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.