How does a Sale / Buyback Work?

This type of finance is where a loan is raised (by way of Lease, Chattel Mortgage or Hire Purchase) against an item of heavy equipment that is owned outright and free from any encumbrance.

Features of a Sale / Buyback Facility

  • Allows a client to purchase equipment very quickly to secure the sale, whilst allowing them to be reimbursed for the purchase
  • Funds can be raised for working capital purposes or engine repairs
  • Facility can be structured as a Finance Lease, Chattel Mortgage or Commercial Hire Purchase
  • funds are paid directly to clients bank account giving them control of the funds

Benefits of a Sale / Buyback Facility

  • facilitates access to funds in the event of an emergency (i.e. engine rebuilds or mechanical repairs for trucks or heavy machinery)
  • gives client the ability to raise funds for working capital requirements
    tax deductibility at end of the financial year
  • as funds are paid directly into the clients bank account, it allows them to control how the funds will be used
  • if a client needs to move on the purchase of a particular item of equipment at short notice (by paying cash) a Sale / Buyback Facility allows them to raise finance against the goods after the fact

Example of a Sale / Buyback Facility used for Truck Finance

  • Purchase Price of 5 year old Kenworth Tip Truck – $165,000 (gst inc)
  • Finance Type – Chattel Mortgage
  • Loan Amount – $165,000 (gst inc)
  • Term – 60 months
  • Balloon – 30% or $49,500
  • Payments – monthly in arrears

 Outcome

  • Client found this tip truck on the internet one day before a Ritchie Bros Auction and had a feeling that it would go for a good price. Client therefore rang our office for some funding options regarding truck finance, to which we suggested a Sale / Buyback
  • This option for client meant that they could secure the tip truck for a great price at short notice
  • A regular Chattel Mortgage agreement was drawn up for the client which allowed them to claim depreciation and interest as a tax deduction and reduce tax paid to the ATO
  • Client was able to maximise working capital position as the $165,000 was deposited back into their nominated bank account a few days after payment was made to Ritchie Bros

Who would use a Sale / Buyback Facility?

A Sale / Buyback facility would be used by businesses in the following situations;

  • Need to purchase a truck or heavy equipment at very short notice in order to secure a good price for the equipment
  • A transport business whereby major repairs need to be completed on a truck – ie gearbox or engine rebuild
  • In the event that a business requires a cash flow injection for working capital purposes

Heavy Vehicle Finance advises that all clients discuss a particular funding scenario with their Accountant before making a decision on what product to use when considering truck finance or the finance of any type of heavy equipment.

Want to ask more questions about a Sale / Buyback Facility?

To discuss how a Sale / Buyback facility could help your business, please call one of our Finance Consultants on 1300 788 740. One of our specialists Finance Consultants will be able to suggest the best product relating to your particular funding scenario. Or alternatively you could also fast track the process by completing our online finance pre-approval form.

NEED FINANCE FOR A HEAVY VEHICLE FAST?

DON’T WASTE TIME

GET APPROVED ONLINE NOW!

or Call 1300 788 740