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Truck finance – Get funding for your heavy business assets
Each day thousands of trucks criss-cross up and down Australia’s roads. It’s no surprise that trucking has been dubbed a billion-dollar industry in a recent National Industry Insights Report
. But if you’re familiar with the nuts and bolts of the trade, you’ll know that vehicles are one of the major costs saddling many businesses out there. Therefore, and to stay abreast of the competition, you might need a cash flow injection to keep your heavy vehicle count where it needs to be.
BestFind explores what you need to know about truck finance in Australia and how to find a tailored funding solution for your business budget and needs.
What is truck finance?
Truck finance is an innovative financial product that pumps working capital into your coffers so you can purchase a truck or heavy vehicle. This means you can easily outfit your business with what’s undoubtedly the major tools of the trade without also exhausting cash reserves.
Instead, you embark on a flexible repayment plan that can take up to 10 years and allows you to enjoy truck ownership benefits and hopefully smooth cash flow. Generally, businesses in Australia can arrange finance with their automobile dealer, finance specialists, or a suitable financial institution, although the terms will likely differ from lender to lender.
What type of trucks can I finance?
Whether you’re searching for big truck loans or commercial truck loans, the list of heavy vehicle types you can finance includes:
- Trucks and truck trailers – Box truckers, semi-trailers, semi-trucks, prime movers, tow trucks, etc.
- Transportation vehicles – Buses, vans, flatbed trucks, tankers, etc.
- Earthmoving equipment – Excavators, dump trucks, dozers, compactors, etc.
- Construction equipment – Cranes, forklifts, concrete transporters, etc.
- Mining equipment – Crushers, haul trucks, etc.
- Farming equipment – Tractors, farm trucks, livestock trucks, etc.
Truck finance options in Australia
Credit providers generally hand out truck finance deals with a spectrum of different arrangements:
- Chattel mortgage. A chattel mortgage gives your business the cash boost it needs to make a truck purchase. You then whittle away the debt through regular payments. Although you get to enjoy immediate ownership benefits, the lender takes out and holds a mortgage over the vehicle. However, this mortgage only hangs over your head during the repayment period. Once the lender receives their due, the mortgage will be lifted.
- Commercial hire purchase. With commercial hire purchase, you can evenly space out the cost of a new vehicle. As the name suggests, you hire the vehicle from the lender for a fixed period. During this time, you pay for the service via fixed monthly repayments. Once the time is up, ownership then turns over to you.
- Operating lease. An operating lease allows your business to record any heavy vehicles in use as operating expenses rather than assets. That’s because the trucks belong to the lender who cashes monthly repayments from you. When the lease expires, the lender also makes a profit by selling the vehicle, which usually still has residual value.
- Finance lease. Although the lender purchases the vehicle on your behalf, a finance lease also doesn’t grant ownership. But once the lease reaches a dead end, you have the option to cover the residual value if you wish to own the vehicle. As a second and third option, you can also return the truck or upgrade with a new lease.
- Business car loan. Besides trucks and trailers, business finance can also furnish you with a range of new or used vehicles, including motorcycles, work vans, or caravans. However, you can only apply if the vehicle services your business for at least 51% of the time.
How to choose the right truck finance option for your business
A side-by-side and like-for-like strategy is best when comparing truck finance options. Here’s what you should look at to arrive at a solution that’s right for your business:
- Finance costs. Don’t get too invested in a low interest rate. You also need to add up fees and charges to get an idea of the true cost. The comparison rate is a rough approximation if you need to gauge overall costs quickly. Beware of penalty fees that get triggered when you repay too early or too late.
- Repayment amount. Need to know what your monthly repayment will be? Our truck finance calculator will spit out an estimate once you tell it your preferred loan amounts and terms. As a heads up, longer terms tend to be kind on your cash flow while running up more total costs. On the other hand, taking less time to clear your debt makes more sense if you want to keep finance costs down.
- Repayment flexibility. Consider how you want to make repayments: weekly, fortnightly, or monthly. Check whether the finance provider allows for any of these options depending on what you want.
- Tax benefits. Some loans have business tax benefits built into them. For instance, you might be able to claim the vehicle as a deduction. Have a quick consult with your accountant to beef up your understanding of potential tax benefits, just in case.
- Lender’s product portfolio. As mentioned earlier, truck loans come with a stack of different arrangements. Make sure the lender has your preferred financial product in stock. Some lenders merely offer big truck financing, while others provide equipment finance for heavier and specialised machines.
What are the requirements for heavy vehicle finance?
To secure the best rates on the table, providers generally ask for the following to determine your financial standing:
- Personal tax returns
- Bank statements
- Profit and loss balance sheets
- Details of the vehicle you plan to purchase
How to get started on your truck loan application
The easiest way to apply for truck finance is through a comparison website like BestFind. Our product table and truck loans calculator at the top of this page will set you on the right path to what you need. Once you have a top choice, switch over to the lender’s application page by simply clicking “Go to Site.”
Truck finance FAQ
Can I use a personal loan to buy a truck?
Yes, but usually, personal loans should only be considered if you’re also planning to use the vehicle for personal errands. Additionally, personal loans tend to have higher interest rates.
Do I qualify if I’m starting a new business?
Truck finance is an excellent option if you’re setting up shop for the first time. If you qualify, you might even be able to finance more than one vehicle at a time.
Can I get a low doc or no doc truck loan?
Yes. You can also get the following special types of finance from some providers:
- Pre-approved truck financing
- New and used truck financing
- Bad credit truck financing
- No-deposit truck financing
Can I choose an option with a balloon payment?
If you wish to reduce your repayments, some Australian lenders allow you to opt for a balloon payment. This is a lump sum that’s only due at the end of your loan term.
Can I buy a truck from any seller?
You can generally buy a truck from either a manufacturer, dealer, auction house, or private seller.
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