Delivering on Truck Finance

Whether you’re an owner-operator, operate a small number of trucks or you run a large fleet concern, there is a commercial finance product to suit your business structure.

The range of commercial finance facilities for truck loans include:

  • Chattel Mortgage
  • Commercial Hire Purchase (CHP)
  • Truck Leasing
  • Truck Rent to Own

Key Differences

The differences between each product include:

  • Suited to either cash accounting or accruals accounting method
  • Treatment of GST: not all elements of all loans, eg repayments, etc have GST applied and claimable.
  • Tax deductibility: with leasing and rent to own, the repayments are tax deductible but with Chattel Mortgage and CHP only the interest component is tax deductible.
  • Depreciation: leasing and rent to own are off balance sheet loan types and as such the business cannot claim depreciation. Chattel Mortgage and CHP are on balance sheet so the depreciation on the truck can be realised.

To decide which is the best finance type for your business is best done in consultation with your accountant as they will understand the accounting ramifications and be best-placed to outline the benefits for your business.

Key Similarities

Depending on where you source your finance and who you get to assist you, all commercial finance products can include:

  • Fixed interest rate for the term of the loan.
  • Fixed loan term – dependent on size of loan, age/value of truck, some lender guidelines.
  • Fixed monthly repayments or lease payments.
  • Balloon, residual or buyback: the percentage of the purchase price which is deferred for payment when all repayments are finalised.

Tips to Secure the Best Truck Loan

  • Most banks and major finance companies will offer truck finance. If not clearly advertised it may be part of their heavy machinery loan category.
  • To ensure you are getting the cheapest and best truck finance, you will need to source multiple quotes from different companies. This is time-consuming and applying for multiple loans can negatively impact your credit report.
  • If you choose to source finance yourself, you need to be aware that it could be a very time-consuming process. Time that you may consider is better spent working!
  • Many lenders have strict lending guidelines and very little flexibility to alter them to suit individual businesses.
  • If the bank doesn’t offer a specific truck loan category, they may offer you a generic machinery loan or business vehicle finance which may be at a higher interest rate.
  • Using a finance broker that specialises in truck finance is a solution to many of these issues. Head over to our Finance Broker webpage for more information

We know people that work in truck finance broking area and we can pass on their contact details to you. Just get in touch with us for further information.