This year’s EOFY frenzy is set to be exciting as COVID hangover effects, asset delivery delays and Australia’s hot vehicle market are all thrown into the mix.
We take a look at what this means including some important information to keep in mind.
The current outlook
Nodifi is seeing an increasing number of clients getting their finances ready in time for expected car delivery delays.
These delays are mostly the result of global supply chain disruptions, in particular chip (semiconductor) shortages.
According to Price My Car’s delivery date estimator, big brands such as Toyota, Nissan and Subaru are all seeing wait times at over 100 days, with Isuzu at over 200 – depending on the model.
In terms of individual models, the Mercedes-Benz S450L luxury sedan is pegged at having the shortest wait time of 43 days while buyers of Toyota’s RAV4 will have to wait 270 days.
At the time of writing, the average wait time for a new car in Australia is 124 days.
Most experts put production relief in late 2022 or early 2023 when chip shortages are expected to ease but this won’t mean an instant end to vehicle shortages.
It’ll take several months for backdated orders to be filled before consumers in Australia can feel a return to normal or a “new normal”.
What it all means
Put simply, it means that anyone looking to get into a new vehicle (consumer or commercial) soon, won’t be doing so.
And, that means extra pressure on EOFY deadlines as more and more buyers look to secure purchases earlier in order to meet June 30 plans. This, of course, is especially true for SMEs who typically ensure their books are aligned for the financial year ahead.
It’s these businesses that are applying pressure to EOFY deadlines as they look to make the most of government initiatives such as the temporary full expensing measure.
Temporary full expensing (refresher)
If you’re not familiar with this Australian Government initiative, it basically allows businesses to claim an immediate deduction for the full cost of eligible assets. Temporary full expensing is one of several measures in a suite of tax incentives designed to help businesses recover from the pandemic.
To encourage investment, temporary full expensing allows the deduction of the full cost of eligible depreciating assets of any value.
Eligible businesses
A business may be eligible with an aggregated turnover of less than $5 billion. Additionally, a corporate tax entity that meets the ATO’s alternative income test may also be eligible.
Eligible assets
Assets include new and used vehicles, processing equipment, tools and computers for example, among others.
Eligibility criteria includes
- NEW assets first held by you at or after 7.30pm AEDT on 6 October 2020 until 30 June 2023
- USED assets first held by you at or after 7.30pm AEDT on 6 October 2020 until 30 June 2023 and your aggregated turnover is below $50 million
Improvements
Businesses may also be able to claim on improvement costs to assets that they may have incurred if they meet the criteria below:
- Improvements incurred between 7.30pm AEDT on 6 October 2020 until 30 June 2023
- Existing assets that would be eligible assets except that they are held before 7.30pm AEDT on 6 October 2020 until 30 June 2023
Note that only the business portion of an asset can be claimed, for example if a vehicle is used for 50% business and 50% private use, only the 50% for business purposes can be claimed.
Check out the full details here.
What this means for brokers
It means alerting your clients so that they can align themselves with wait times and June 30 deadlines.
Commercial clients
When working with commercial clients, offering a free financial health check is a great way to A: touch base and B: ensure that they are aware of potential options.
Some commercial clients may qualify for low or no-doc finance which can be an attractive option as these applications are simplified, requiring less documentation (hence the name).
Ensure that you’re well versed in the following commercial assets
Consumer clients
Consumer clients looking to make the most of any plate clearances or other discounts from dealers will need to get in quick to ensure they secure purchases in time for EOFY.
Furthermore, Nodifi often sees buyers looking to use tax returns as deposits on vehicles which means reaching out to your consumer clients to ensure they’re aware you can assist in July/August when returns hit bank accounts.
Deadlines
Something not unlike past years is the importance of giving your application the best chance of settlement before the EOFY.
For Nodifi partners, ensure all new applications and required supporting documents are received no later than 5.00 pm (AEST) Friday 17 June.
As always, every effort will be made to process your application as quickly as possible, but lender assessment queues and processing times are out of our control.
Current lender time frames
Below is a guide only of a handful of lenders and their assessment and settlement time frames. Note that these time frames can change daily.
*times listed are in AEST
Pepper
- Credit Assessment: 4 business hours
- Documents: 1 business hour
- Settlement: 4 business hours
Firstmac
- Credit Assessment: 4 business hours
- Documents: 6 business hours
- Settlement: 2pm next day from submission for settlement
Westpac
- Credit Assessment: 2 business days
- Documents: 4 business hours
- Settlement: 1 full business day
Angle:
- Credit Assessment: 2 business days
- Documents: 6 business hours
- Settlement: 6 business hours
Latitude
- Credit Assessment: 4 business hours
- Documents: 1 business hour
- Settlement: 6 business hours
Metro
- Credit Assessment: 2 full business days
- Documents: 1 business hour
- Settlement: 2 business hours
Wisr
- Credit Assessment: 3 business days
- Documents: 6 business hours
- Settlement: Same day if submitted for settlement before 2pm
Plenti
- Credit Assessment: 6 business hours
- Documents: 6 business hours
- Settlement: Same day and loan contract signing
Money3
- Credit Assessment: 2 business days
- Documents: 4 business hours
- Settlement: Same if submitted for settlement before 2pm
Finance One
- Credit Assessment: 6 business hours
- Documents: Full business Day
- Settlement: Same day settlement before 12pm
To summarise
The EOFY is always a great time to touch base with your clients and ensure they are aware of any potential options and opportunities.
If you’d like to know more about lender cutoff times (of those not listed above), get in touch with your Relationship Manager.
