaning jobs around the city.

But too many people don’t make the transition up from regular house cleaning services to bigger commercial services. There’s one reason for this: capital. You see, if you want to tender for a bigger commercial job, even if your first big job is as a school janitor or cleaning your local sports club, you probably need some better equipment than what you’ve already got. Sure you can start off with just a few brooms, mops, dusters and vacuum cleaners and they’ll get you enough to feed your family and pay the bills if you put in the work. But the time may come when you’d like to go up a notch or two and go for the bigger jobs. For this, you’ll need some heavy-duty equipment and if you don’t have the money in the bank account, this means that you’ll need to apply for an equipment loan.

So what are your options when you want to add some industrial cleaning equipment to your toolbox? Sure, if you have the option of getting an equipment loan for your small cleaning business, it might be tempting to try for a loan that’s big enough to get the lot. However, it’s always to grow slowly and not to over-commit yourself with the repayments. Sure, you’ll get more business with the new machine, but you don’t want to be stuck with massive weekly repayments that mean you’re in a tight spot if something goes wrong one week  there’s always that client who’s a bit slow to pay and you’re still going to get sick and want a holiday now and again. Just start with one or two items of heavy-duty equipment and pay them off before you get a third.

We’re loan brokers, which means that the ultimate decision about what new industrial cleaning equipment you should get is really up to you. You’re the professional and you know what sort of thing is most in demand. But if you’re still just at the stage of thinking about it, here are a few suggestions to get you thinking:

  • Water blasters: Best used outside and are great for cleaning off moss and mould on house exteriors as well as on driveways and patio areas.
  • Carpet cleaning machines: Deep cleaning carpets is one of those things that every household and every office should do annually, but carpet cleaning machines aren’t your average piece of household equipment. This service is bound to be in demand. Look out for units that have spot cleaning and upholstery cleaning attachments to really broaden the spectrum of services you offer. These range from small pull-along machines (cheap) to large truck-mounted units (expensive).
  • Polisher/scrubbers: A must-have for anyone tendering for office or school cleaning contracts, as these places tend to have acres of hard flooring which needs to be scrubbed and polished on a regular basis.
  • Vacuum cleaners: We’re talking industrial strength vacuum cleaners here, not little dinky domestic ones that have to be emptied every ten minutes. One thing you might want to keep an eye out for is a wet/dry model, meaning that you can do wet areas as well as carpeted areas, or backpack models that make it easy for you to do stairs safely without lugging a heavy thing on wheels up behind you.
  • Chimney cleaning rods, etc.: People still have wood fires so chimney sweeps are still in demand, especially in the cooler parts of the country.

Whatever you decide on getting so your fledgling business, don’t forget to talk to us before signing the dotted line for any loan. Ask us questions, even if they seem dumb. Do your homework. And we wish you all the best for your future success.

Let’s say that a few years ago, you started out as a small-scale contractor doing things like lawn mowing, window cleaning or home cleaning. And so far, your business has been doing pretty good. But you know that you can reach a bit higher and provide more services  and do a better job of what you do  if only you had an extra bit of equipment. You might want a stump grinder, a ride-on lawnmower, a set of scaffolding or an industrial strength steam cleaning machine (or whatever piece of equipment suits the next step you want to take with your business). You could go for the big commercial contracts and you know that the demand for what you want to do is there.

But there’s one small snag preventing you from taking that next step. Your business has been doing well, but you haven’t got that much stashed away in the account for purchasing a new asset for the business. This is where you need to start shopping around for an equipment loan so you can borrow the money you need to finance the new step. Well, you’ve taken the right step by coming here and reading this article.

Getting out a loan or a lease for business equipment is the same as getting out any other loan, really. You need to do your homework and ask all the questions before you sign on the dotted line. You need to make sure that you (or in this case, your business) can manage the weekly, fortnightly or monthly repayments (don’t forget to work out which of these would suit your situation best). And the usual rule about having a generous deposit so you don’t have to borrow as much applies.

You also need to ask a few questions that relate to business finance  have a yak to your accountant and do a bit more homework. If this is the first piece of big equipment that you’re buying for your business, you might need to work out what to do with assets and depreciation when it comes to accounting. You also need to ask about what is and isn’t a business expense that you can claim back against tax. And if your business has enough turnover for you to worry about GST, you need to find out what to do about that when you purchase your new asset.

And I know it’s not pleasant to contemplate, but you also need to work out what you’re going to do about your loan and whether you can manage it if your new business venture doesn’t prove to be as profitable as you thought it would be. Will you be locked into a lease agreement for ages? Can you re-sell the asset to raise the funds to pay back the outstanding amount? And can you manage the repayments now with what you are currently earning rather than relying on the extra you’re pretty sure you should be able to earn with the new piece of equipment?

Of course, there’s a good chance that your new venture will succeed, especially if you persevere and do a good job. We wish you the best of luck with it, whatever it is.