What is a SMSF?
2nd May 2022
Irrespective of whether you are a new business or a veteran, the process of taking out truck finance can be daunting.
Purchasing a truck is a large financial commitment and understandably many businesses, no matter the size, may not have the cash flow to purchase a new or used truck outright. Even corporate giants in the transport industry rely on commercial finance products to assist with the purchase of heavy machinery.
So, let's answer some of your truck finance questions and help you get your new truck on the road and watch your business grow!
Points to keep in mind when getting a truck on finance:
Consider all the finance solutions available to your business
You have decided to make a truck purchase and are looking for the best truck finance solution to meet the needs of your business. There are three main types of heavy vehicle finance to consider:
- A chattel mortgage - this type of truck financing is a loan secured by the chattel, in this case, the truck or trailer. A chattel mortgage allows the business owner the opportunity to tailor the loan term and monthly payments to meet the needs of the business.
Unlike other equipment finance options, a chattel mortgage passes ownership of the vehicle to the business at the commencement of the loan term. This means there are no limitations on the use or modification of the truck.
To keep your monthly payments low, you can opt to make a balloon payment at the end of the finance period. If you don't have the finances to cover this balloon payment at the end of the term, you can always refinance the balance into a new loan.
- A commercial hire purchase - this type of business finance works in a similar way to a chattel mortgage. The business pays a monthly payment for a fixed term. It is important to remember that with hire purchase, ownership is not transferred to the business until the final payment is made. You may have limitations on the use and any modifications until the truck financing is paid in full.
3. Operating Lease - if you are a new business or do not qualify for more traditional truck finance, leasing options may be an alternative to get the vehicle you need. You will have flexibility with the lease term and may have the opportunity to purchase the truck for an agreed residual value when the agreement ends.
Do your research
With so many lenders offering equipment finance, it can be difficult making the right choice when it comes to truck loans. Remember, low-interest rates don't always mean the best value for money. You should always consider the comparison rate and read the fine print. You should look for any hidden fees and charges, including fees for paying out the loan early. Also consider other factors such as the monthly repayment, repayment term, down payment, etc.
There may be factors that impact your application
Not all truck loans are created equally. There are factors that may impact your ability to qualify for equipment finance:
The age of the vehicle
Many businesses don't have the option of buying a new truck. Quality used trucks still qualify for a truck loan. However, while the purchase price of older trucks may appeal to small business owners, it comes with an increased risk to both the lender and the business.
Purchasing an older asset may limit the lender's willingness to provide financing and the term of the equipment finance offering. Hence increasing the interest rate, reducing the term of the truck loan offered, and increasing the monthly payments.
Older trucks also come with the risk of downtime due to breakdowns as well as additional maintenance. So, the cheaper cost may be negated by the future impact on the business's cash flow.
Having the right paperwork
When arranging to finance, you need to be prepared with your paperwork. When applying for a truck loan, you may require some or all of the following:
- 2 years' financials for both you and your company
- held an ABN for 2 years
- registered for GST
- rates notice if you have the property (while this is not essential, it can result in a cheaper interest rate)
- 6 months of bank statements
- depending on the age of the truck, you may need to have it inspected prior to the purchase.
Not able to provide the appropriate paperwork?
If you don't have financials available for the last two years and are looking to purchase a new truck, you may still qualify for a low-doc loan.
Sound like hard work?
Do you have the time needed to find the right truck loan and the best deal for your money? It can be time-consuming! That is where the services of an experienced finance broker can help.
Reasons to utilise the services of a finance broker:
Make the process of finding a truck loan or equipment finance easy by utilizing the services of a commercial finance broker. Wondering why? Here are a few points that will give you a clearer idea.
1. Best deals:
With multiple lenders in the equipment finance market, businesses can find it daunting to find the right finance solution to meet their business needs. Unless you are experienced in the field, it can be a time-consuming challenge.
A truck finance broker helps you make the right decision. They will give you details on the types of truck loans available, whether a for a new truck or an older truck.
A finance broker will help you understand the different types of truck loans available to you. They can also explain balloon payments and other aspects of equipment loans you may not be sure about.
2. Hassle-free process:
A truck finance broker takes the time to get to know your business. So, you can be sure they will always act in your business's best interest. They will save you time, money, and energy by taking responsibility for the major legwork. With a panel of equipment finance specialists, they will find the right finance to meet your own individual needs.
They will explain all your options, any hidden fees, and the terms and conditions. So, you can be sure that you are choosing the truck finance that's right for you. However, their involvement doesn't end there!
You won't even need to complete the paperwork. Your finance broker will work through the application, seek finance approvals and arrange the documentation. Meaning, in most cases all you will need to do is sign on the dotted line.
3. Wide choice of options:
An experienced finance broker will have an extensive range of equipment finance lenders on their panel. From Australia's leading lenders to smaller equipment finance specialists, a finance broker will find a deal and interest rate to suit just about everyone.
4. Maintain credit score:
Did you know that applying for a loan can damage your credit score? Every time a lender conducts a credit search on your financial profile this will appear on your credit report and can lower your credit score.
Working with a finance broker removes that worry. With their industry experience, they will only apply for truck finance through lenders whose criteria your business meets. Thus, you have a lower chance of your loan being rejected.
5. An option for all:
If you haven't held your ABN for two years or you are concerned about past credit issues, there may still be suitable truck finance options, still with competitive interest rates available to you. Talk to a finance broker with equipment finance experience, as they may be able to come up with a low-doc solution.
Finance brokers NSW: The best truck finance brokers:
Your truck finance questions are answered! With nearly four decades of experience, Finance Brokers NSW is a leader when it comes to truck finance and equipment finance solutions.
Our finance brokers are experienced at finding finance solutions market. So, you can be sure of getting the best advice.
We will help you find a great deal on your truck on finance anywhere in NSW.
Let us arrange finance on your next truck loan. Get in touch with us for easy applications on your next truck on finance.
