Certain assets show more demand in winter. We take a look at those assets that typically see an increase in demand during the colder months of the year.

Just as these assets typically see stronger volume in summer, others heat up during winter.

Key Takeaways

  • Assets like agricultural machinery, trucks and yellow goods see high volume in winter
  • Truck finance is often split into three categories; full doc, low doc, no doc
  • There’s a large market for new and used yellow goods, including agricultural machinery
  • Boat finance typically declines during the winter months, however, due to border closures, demand is still strong

Assets in winter

Over a normal year, some assets see higher volume in winter – ‘normal’ meaning prior to 2020. These often include trucks, yellow goods and agricultural machinery. Consumer assets like caravans and camper trailers see less enthusiasm.

Taking the pandemic’s effects on international travel into account, caravans / camper trailer demand is expected to continue this winter – this has been evident throughout June.

Vehicles with high towing capacity, namely 4×4 utes and SUVs, are also sharing strong interest during these months – something not typically seen in years gone by.

Motorbikes and boats are examples of assets that don’t fare so well in winter.

EOFY

Winter is home to the industry’s most significant period; the end of the financial year. Across the board, asset finance typically sees higher volumes in June, often carrying over into July.

The pandemic push

Australia’s recovery from the global pandemic, helped by government stimulus packages, has been kind to the asset finance industry. This has been especially noticeable in assets that support domestic tourism. These include:

  • Boats
  • Jet skis
  • Caravans
  • Camper trailers

Finance can be arranged for new and used assets, from private sellers and dealerships.

General parameters

  • Age of asset: 20-25 years at end of term (can arrange no limit)
  • Min lend: $5,000
  • Defaults: max two unpaid totalling max $5,000
  • Private sale: possibly requires inspection / Redbook

Trucks

Truck loans are often financed as ‘chattel mortgages’ or ‘lease agreements’. Chattel mortgage means the truck is listed as an asset under the borrower’s business.

This is different from a lease where the lender ‘owns’ the truck and the borrower pays to lease it with the intention of owning it when all repayments are made. The truck is not listed as an asset under the borrower’s business.

Often truck loans fall into one of three categories;

Full-Doc
All financial documents are required. For example, BAS statements, bank statements and ABN and GST registration.

Low-Doc
Some financial documents are required such as bank statements and payslips. Typically for clients with 12 months or more trading under ABN and a clean credit history.

No-Doc
Lenders do not require financial statements to assess the deal.

Yellow goods / Agricultural machinery

This asset class consists of construction equipment such as earthmoving machinery like excavators, loaders and bobcats. It also includes large-ticket items like cranes and bulldozers.

Agricultural machinery such as tractors, harvesting equipment and sprayers are also typically listed as yellow goods.

Yellow goods finance, like truck loans above, are typically acquired as no-doc, low-doc or full-doc loans. Low and no-doc options are preferable as the process is generally simpler and smoother.

A large market exists for yellow goods, with lenders providing various finance options for new or used assets, with the ability to purchase through a dealership or via private sale.

Rates
From 2.85%, however, can be negotiated with larger ticket items over $100,000 depending on various factors.

Notes
Yellow goods are typically measured in operating hours rather than mileage. They are also often sold with numerous attachments, like different types of buckets or drilling equipment.

Boats

Although these assets typically see more volume in the warmer half of the year, the pandemic has bucked the trend.

As more people choose to stay in Australia due to coronavirus border closures, watercraft settlements have seen significant growth, especially in spring and in the lead up to summer.

Australia-wide, jet ski settlements increased by 13% in 2020, a result of travel-starved Australians looking for alternatives to annual overseas holidays.

Documentation
Depending on the client profile, often all that’s required are payslips (3-6 months) and identification.

Insurance
All watercraft must be comprehensively insured.

Notes
There are finance options available for both private and dealer, new and used assets.

Rates
Consumer rates start from 3.85%.

Lend amounts
From $5,000.

Winter assets in summary

Offering competitive and diverse asset finance solutions is a powerful revenue stream, and winter can certainly be your time to shine.

With Australia’s strong pandemic recovery in full swing, now is an excellent time to show your clients how simple it can be to finance some not-so-standard assets.

Don’t forget that your Nodifi relationship manager is one call or email away should you require any assistance.

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