How To Build a Finance Plan

A finance plan helps individuals and businesses organise asset purchases, manage repayments, and preserve cash flow. It is critical for securing assets while maintaining financial stability. A clear plan reduces risk, ensures better loan approval, and allows for strategic investment decisions.

Step 1: Identify Asset Needs

Create a list of all assets you need to purchase or upgrade, from vehicles and equipment to lifestyle assets like boats or caravans. Planning ahead allows you to compare lender options, interest rates, and loan structures.

Step 2: Review Cash Flow

Evaluate current income, business turnover, and expenditure. Consider seasonal fluctuations and upcoming obligations. Understanding cash flow ensures monthly repayments are sustainable and prevents over-borrowing.

Step 3: Explore Finance Options

• Secured Loans: Lower rates for vehicles, machinery, or equipment.
• Hire Purchase: Ownership transfers after repayment.
• Finance Lease: Suitable for businesses seeking short-term use with end-of-term options.
• Unsecured Loans: Flexible options with faster approval but higher interest.

Step 4: Determine Loan Terms

Decide on term length, monthly repayment capacity, and whether to include a balloon payment. A broker can model scenarios to show the impact on monthly cash flow, total interest, and residual risk.

Step 5: Secure Pre Approval

Pre approval sets a borrowing limit, gives negotiating power with dealers, and prevents overspending. It also provides clarity on which lenders are best suited for your asset type.

Step 6: Factor in Contingencies

Include a buffer for unexpected expenses, such as maintenance, insurance, or interest rate changes. For businesses, this ensures continuity during low turnover periods.

Step 7: Review and Update Regularly

Circumstances change over time. Annual reviews of the finance plan help adjust for growth, cash flow changes, or asset upgrades, keeping your strategy aligned with goals.

Practical Example

• Scenario: A business planning to upgrade three vehicles. Pre approval shows they can borrow $150,000. Comparing hire purchase vs finance lease options highlights differences in monthly repayments and residual value exposure. The plan ensures cash flow is preserved while achieving asset goals.

FAQs

Should a finance plan include emergency funding?
Yes, it’s important to account for unexpected costs or seasonal business fluctuations.

Can a finance plan cover both personal and business assets?
Yes, provided loans are structured appropriately for each asset type.

Conclusion

A structured finance plan offers clarity, control, and confidence. Pre approval, budgeting, and careful loan term selection are key to sustainable borrowing and effective asset acquisition. For tailored support, contact us today.