Truck loans explained: Rates, documentation, eligibility and more

Vish Tandon

Wednesday, 04 August 2021

If you’re in the market for a new truck, you might be considering financing. You might also have a few questions about how truck loans work, in which case you’ve come to the right place!

If you’d like to compare or apply for truck finance now, give us a call on 1300 780 568 or shoot us an enquiry so we can start searching for a truck loan that ticks your boxes.

What is truck finance and am I eligible for it?

Commercial truck loans are designed to fund vehicles needed for business use and depending on your preferences, there are a few types to choose from.

Truck loans fall under equipment financing, a subset of business finance used for funding equipment including vehicles, yellow goods and machinery.

Our lending experts can help you determine the best type of truck financing for your needs. We can also confirm your eligibility for truck financing without the need for a formal credit application by carrying out a soft check. This won’t affect your credit score whatsoever.

Eligibility for truck financing depends on your credit history, financial health and time trading as well as the strength of your business. These factors will also determine your rate when you are approved.

Keep in mind these are just a few of the factors considered and each lender will have their own set of approval criteria.

Is truck finance worth it? How much are repayments?

Dipping into savings or cash flow is a risky move and should only be considered in emergencies. Truck finance allows you to purchase and use the vehicle you need right away without having to sacrifice your business’ security.

Repayments vary depending on your lender and situation but generally, you can expect your truck loan rate to sit somewhere between 5% and 30%.

After taking out truck finance, many business owners find that the returns make up for their initial investment. But if you’re still unsure, we can crunch the numbers and help you figure out if truck finance is worthwhile in your specific situation. Simply chat with one of our experts on 1300 780 568.

Types of truck finance

There are three main types of truck finance to choose from. They are:

Hire purchase agreement

With a hire purchase agreement, you'll pay instalments to ‘borrow’ a commercial truck from your lender, and once you've paid it off, your lender will transfer ownership of the truck to you.

Hire purchase agreements are typically flexible—for example, some lenders will let you put down a deposit to lower interest rates, while others might let you return the truck during your repayment term if it’s no longer needed.

Chattel mortgage

With a chattel mortgage, you can purchase any eligible truck with borrowed funds from your lender, and then repay those funds with interest. Your truck will double up as collateral (or security) for your loan, meaning you won't have to put existing assets on the line.

No down payment is necessary either—you can often borrow up to 100% of your truck’s value. If you become unable to meet your repayments though, your lender might be able to sell your truck to recoup losses incurred. But rest assured, lenders see this option as a last resort.

For your truck to be considered an ‘eligible asset’ it’ll need to be used for business purposes at least 50% of the time.

Equipment lease

An equipment lease lets you borrow commercial vehicles and pay a monthly instalment over an agreed period of time to use it. Your lender will technically own the asset but you can use it for business needs.

At the end of your equipment lease, you might have the option of purchasing the vehicle (meaning ownership will be transferred from your lender to you), or upgrading it and taking out a new lease.

Documents to have on hand when applying for truck finance

When you’re ready to apply for truck finance, it’s worth having a few documents on hand to ensure your application runs as smoothly as possible.

While required documentation will vary from lender to lender, generally you can expect to be asked for the following:

  • Identification (drivers license or passport)
  • Proof of income (in the form of recent payslips and bank statements from the past three months)
  • Proof of your current assets and liabilities
  • Information about the truck you’d like to purchase (including make, model and registration information if you have it)

Finding the right truck loan for you

The right truck loan for you depends on your preferences and financial situation. If you value flexibility or plan on using your truck temporarily, a hire-purchase agreement may suit your needs best. If you don’t have security or cash upfront, you might like to consider a chattel mortgage.

We also have options for those who need truck finance quickly, and can get you approved in as little as 24 hours.

With hundreds of products to choose from, searching for the right loan and lender is a time consuming task. That’s what our experts are here for.

We can help you navigate the truck finance market and ultimately find a loan that gets you on the road quickly and affordably. Call us on 1300 780 568 or fill out this two minute form to get started with your free, no-obligation truck finance quotes.

Vish is a Credit Manager here at Valiant specialising in equipment, vehicle and fit-out loans. He enjoys assisting our lending experts and keeping up-to-date on the latest in business finance.

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