Truck finance

What is truck financing?

Truck financing can help provide the funds your business needs to purchase a heavy vehicle. Rather than paying the full purchase price of a truck upfront, truck financing allows you to enjoy all the benefits of owning a truck but with the freedom and flexibility to pay it back over a period of time.

However, just like any other type of commercial vehicle finance, the way truck loans work can vary substantially based on the finance option you choose.

What trucks can I finance?

There are truck finance options available to help you purchase an extensive range of heavy vehicles including:

What are the types of truck finance?

There are several types of truck finance available to help you purchase a heavy vehicle for your business:

• Finance lease. Under this arrangement, the lender purchases a truck on your behalf and then leases it back to you. This gives you all the benefits of ownership, including full use of the vehicle for your business, even though you don't actually own the truck. Monthly lease repayments are required, allowing you to budget in advance, and when the lease ends you have the option to pay out the remaining value to purchase the truck.
• Commercial hire purchase. If you choose a commercial hire purchase, your business hires a truck from a lender for a predetermined period. Your business doesn't own the vehicle during this period but you will need to make fixed monthly repayments. Once the term ends and you've paid off the full price of the vehicle, you take ownership.
• Chattel mortgage. A chattel mortgage involves a lender providing the money you need to purchase a truck, and you are then required to make regular repayments to pay down the loan amount. You get to immediately enjoy all the benefits of vehicle ownership and also take advantage of the security of fixed repayments. However, the lender also takes out a mortgage over the vehicle as security for the loan, and this mortgage is only removed when the loan term ends and you've repaid the money you borrowed.
• Personal loan. A personal loan is only really an option for purchasing a truck if the vehicle will be used for both personal and business use. However, the higher interest rates that apply to personal loans mean that they are usually not a viable option for most people.

How to compare truck finance options

Consider the following factors when comparing truck financing solutions:

• Loan term. How long will you have to continue making regular repayments towards the truck? Remember that while shorter loan terms may mean larger repayment amounts, longer loan terms may increase the total cost of the loan.
• Interest rate. The interest rate has a huge bearing on how much you will need to repay each week, fortnight or month, as well as the total cost to you over the loan term. Compare interest rates across multiple finance providers.
• Fees. Will you need to pay any upfront fees or ongoing monthly charges? These can quickly add up, so make sure you're aware of all fees that apply, including penalties for late payments.
• Repayment amount and schedule. Can the repayment schedule be tailored to suit your business's cash flow? Also, take a look at how much your regular repayments will be and calculate whether this is an amount you can realistically afford.
• Tax treatment. Depending on your business and the truck finance option you choose, you may be able to claim your business loan or lease repayments as a tax deduction. Ask your accountant for advice on which finance solution could be the most tax-effective choice for your business.

Truck financing risks and traps

Before you choose a truck finance option, make sure you're aware of the following risks:

• Getting in over your head. Before you sign anything, make sure the regular repayment amount is at a level your business can comfortably afford.
• Buying the wrong truck. Research your new truck purchase thoroughly before you commit any funds. This will ensure that you get a truck that meets all your needs and that will be affordable to own and run.
• Not getting expert advice. Commercial vehicle financing is a confusing and complicated area, so don't hesitate to ask for advice on the available options. Your accountant or a trusted finance broker can help you determine which truck financing product is right for your business.

How to select the right truck for your business

With such a wide range of high-quality heavy vehicles in Australia, it can be difficult to know which truck is the best fit for your business. Consider the following factors before making a decision:

• What you need to use the truck for. This will obviously be the first and most important factor when choosing a truck. Are you transporting heavy goods, refrigerated items, or do you need a tipper truck to discharge a load? As well as these functional aspects, you'll also need to consider who will be using the vehicle and whether or not they'll need to obtain a special licence.
• Performance. How efficiently can the truck you're considering get the job done? Is it fast, durable and frugal with fuel? The last thing you want is to sink a whole lot of money into a vehicle that isn't up to the task or costs a fortune to run, so do plenty of research before purchasing.
• Safety considerations. How safe is the truck for drivers and passengers? How safe is it for occupants when involved in 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 intervals and maintenance needs. Do you research to find out how often your truck needs servicing and what sort of regular maintenance it will need. Servicing and maintenance costs for heavy vehicles can be very expensive, so make sure you're aware of what to expect before you buy.
• Appearance. If your vehicle is going to be out on the roads and highways of Australia representing your business, don't underestimate the importance of looks when choosing a truck.

Need to manage cash flow?

If your business has a few outstanding invoices, invoice financing could be an option to effectively manage your cash flow. It's a type of business loan that comes with reduced risk, no asset requirements or interest payments.

Compare invoice financing products below.

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Name	Product	Min. Loan Amount	Max. Loan Amount	Loan Term	Upfront Fee	Filter Values
Waddle Invoice Finance		$10,000	$4,000,000	From 1 month	$0		Apply to borrow up to $4 million against your unpaid invoices and receive your approved funds within 48 hours.	Go to site More Info	Compare	loading Fetching your data...
Timelio Invoice Finance		$10,000	$100,000,000	Up to 4 months	$0		Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.	Go to site More Info	Compare	loading Fetching your data...
ScotPac Invoice Finance		$10,000	$150,000,000	From 1 year	No set amount		Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.	Go to site More Info	Compare	loading Fetching your data...
ScotPac Selective Invoice Finance		$10,000	$1,000,000	1 to 3 months	$500		Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.	Go to site More Info	Compare	loading Fetching your data...
Earlypay Invoice Finance		$50,000	$15,000,000	From 1 month	No set amount		Access a revolving line of credit that grows in line with your accounts receivable. Funding available from $50,000 to $15,000,000+.	Go to site More Info	Compare	loading Fetching your data...
Octet Invoice Finance		$100,000	$10,000,000	1 month to 2 years	No Set Amount		Convert up to 85% of your company's receivables into cash flow. The value of your receivables need to be worth at least $250,000 to be eligible.	Go to site More Info	Compare	loading Fetching your data...
Earlypay Trade Finance		$20,000	$15,000,000	1 month to 15 years	No set amount		Get finance for 100% of your outstanding supplier invoices. Borrow from $20,000 to $15,000,000 with Earlypay.	Go to site More Info	Compare	loading Fetching your data...

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FAQs about truck loans

Which truck finance option is right for my business?

This depends on an extensive range of factors, including everything from the type of business you run to your current financial situation. Ask your accountant for advice tailored to your business.

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

This depends on the finance option you select, but it is a feature of some truck loans.

Can I get financing to buy a used truck?

Yes, there are lenders who can help you find financing to buy a used vehicle for your business.

I'm starting a new business – can I qualify for truck finance?

Yes, but you will usually be required to pay an upfront deposit or offer another asset as security for the loan.

How can I find the best rates for truck finance?

The best rates are generally offered to operators who have been in business for several years, can provide comprehensive financial statements, has a good credit history and has assets to offer as security.

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