Truck finance

If you're looking to purchase your next heavy vehicle, there are several truck finance options available. These include finance lease, commercial hire purchase, chattel mortgage and business loans. Each option has its pros, cons and unique features so it's best to compare your options before deciding.

What is truck finance?

If your business needs a new heavy vehicle, buying it outright may not be financially feasible. With truck finance, you can get the benefits of owning a truck but without having to pay the full purchase price upfront. You will have the freedom and flexibility to pay it back over a period of time.

These loans work on the basic premise that you borrow money and will pay it back with interest over a period of time. But there are differences with regard to ownership you will have to take into consideration. We've outlined your options in detail below.

What trucks can I finance?

You'll be able to purchase an extensive array of heavy vehicles, including:

• Prime movers
• Refrigerated trucks
• Tilt-tray trucks
• Tipper trucks
• Livestock trucks
• Cement trucks
• Crane trucks
• Car carriers
• Pantech trucks
• Water trucks

How can I finance the purchase of my truck?

There are several ways to finance the purchase of your heavy vehicle. These include:

• Finance lease. Under this arrangement, the lender purchases the vehicle on your behalf and then leases it back to you. You will have the benefits of ownership and full use of the vehicle, but the lender will retain ownership. You'll be required to make monthly repayments up until the end of the lease term. After the lease expires, you could pay off the remaining amount on the lease and own the vehicle fully, or you could trade it or refinance the lease.
• Commercial hire purchase. With this option, your business will hire the vehicle from a lender for a predetermined period. Your business won't own the vehicle, but you'll need to make fixed monthly repayments. Once the total price of the vehicle has been repaid, the ownership of the car will be transferred to you. You're hiring the vehicle and not owning it outright.
• Chattel mortgage. With a chattel mortgage, you borrow funds to purchase a vehicle. You take immediate ownership of the vehicle and make regular repayments to pay down the loan. The loan will be secured against your vehicle, but you will have ownership of it. The mortgage is only removed when the loan term ends and you've repaid the loan.
• Business loan. There are a range of business loans you can apply for, including secured and unsecured options. This may be an option if you wish to use the finance for more than the purchase of a heavy vehicle.

How do I know which type of finance is right for me?

When choosing between finance options, there are a number of questions you can ask yourself to narrow down your choice. These include:

• Do you want to retain ownership of the vehicle? You may not want to be tied down to a depreciating asset, or you may have long term plans for the vehicle. If you would prefer a new vehicle at the end of the term, a finance lease may be an option. Depending on whether you want to own it, you can eliminate options.
• Can your business afford the repayments? Some options may require you to make a residual payment to take ownership of the vehicle. Ask yourself if your business can front the amount required. If you only have to make repayments over a period of time, work out what your business can reasonably afford to pay.
• Will there be a use for the vehicle beyond the loan term? You may need the vehicle for a short duration only, and it may not see much use in the long term. In such an instance, hiring a vehicle may be a better option.

How can I compare my truck finance options?

When comparing loans, you need to look out for the following:

• Interest rate. How much you pay in interest will affect your monthly repayments and the total cost of the loan. Comparing interest rates is a good way to check if the loan is competitive.
• Fees. As important as interest rates are, you should keep an eye on fees. This includes application fees and account-keeping fees. These will vary between lenders, so make sure you account for them. They will add to the cost of your loan. Some loans may offer low rates and high fees. This may work out to be more expensive, so keeping an eye out for fees is a good idea.
• Loan term. How long will you have to keep making repayments? With short loan terms, you can expect higher monthly repayments. But with longer terms, you pay more in interest and fees.
• Vehicle age requirements. If you're looking to buy a second hand heavy vehicle, there may be age requirements you'll have to comply with.
• Repayment flexibility. Look into whether the repayment schedule can be tailored to suit your business cash flow.
• Eligibility. You may not be eligible for all the loans. Look into whether you meet the lender's minimum criteria. This may include income requirements. Only apply for the loan if you tick all the boxes.
• Tax treatment. Depending on your business and the truck finance option, you may be able to get a tax deduction. Ask your accountant for advice on which finance solution is the most tax effective for your business.

What should I avoid with truck finance?

• Unaffordable repayments. Before you sign anything, make sure your business can afford the regular repayments. Do the repayments fit comfortably within your existing budget, or will you be left out of pocket?
• Buying the wrong truck. Research your new truck purchase thoroughly before committing any funds. This will ensure the truck you get meets all your needs and will be useful for your business. And, you won't be stuck paying for a vehicle that isn't useful.
• Not getting expert advice. Commercial vehicle financing can be confusing and complicated. Don't hesitate to ask for advice on what the best option for you is. Your accountant or a trusted finance broker can help you out with this.

How can I select the right truck for my business?

With such a large variety of high-quality heavy vehicles out there, it can be difficult to work out which truck is the best fit for your business. Consider the following before making a decision:

• Use. This is the most obvious and important factor when choosing a truck. What you want to use the truck for can help you narrow down your options. Are you transporting heavy goods, refrigerated items, or do you need a tipper truck to discharge a load? Apart from that, you also need to consider who will be using the vehicle and if a special license will be required.
• Performance. How efficiently can the truck perform its task? Is it fast, durable and fuel efficient? The last thing you want is to sink money into a vehicle not up to its task, or that costs a fortune to run.
• Safety. How safe is the vehicle for the driver and passengers? How safe is it for occupants in the event of an accident? Is it easy to get in and out of when on the road? Is there a comfortable sleeping cabin for drivers working longer routes?
• Service and maintenance. How often will your truck need servicing and what sort of maintenance will it need? Servicing and maintenance costs may be high for heavy vehicles. Make sure you're aware of what to expect before you buy.
• Appearance. If your vehicle will be out on roads and highways, don't underestimate the importance of looks.

How can I apply for truck finance?

🤔 Work out what type of finance you require, how much you need to borrow and what you can afford.

🔎 Start comparing lenders and loan products. Don't forget to compare interest rates, fees and eligibility criteria. You can use the comparison table on this page.

✅ Select a lender. Click "Go to site" to be directed to the lender's page, or "More info" if you want to read about the lender.

🖨️ Organise and prepare the required documentation. This will make the application process easier.

📱 Apply. Most lenders have their applications online.

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Frequently Asked Questions

• Will I need to make a balloon payment at the end of the loan?

  This will depend on the finance option selected. Balloon payments are a feature of some truck loans.

• Can I get financing to buy a used truck?

  Yes, there are lenders who can help you finance a used truck. You'll have to look into their age requirements for the vehicle.

• I'm starting a new business. Can I qualify for truck finance?

  Yes, but there may be requirements like a deposit or an asset as security. Make sure you take this into account when applying.

• How can I find the best rates for truck finance?

  The best way to get a good rate is by comparing your options. Don't settle for the first loan you find. Do some research, look into what's on offer. The rates you're offered may be influenced by factors such as credit history, security and business financials.

Written by

Alex Jeffs

Publisher

Alex Jeffs is the senior publisher for automotive content at Finder. He has tested vehicles everywhere from Tasmania to Oodnadatta. See full bio

Alex's expertise

Alex has written 62 Finder guides across topics including:

• Automotive industry
• Car finance
• Car insurance
• Personal finance