The client was a young, motivated self-employed removalist who owned a 5-tonne truck and was renting a second truck for the business.
The business was in upstart stage, having been trading for only 14 months at the time.
As enquiry volumes were steadily growing, the client was considering investing in a second, larger truck, instead of renting one.
The truck he wanted to buy was a second hand Mitsubishi Fuso Fighter 1024 Pantech – a 10 tonne truck which was worth $68,000.
When his accountant introduced him to us to obtain finance for the truck purchase, the client had already committed to purchasing the asset.
At face value, the deal didn’t tick many boxes.
The business only had one full year of trading history and financial statements were not yet finalised.
He was not able to contribute a deposit – although he had $20K to his name, he wanted to preserve this cash as working capital for the business, namely to hire another staff member.
The truck in question was second hand and a private sale, which came with no warranty and not all lenders can consider this asset.
The client lived at home with his parents, did not own property and has never had an asset finance facility before. The lack of a track record and/or property ownership is a flag for risk.
To add to the case, the client had a telecommunication default of $2,000 from 2 years ago.
Based on a detailed business plan and the 24 month cash flow projection, we packaged the credit paper together and presented it to a number of lenders.
Three lenders returned with an offer. We presented to the client all 3 options, representing different deposit requirements, paperwork needed and interest rates, as follows:
Given our client did not want to contribute a deposit, he chose Axsess today, reflecting his preference to preserve working capital over a lower rate.
We explained that the previous telecommunication default was not due to the client missing a payment, but his younger brother not paying for a phone plan as promised.
The interest rate on this loan was at the higher end of the market, reflecting the risks of the deal – 28% pa over 4 years.
There was an exit strategy of refinancing to a lower rate lender once his financials had been finalised.
The outcome for the client was the acquisition of a second truck to meet growing enquiry volumes.
A weekly principal & interest repayment of $618 per week meant the client was paying only $18 more than the $600 rental fee he was quoted for hiring the exact same vehicle.
