Equipment Finance

equipment finance

Equipment Finance 

As COVID-19 has heavily impacted most industries over the past 12 months, your business’s financial and personal wellbeing should be a priority in these uncertain times. Whether you are suffering from business hardship, loss of income, or reduction, NGR accounting plus connections with our referral partners, are here to help guide you through this unpredicting time.

In April of 2020, a 3-month repayment deferral on all eligible equipment and vehicle loans was set in place for business and individuals who have financially struggled throughout 2020 with income and the prepayment of loans. This deferral was extended another 3 months for all eligible customers through to September, making it an overall 6 month payment deferral.

This article specifically focuses on financial stress in relation to paying vehicle and equipment loans, with an aim of helping you become informed on all possible questions and solutions to your financial stress surrounding these loans.

What will happen when my 6-month loan deferral comes to an end?

First of all, if you are in a position to start your repayments again at the end of your deferral, do so.

However, if COVID has left you or your business in extreme financial difficulty and you need more time, talk to your bank. Your bank is here to help you through such an unpredicting time.

By reaching out your bank can help you learn about more options that are available to you, whilst they can also work with you to restructure your loan, possibly making you eligible for an additional further four-month deferral or other measures.

I’m nervous about telling my bank I’m in trouble: 

In such uncertain times seeking help is not something to be embarrassed about. Suffering in silence is not the answer.

Your bank wants to partner and help you through this difficult time. Getting people back to work whilst being able to keep them in their homes is what is in the best interest of all communities. Many banks are contacting their customers directly to see what help they may need.

However, if you are worried it’s very important that you contact your bank as soon as possible, as the earlier you contact and inform them that you are struggling or in trouble the quicker, they are able to provide their assistant to help you get ahead of the situation.

How will my loan deferral be reported if I was behind in my payments before the crisis? 

If you were behind in repayments before COVID started financially impacting industries, banks will not report the repayment history information for the deferral period, they will leave that field blank for the duration of the crisis deferral period.

Why is my bank still charging interest on my deferral loans? 

For every dollar, that an Australian bank lends, the regulation requires them to hold a certain amount of capital. If banks do not charge interest, even if the loan is deferred, the loan must then be treated as ‘impaired’ under the accounting and banking rules. The bank is then required to hold more capital to support that impaired loan.

If banks stopped charging interest on the hundreds of thousands of deferred loans during the COVID-19 pandemic they would not have enough capital to provide new loans.

Stopping charging interest on loans would not be in the best interest of Australian citizens and the need to support the economy is greater now more than ever.

Can I get an extension on my original deferral?

With COVID-19 affecting everyone to a different extent, customers who are experiencing reduced income and ongoing financial difficulty may be eligible for a further deferral period of up to four months.

This four-month extension is not automatic and not everyone will be eligible for it. It will only be provided to those who are genuinely in need of some extra help and time, due to being more heavily impacted by COVID-19.

During this extended time, they will be expected to work with their bank to find the best solution to assist them to return to repayments through a restructuring or variation of their loans.

What happens if I can’t make any more payments at all?

If you cannot make any more payments at the end of both the six-month deferral and the four-month extended deferral, then you will have to work closely with your bank on the best solutions moving forward that will address all your financial needs.

What can I expect from my bank during this time?

As banks are implementing phase two of their COIVD-19 support, they will continue to act in accordance with the Guiding Principles of the Banking Code of Practice and communicate in a clear and timely manner and treat customers in a fair and ethical manner.

Banks have also deployed over 500 extra frontline staff to help speed up response times, and to make sure that all individuals are being cared for by their bank during the pandemic.

With COVID-19 continuing to throw unexpected challenges at us all, now more than ever is the time to ensure that your financial wellbeing, whether that be individually or as a business is being taken care of to ensure that the pandemic does cause any more hardship than it already has.