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When saying no to the car loan means no to the home loan

26 Jul 2019 9:25 AM -

Customers have started seeking a “one-stop shop” for their finance needs. Therefore, asset and equipment finance is quickly becoming a natural extension from the home loan process. This is being used by savvy mortgage brokers to ring-fence their client,  creating a deeper and more longstanding relationship.

Asset Finance represents a quick alternative as another revenue stream to mortgages. If you have looked after all of a clients financial requirements, they will be less likely to refinance. However, on average consumers upgrade their vehicles every five years. Consequently, clients that may only ever have 1 property loan will still need your services for vehicle loans, debt consolidation, unsecured personal loans, a large number of cash flow solutions and asset and equipment finance.

As if you needed additional reasons to move into this space, have a look at the two examples below where the asset finance facilities have made the home loan possible:

Scenario 1: A broker has a consumer (PAYG) client looking to purchase an investment property

Problem: When they put in the repayment for the existing vehicle loan they could not verify capacity to service a new loan. They spoke to our team and asked if there were any options available. We had a look at the scenario and worked out even with new establishment fee’s and an increased loan term, the money they pay isn’t a much as the money they will make in rent with the new property purchase.

Solution: Our team paid out the existing facility and refinanced it over a 7 year loan term. This brought the vehicle loan repayments down by two hundred a month which made the new investment property loan possible.

Scenario 2: A broker has a self-employed client looking to buy his home

Problem: He had invested all his personal funds into the business and then found himself stuck. He couldn’t borrow with majority of lenders to grow his business and he also didn’t have a deposit for his property.

Solution: The broker contacted our team and presented us with this scenario. We were able to look at one of our cash flow lenders to pay back the client some of the personal funds he had invested in the business. We did this on an unsecured basis and were able to free up 60k. They then used this finance as his deposit for the property they were seeking to buy.  

Tip Time!

Please keep in mind, as much as you can help your clients by expanding your service offering, by not understanding the process or using a support team, you could be doing more damage than not doing it at all.
For instance, you could have a self employed client looking to purchase a piece of equipment for their business and you simply do a top up on the home loan. The client will then be potentially paying interest on that asset, long after the asset has passed its useful life.

The structure of these facilities can have all kinds of tax implications. Moreover, the same client could come back to you in 6 months hoping to secure a permanent overdraft facility and they won’t have any equity left because you have used it unnecessarily for the purchase of an asset. This may mean the business can’t accept a new contract as payment terms will increase and wages will need to be covered in the interim.

Happy to help.

If you are looking for a solution to assist your consumer and commercial clients with all asset/equipment and cash flow finance solutions  - but don’t yet have the knowledge and can’t justify the high costs associated with multiple accreditations, specialist systems or a full time specialist on the payroll – then NLG Leasing is the right business partner for you. If you would like more assistance, please contact the NLG Leasing team on 1300 722 011 or email