Last Updated: 31st May, 2021

Heavy vehicle finance can allow you to buy trucks, trailers and heavy-hauling vehicles for your business.

There are many options available but an experienced equipment finance broker can find a competitively-priced loan that set up to match your long-term business goals.

How much can I borrow?

You can borrow up to 100% of the value of the truck or heavy vehicle and another 50% for business cash flow purposes with select lenders.

Generally speaking, you need to meet the following criteria:

  • Borrowing limits subject to truck valuation.
  • Standard trucks, trailers and semi-trailers are more likely to be accepted.
  • Your financials must show evidence of a profitable business (low doc options available).
  • You need at least 3-5 years business experience.
  • Some lenders will accept minor defaults (typically up to $7,000) but black marks must be clear from your credit file.
  • A director’s guarantee, and a fixed and floating charge (Bill of Sale) over the vehicle will be used as security.

What loan features are available?

  • 5-7 year loan terms.
  • Some lenders offer negative equity rollover when you trade-in.
  • Fixed rate principal and interest (P&I) payments (interest only not available).
  • Business Line of Credit, overdraft facilities and offset accounts are available.
  • Balloon or residual payment structures available (typically up to 30% of the vehicle value) to reduce your repayments.

Call us on 1300 889 743 or fill in our online enquiry form to discover if you qualify for heavy vehicle finance.

What types of trucks do lenders accept?

We know lenders that will accept a wide range of trucks and trailers.

For example, it is common for any one logistics business in the building industry to own a variety of trucks and trailers because there is a market need for their services.

Some of the types of trucks and trailers that select commercial lenders will consider include:

  • Belly dump trailers (typically used in quarry and excavation industries for transporting soil and rock).
  • Car carrier trailers.
  • Dolly trailers.
  • Livestock trailer (heavy rigs that transport everything from cattle and chickens to sheep and pigs).
  • Low load trailers (they generally have a load rating of 200 tonnes and they are designed for transporting mining and excavation equipment).
  • Refrigerated trailers.
  • Side lift trailers (for container transport operators).
  • Tanker trailer (for transporting water, fuel, diesel, bitumen or other bulk liquids).
  • Tipping trailer.

Lenders are more likely to accept vehicles that are not purpose-built and can be used for a wide variety of commercial purposes.

However, if you can show proof of a genuine business case, a strong application will allow you to get approved for the finance you need.

Which truck and trailer finance solution is right for you?

  • Finance lease: The lender purchases the truck and leases it to you for an agreed term, after which ownership hands over to you and you have the option to either trade in or refinance your lease.
  • Commercial hire purchase: This is also called asset purchase and is similar to a finance lease except your business immediately owns the truck once the final payment is made.
  • Novated lease: A novated lease gives your employees an option to lease a truck or trailer of their choice and retain ultimate responsibility for it while you make the lease payments by making deductions on their pre-tax income.
  • Chattel mortgage: The equipment is owned by the business but will be used as the primary security against a mortgage over the vehicle.
  • Sale and hireback / sale and leaseback: Generally, this type of finance is only available with rigs purchased in the last three months.

As you can see, some of these options give you the opportunity to own the truck at the end of the loan term while others do not.

Improving your chances at approval

Approval for truck and trailer finance, like other business loans, will be considered on a case by case basis.

A mortgage broker that specialises in asset finance can assess your needs and find a lender that can offer you favourable terms.

However, the following factors will increase your eligibility for heavy vehicle finance.

Business experience

Lenders will consider business owners with at least 3-5 years experience in the same industry more favourably than an applicant who has just started their business.

There are exceptions to this rule depending on your previous industry experience.

For example, if you need a livestock trailer for your pig and cattle agribusiness, lenders will be more willing to work with you have had past experience in successful livestock management.

Work references will help strengthen your case.

Income evidence

Banks generally want to see your last two years business financials including:

  • Screenshots of your last 2 years ATO tax portals.
  • Business Activity Statements (BAS).
  • Your last 2 years balance sheets showing profit and loss as well as assets and liabilities.

In some cases, business turnover needs to be 1.5 to 2 times the proposed interest expenses on the truck and trailer finance. This is known as the ‘serviceability ratio’.

However, there are low doc options available, which can be helpful for businesses with less than 2 years ABN.

Lenders will instead rely on alternative or alt docs like your interim financials for the most recent financial year supported by an accountant’s letter or your last 3 months’ bank accountant statement.

A 30% deposit deposit is typically required if your business is less than a year old.

Business plan and SWOT analysis

If you’re a relatively new business, and depending on how many trucks or ancillary equipment you want to purchase, the lender may ask you to provide a detailed business plan.

The business plan should detail the expected return on investment from purchasing the vehicles.

The bank will then run a SWOT analysis, an acronym standing for strengths, weaknesses, opportunities and threats.

We recommend that our clients sit down with their accountant to discuss their business plans to determine the commercial and tax benefits of buying a heavy rig.

Will banks accept used trucks?

Yes! It’s common for logistics and transport business to purchase vehicles through sites like Trade Trucks, Truck World and Truck Sales.

For other types of vehicles and equipment, lenders will generally only finance new assets.

Trucks and trailers are instead viewed as work horses that have a longer road life and are usually retained by businesses for a longer time than a business car.

Don’t sign the sales contract until you have received an indicative approval from the lender subject to a valuation.

Simply call us on 1300 889 743 or complete our online assessment form and tell us about the truck or trailer you want to purchase.

How are trucks valued?

The valuer will consider whether the sem-trailer is in an “average” or “good” condition as well as:

  • The kilometres on the odometer.
  • Any accessories that have been fitted.
  • Supply and demand in the local area.
  • Any current or historical damage.
  • The load bearing capacity of the vehicle.
  • Whether the truck is purpose-built, which can reduce the overall valuation

Can I claim depreciation and other expenses through tax?

Yes, there are tax benefits for purchasing a truck or trailer for commercial purposes.

It’s best to speak with your accountant first but, generally speaking, you can claim such expenses as:

  • Fuel and oil.
  • Repairs and servicing.
  • Interest on your commercial truck finance.
  • Lease payments.
  • Insurance.
  • Registration.
  • Depreciation.

Can I claim negative equity in a trade-in?

Negative equity is when your commercial truck is either valued or sold for less than the loan amount owing on the loan.

For example, let’s say run a transport business for local fisheries and you borrowed 100% to purchase a refrigerated trailer valued at $30,0000, plus another 30% against the vehicle value as a business line of credit.

This brings your total truck and trailer finance to $39,000.

After 5 years, you still owe $25,000 in finance but you’re looking to upgrade to a newer model.

You go to the dealer and they offer you $19,000 to purchase the refrigeration trailer.

Instead of paying down the $6,000 difference upfront, some lenders will allow you roll over some of this negative equity into your new truck finance when you refinance.

Discover if you qualify

Simply call 1300 889 743 or fill in our online enquiry form to get started today.

We can guide you through a range of other business and commercial loan solutions depending on your needs.