A Vendor Finance Loan Agreement allows the Vendor or Seller of slow or overstocked items the option of being able to make extra sales from their existing stock whilst using that stock to secure their loan agreement with their clients. It’s a Win-Win situation for all parties involved.
Loan Agreements for All Circumstances
Debt Prevention Strategies
Hi, welcome to CCA OR Collection Consultancy Australia and today we are going to discuss one of our Loan Agreements, in particular, our Vendor Finance Loan Agreement. Now a Vendor Finance Agreement can be used a couple of different ways. The main idea to a Vendor Finance Agreement is that the Vendor actually finances the purchase of a piece of equipment or a piece of stock to their client whilst using that piece of equipment or stock as collateral for the loan agreement. This can be done via a PMSI Security Interested which stands for Purchase Money Security Interest. Your PSMI Security Interest is registered on the PPSR OR Personal Property Security Register thereby maintaining your ownership of the piece of equipment being Vendor Financed ensuring that should the borrower default in payment you are able to repossess the piece of equipment.
Now a Vendor Finance Loan Agreement can be used a couple of different ways. First it can be used to finance those one or two pieces of equipment that is still sitting in the warehouse that haven’t shifted or end of line product. Or alternatively some of our clients use it as their main way of doing business.
We have a client who uses our Vendor Finance Loan Agreements to sell of all things, Vending Machines to their clients. Their clients actually purchase the Vending Machines over a period of a couple of years, our clients still maintain their ownership of the vending machines as collateral for those agreements, so that if their clients default in payment, they have the option of simply repossessing the Vending Machines. But most importantly their Vendor Finance Agreements are registered on the PPSR OR Personal Property Security Register.
Now we do have other videos on the PPSA or Personal Property Securities Act which shows exactly how the PPSR or Personal Property Securities Register works, but essentially by registering on the PPSR the Vendor or the person providing the loan is maintaining absolute security by still retaining ownership of that piece of equipment with the same protection as the banks.
This is without a doubt the most important aspect of using a Vendor Finance Agreement.
OK, when it comes to setting up the loan on your behalf the process is straightforward, but as you can appreciate there are several variables. The first one would be the entities involved in the Vendor Finance Loan Agreement. Whether they are a business, company or Trust we need to make sure we have the correct entity details. The second variable would be interest rate, this includes if you are going to charge an interest rate, what that interest rate might be. You might elect not to charge an interest rate or decide that you are just going to charge a flat fee. It is totally up to the person or entity extending the credit.
Another variable would be the costs. You may decide to include the Vendor Finance Agreement establishment costs into the loan itself, that way minimising any upfront costs to the borrower, and instead spreading the establishment costs out over the period of the loan agreement.
Another variable might be the inclusion of a balloon payment at the end of the loan period thereby reducing the monthly loan payments. It is totally up to the parties involved to decide on how they want the loan established.
Direct Debits, or direct debiting the loan repayments from the borrower’s bank account is another way of trying to ensure the loan progresses smoothly over the period of the loan and helps eliminate defaults in loan repayments which can be debited on a weekly, fortnightly, or monthly basis.
We also use electronic signatures when setting up the loan agreement which means that all parties can sign the loan documentation using their finger on a smart phone or tablet which helps dramatically with the initial setup on the loan documentation.
Now once you have your loan established, the reason you would purchase a Vendor Finance Loan Agreement through CCA or Collection Consultancy Australia excluding our direct debit facility or the ability to secure your Vendor Finance Loan Agreement is our Loan Management Dashboard.
Now this is your very own Vendor Finance Loan Agreement Dashboard which provides access to your Vendor Finance Loan agreement, which you can log into at any time, available 24/7. This is where you can view your loan repayments, you can see which payments have been made and which are still outstanding. You even receive automatic notifications of any defaults in loan payments by the borrower. Your Personal Loan Dashboard is the centre piece of your loan management functionality with various other options available.
Your Vendor Finance Loan Agreement Dashboard is where you can adjust you Loan, you can adjust the loan amount, you can adjust the loan period, you can even top up the loan. You simply renegotiate the loan with the borrower. You might decide to extend the period which you can do through your Vendor Finance Loan Agreement Dashboard, a new loan would just automatically start. You can even defer payments and add additional payment onto the end of the loan, you can even forgive or cancel the loan. It is totally up to yourself.
So having your own Vendor Finance Loan Agreement Dashboard provides complete flexibility not available anywhere else.
Now the only other aspect we need to look at is your investment for your Vendor Finance Loan Agreement, which is only four payments of $325 per Month. It’s a very small investment which remember, can be paid by the borrower which can be spread out over the life of the loan.