Most Popular Asset Finance Options in Australia
A business is nothing without the tools of the trade, and the equipment you need to maintain operational continuity. If you are a printer, you
The demand for business loans in Australia has remained high with post-Covid recovery and a strong economic climate for SMEs. More and more business owners are exploring credit instruments to fund their operations and grow their businesses. If you are looking at your business loan options, you are probably comparing them by their interest rates. However, as experts will tell you, this approach is not enough. You need to analyse your interest rates in greater detail to uncover the best value while looking for loans. Whether you want short-term business loans or long-term financing, understanding your loan costs is essential for making the right choice. Let’s discuss how you can get the best value from your business loan!
The lender charges an interest rate based on several factors. Here are the top aspects that play a role in determining your interest rate:
While the interest rate is a critical component of your loan cost, it is not the only consideration. Your business loan can have other costs like:
All these costs may or may not be present in the loan of your choice. However, you should read the loan terms in detail to identify these additional costs. You can also have some rebates which lower your overall loan costs. Accounting for all these amounts can help you calculate the final cost of the loan.
Annual Percentage Rate (APR) can reflect the total cost of the loan taking into account the reducing balance of the loan amount after each perioding repayment. Here is an example to understand how to calculate the APR:
Now, say if the loan needs to be paid in 52 equal weekly installments, the APR consdering the reducing balance at teh end of each week comes to 10% p.a.
Your final choice will depend on your priorities. You can consider the trade-offs between mortgaging an asset and paying higher interest to understand what the rate means for you. At the same time, you should consider the repayment term while comparing APRs. An extended loan period is usually less costly than a shorter repayment window. All these factors interact with your business circumstances to help you determine the best value for your loan.
If you need help choosing a business loan that works for you, reach out to the experts at Broc Finance today!
Saroj is the Head of Lending at Broc Finance. He comes with 13+ years of experience in small business lending and has a knack of structuring complex deals and get the best outcome for his customers.
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