Compare Truck Finance Options & Loan Rates
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What is truck finance?
Truck finance is a type of business loan or lease used to finance heavy vehicles, including trucks and machinery transport. It can sometimes be referred to as asset finance or equipment finance.
Truck finance is generally secured against the vehicle you purchase, meaning:
- It comes with a lower interest rate than an unsecured business loan (because secured finance is less risky for lenders)
- You can usually borrow 100% of the truck's purchase price (including GST and stamp duty)
- The lender can repossess the truck if you default on the loan during the finance term.
Truck finance features
- Borrow anywhere from $10,000 to $1,000,000+
- Loan terms from 1-7 years
- Fixed interest rates starting from around 7.50% p.a. (for borrowers with excellent credit profiles)
- Truck loan and lease options available
- Weekly, fortnightly or monthly repayments to suit your business cash flow
- Truck finance can come with or without a balloon payment option
- Can be used to purchase a truck from a dealership, auction, or via a private sale.
What types of trucks can you finance?
Heavy vehicle types
Truck financing can be used to purchase a diverse range of commercial truck body types in various conditions, as long as the vehicle is identifiable by an engine number or registration number. This may include:
- Tow & tilt trucks
- Service body trucks
- Pantech trucks
- Tipper trucks
- Dump trucks
- Concrete pump trucks
- Vacuum trucks
- Agitators
- Livestock transporters
- Water trucks
- Refrigerated trucks
- Food trucks
- Cab chassis
- Crane trucks
- Curtainsider trailers
- Rigid trucks
- Semi trucks
- Prime movers
- B-doubles
- Tankers
Who’s eligible for truck finance?
Truck finance eligibility criteria vary between lenders, but these are the most common requirements among the lenders analysed by Money.com.au:
- Australian citizenship or permanent residency
- An active ABN or ACN
- At least six to 12 months of trading history
- Your business must be GST-registered
- Your business must meet the lender’s minimum annual turnover requirement (usually ranging from $75,000-$100,000)
- A good credit score — the minimum business credit score most lenders will consider is 475, and for company directors, it’s about 500 (if you’re a homeowner, lenders may accept a lower score)
- The truck you’re financing must be used for business at least 51% of the time
What are the interest rates on truck finance?
Truck finance interest rates are fixed and start from around 7.50-15% p.a. Your actual rate will depend on:
- The type, age and weight of the truck you’re purchasing
- Your business’ overall risk profile.
Factors that impact your truck loan rate
1. The truck's usage, weight, and age
Based on analysis by Money.com.au, commercial trucks above 4.5 tonnes and trucks with a specialised or niche use (e.g. food trucks, concrete pump trucks) generally attract higher rates than standard vehicles like crew cabs or light-duty trucks.
That’s because these vehicles usually have lower demand in the resale market, which could impact the lender’s ability to recoup its losses if you can’t repay the loan.
Additionally, truck loans used to purchase brand-new vehicles usually come with lower interest rates than loans for used vehicles. Most lenders have a 15 or 20-year age limit for trucks they’ll finance.
2. Your business’ overall risk profile
Lenders will consider several factors to assess your risk as a borrower, including:
- Your business trading history, profitability & cash flow
- Your business assets & liabilities
- Whether you’re a homeowner (i.e. an asset-backed borrower who may be able to borrow against their home equity to settle outstanding debts)
- What documentation you’re able to provide (low doc business loans may attract a higher rate)
Established businesses with a proven track record and business owners who own residential property in Australia are seen as less risky by lenders and generally qualify for lower interest rates.
Compare truck finance rates & repayments
This example shows the impact of different truck loan interest rates on monthly repayments for various loan amounts. The calculations are based on a five-year loan term.
Truck finance | $10,000 |
|---|---|
| Monthly repayments with 7.50% p.a. interest rate | $200.38 |
| Monthly repayments with 9.50% p.a. interest rate | $210.02 |
| Monthly repayments with 11.50% p.a. interest rate | $219.93 |
Truck finance | $20,000 |
| Monthly repayments with 7.50% p.a. interest rate | $400.76 |
| Monthly repayments with 9.50% p.a. interest rate | $420.04 |
| Monthly repayments with 11.50% p.a. interest rate | $439.85 |
Truck finance | $30,000 |
| Monthly repayments with 7.50% p.a. interest rate | $601.14 |
| Monthly repayments with 9.50% p.a. interest rate | $630.06 |
| Monthly repayments with 11.50% p.a. interest rate | $659.78 |
Truck finance | $40,000 |
| Monthly repayments with 7.50% p.a. interest rate | $801.52 |
| Monthly repayments with 9.50% p.a. interest rate | $840.07 |
| Monthly repayments with 11.50% p.a. interest rate | $879.70 |
Truck finance | $50,000 |
| Monthly repayments with 7.50% p.a. interest rate | $1,001.90 |
| Monthly repayments with 9.50% p.a. interest rate | $1,050.09 |
| Monthly repayments with 11.50% p.a. interest rate | $1,099.63 |
Truck finance | $60,000 |
| Monthly repayments with 7.50% p.a. interest rate | $1,202.28 |
| Monthly repayments with 9.50% p.a. interest rate | $1,260.11 |
| Monthly repayments with 11.50% p.a. interest rate | $1,319.56 |
Truck finance | $70,000 |
| Monthly repayments with 7.50% p.a. interest rate | $1,402.66 |
| Monthly repayments with 9.50% p.a. interest rate | $1,470.13 |
| Monthly repayments with 11.50% p.a. interest rate | $1,539.48 |
Truck finance | $80,000 |
| Monthly repayments with 7.50% p.a. interest rate | $1,603.04 |
| Monthly repayments with 9.50% p.a. interest rate | $1,680.15 |
| Monthly repayments with 11.50% p.a. interest rate | $1,759.41 |
Truck finance | $90,000 |
| Monthly repayments with 7.50% p.a. interest rate | $1,803.42 |
| Monthly repayments with 9.50% p.a. interest rate | $1,890.17 |
| Monthly repayments with 11.50% p.a. interest rate | $1,979.33 |
Truck finance | $100,000 |
| Monthly repayments with 7.50% p.a. interest rate | $2,003.79 |
| Monthly repayments with 9.50% p.a. interest rate | $2,100.19 |
| Monthly repayments with 11.50% p.a. interest rate | $2,199.26 |
| Truck finance | Monthly repayments with 7.50% p.a. interest rate | Monthly repayments with 9.50% p.a. interest rate | Monthly repayments with 11.50% p.a. interest rate |
|---|---|---|---|
$10,000 | $200.38 | $210.02 | $219.93 |
$20,000 | $400.76 | $420.04 | $439.85 |
$30,000 | $601.14 | $630.06 | $659.78 |
$40,000 | $801.52 | $840.07 | $879.70 |
$50,000 | $1,001.90 | $1,050.09 | $1,099.63 |
$60,000 | $1,202.28 | $1,260.11 | $1,319.56 |
$70,000 | $1,402.66 | $1,470.13 | $1,539.48 |
$80,000 | $1,603.04 | $1,680.15 | $1,759.41 |
$90,000 | $1,803.42 | $1,890.17 | $1,979.33 |
$100,000 | $2,003.79 | $2,100.19 | $2,199.26 |
Compare truck loans & lease options
There are three main truck finance options for businesses — secured truck loans, unsecured business loans, and finance leases.
1. Secured truck loan
With a secured truck loan (also known as chattel mortgage), you borrow a lump sum from a lender to purchase a truck. The vehicle secures the loan, which you repay with interest over a fixed term (similar to a mortgage). Your business owns the truck from the outset and is responsible for all registration and upkeep costs.
However, the lender can repossess the vehicle if you fail to make repayments during the loan term. Once the loan is fully repaid, you gain full vehicle ownership without any restrictions.
If there's a balloon payment due at the end of the loan term, you’ll have several options:
- Pay the remaining balloon amount and decide whether to keep, sell or sublet the truck.
- Refinance the balloon amount into a new loan.
- Trade in your truck under a new finance agreement, and pay the outstanding balloon amount as part of the trade-in process.
2. Unsecured business loan
An unsecured business loan doesn’t require any assets as security for the finance, making it a potential option if the truck you’re looking to buy is not eligible to be used as collateral on a loan (e.g. if it’s too old). Unsecured finance is riskier for lenders and comes with higher interest rates.
Besides that, it works like a standard business loan. You borrow a lump sum and repay it with interest over a fixed period. There might be a balloon payment at the end of the loan term.
3. Truck lease
Under a truck lease or finance lease, the lender buys the truck and leases it to you for a set period of time. You’ll make regular lease repayments and be able to use the truck until the lease period ends.
At the end of the finance lease term, you can purchase the truck from the lender by making a residual balloon payment to clear the outstanding debt. Alternatively, you’ll have the option to:
- Refinance the residual amount into a new lease agreement and continue renting the truck.
- Trade-in the truck and upgrade it under a new finance agreement. You could use the proceeds from the trade-in to pay the balloon payment.
- Return the truck to the lender if you no longer need it.
Truck loans vs lease compared
| Truck finance options | Pros | Cons |
|---|---|---|
Secured truck loan |
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Unsecured business loan |
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Truck lease |
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GET STARTEDGET STARTEDShould you opt for a balloon payment with your truck finance?
Most truck loan and lease agreements include a balloon payment option. A balloon payment is a residual lump sum you pay at the end of the finance term to clear the remaining debt on the vehicle. Depending on your arrangement with the lender, it can range from 20-40% of your loan or lease amount.
With a balloon payment, your monthly repayments will be lower (allowing you to free up cash flow to invest back into the business), but you'll owe a larger sum at the end of the finance term and pay more interest overall. That’s because you'll effectively pay interest on the full balloon payment amount over the entire loan term (instead of paying down the full loan amount over time).
How to apply for truck finance
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Decide on a truck finance option
Depending on your business structure and industry, owning the vehicle outright via a truck loan could have more benefits than leasing it. For other businesses, leasing the truck will make more sense. Think about how long you will need the truck, whether you want to keep it beyond the finance term and speak to an accountant about the potential tax implications of each option. This could also sway your decision.
2
Prepare your financial documentation
Your lender will request financial documents to confirm your business revenue. Typically, they'll ask for six to 12 months of business bank statements, BAS statements, and/or tax returns. Keep in mind, the larger your loan, the more information you'll need to provide. If you're borrowing over $150,000, some lenders might ask for your financials to be prepared by an accountant.
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Apply online with your lender of choice
Most lenders have an online application process that only takes a few minutes. To get started, you’ll be asked how much you want to borrow, your preferred finance term and details about the truck you’re purchasing (including its age and model). Then, you’ll be prompted to give some business information about your annual revenue and how long you’ve been trading.
4
Get your truck finance application approved
The lender will conduct a credit check before deciding whether to approve your truck finance application. If you haven't found the truck you want to purchase yet, the lender might offer you pre-approval. This indicates that you're conditionally approved to borrow a specific amount before you actually purchase the vehicle. To obtain unconditional approval, you'll need to sign a purchase contract and provide registration paperwork for the truck.
How to get the cheapest deal for truck finance
Look for low truck finance fees
Truck finance fees can vary massively depending on the lender. Here are the main fees you should try to minimise:
- Establishment fees: $150 - $550
- Monthly account keeping fees: $0 - $10
- Extra repayment fees: Depends on loan amount & loan term
- Early payout fees: $0 - $450.
Compare the best rates
Compare indicative truck finance rates, fees, and features across various lenders. Alternatively, a finance broker can do the research on your behalf without affecting your credit. Keep in mind that your personalised rate is based on your business credit profile and will likely differ from the lender's advertised rate.
Look for a short finance term
When calculating the cost of your truck loan, the length of the loan term will make a big difference. Getting a shorter term (while keeping your repayments affordable) could cut your costs substantially. For example, opting for a five-year term instead of a six-year term on an $80,000 truck loan at a rate of 9.50% p.a. could save you $4,460 in interest.
It also helps if you have the flexibility to pay off the truck loan sooner (without penalty) if you have available cash flow.
FAQs about truck finance
Can I get finance to purchase a truck through a private sale?
Yes, you can get truck financing to buy a truck from a private vendor, although this will depend on the type of vehicle you’re buying. Some lenders may require a mechanical inspection and formal valuation if you’re buying a used truck, which may increase the cost of your finance.
Do I need a deposit to get truck finance?
No, you generally don't need to contribute a deposit for truck finance. Most lenders will finance 100% of the truck's purchase price if your business meets all lending and eligibility criteria.
There are cases where you may be asked to pay a deposit of 10-20% of the truck’s value, such as if your business has been trading for less than two years or if you don't own property and want to buy a vehicle worth more than $150,000.
Can I claim my truck loan repayments on tax?
You may be able to claim the interest portion of your truck loan repayments as a ‘business expense’, according to the ATO. Other expenses related to owning and running a business vehicle, like depreciation and insurance, may also be tax deductible.
For a finance lease, you may be able to deduct lease payments and claim a credit for GST included in the lease charges.
Can sole traders apply for a truck loan?
Yes, sole traders and self-employed individuals with a valid ABN can apply for truck finance. Remember that you must still be able to provide bank statements and other financial documentation showing you can service the loan in full.
If you can’t provide the documentation your lender requires, you may be able to apply for a low doc business loan and use alternate documentation such as financial statements prepared by your accountant. However, be prepared for a higher interest rate with this option.
How long does it take to be approved for truck finance?
In most cases, truck loan approval takes 1-3 business days. However, you could be approved on the same day if you meet the lender’s eligibility criteria and submit all the required documentation, including the vehicle’s registration information.
Can I get truck finance with bad credit?
Yes, you can still qualify for secured truck finance even if you have impaired credit, although at a higher interest rate to mitigate the lender's risk. Keep in mind that lenders don’t look at your business credit rating in silo, but also evaluate your business revenue and serviceability.
Alternatively, you could consider a bad credit truck loan or speak to a specialist lender about other bad credit business loan options that may be available to your business.
Business Loan guides and resources
Learn more about your business finance options and how to get the funding you need to grow your business.
Written by
Senior Finance Writer
Megan Birot
Reviewed by
Editor
Sean Callery
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