Truck Loans | Heavy Vehicle Finance

Chattel Mortgage and Leasing are both very effective funding solutions for heavy vehicles. Neither is better than the other based purely on the features and benefits. The selection of which is the better product will depend on suitability to the financial objectives, accounting measures and approach to tax of the enterprise.

New owner-operators may not have all the documentation required for the application form. If not, they may consider Low Doc or No Doc options. These are categories of applications for operators without all the documentation. A situation typical of new operators. When approved  on a Low Doc or No Doc basis the operator may select from the range of funding products. The one which best matches the taxation approach, accounting methods and objectives of the operation would be deemed the most suitable or best.

When applying for truck funding, operators are required to provide a range of financial documentation and records as part of the application process. These can include BAS reports, bank statements, tax returns, annual accounts, trading figures, profit and loss statements and others. The quantity and specifics of what is required will vary depending on the lender. Holding an ABN and having identification is essential.

The same products are available for funding all types of trucks. They include Chattel Mortgage, Leasing, Commercial Hire Purchase and Rent to Own. The interest rates vary with the products and may vary with new and used vehicles. Specific conditions applied to individual offers may vary according to the age and condition of second-hand vehicles.

Where a vehicle and a trailer are purchased concurrently, the cost of both may be combined into the same lending package. This is subject to lender approval of the overall amount requested and other aspects of the application. Both assets must be acquired at the same time and in some cases from the same supplier in order to be combined into the one funding arrangement.

Yes. The same selection of funding products apply to all types of heavy vehicles. That includes electrified models, hydrogen cell and diesel models. The products include Chattel Mortgage, Leasing, Rent to Buy and Commercial Hire Purchase. Some banks and lenders may offer green vehicle funding for alternate fuel vehicles.

Refinancing is the process of replacing the current vehicle funding arrangement with a new lending arrangement. The new funding may be with the same product as the current arrangement or with a different product. Refinancing may be sourced from the same or a different lender. Exit fees will be charged by the lender for finalising the current contract prior to the end of the term. The refinanced arrangement would typically encompass all outstanding monies due on the current arrangement. That would include repayments, residual or balloon and relevant fees and charges.

All heavy vehicle funding products offer tax deductible aspects. The tax deductions vary with the different funding products. With Rent to Own and Leasing the monthly payments are tax deductible. With Chattel Mortgage a tax deduction is realised when the asset is depreciated. All interest is tax deductible as are lender fees and charges.

Yes. The monthly lease payments are treated as a business expense by the ATO and are tax deductible. The total of payments made in a financial year would be accounted as tax deductions in preparation of the annual tax return and accounts. GST is applied to repayments and can be claimed by those registered by GST on the relevant BAS return.

Chattel Mortgage includes the option for a balloon. This is a percentage of the total amount of the funding which is due for payment in full, in a lump sum at the end of the term. The balloon may be finalised with a cash payment by the operator or via refinancing. When refinancing a balloon, the vehicle would attract an interest rate relevant to a used vehicle. The same or a different lender and funding product may be selected for the refinanced funding.

When funding a vehicle acquisition with Rent to Own, the lender retains ownership title to the vehicle through the funding term. The borrower has full use of the vehicle, pays a monthly rental or funding repayment and is responsible for all ongoing and running costs. These include registration, insurance, servicing and maintenance, etc. At the end of the term, the borrower can finalise a buyback with the lender. The buyback amount may have been set out in the original funding arrangements or negotiated at the end of the term. When this is finalised, the lender transfers full ownership to the borrower.

The terms offered on vehicle funding may vary depending on the lender guidelines, the age and condition of the vehicle, the total amount requested and aspects of the individual application. Terms of up to 7 years are available through some lenders. A longer term results in lower repayments but a greater total interest payable compared with a shorter term. A shorter term means higher monthly payments but the vehicle will be paid out earlier. Customers can request preferred term when making application for funding. Using a finance calculator can assist in forming a view to the preferred term.

Interest rates on truck funding are generally the same for all sized vehicles. The rate offered to an individual operator by a lender will be determined by a range of considerations. These include the lender guidelines; the creditworthiness of the applicant; the quality of the application; the amount requested; and the age and condition of the vehicle. Used vehicles can attract a higher interest rate than new vehicles, regardless of size. The size of the truck based on heavy, medium or light duty, length or engine capacity may not typically impact the interest rate offered.

Yes. When refinancing a heavy vehicle funding arrangement, the operator may consider a change of product. The full range of options may be available. They include Rent to Own, Leasing, CHP and Chattel Mortgage. An operator may request changing product and lender. In some instances, the choice of product may be subject to lender approval. The preferred product is advised at the time of application so a relevant quote for that product can be obtained.