How to use the truck loan calculator
Truck purchase price
This is the value of the truck you wish to buy. Truck loans are secured by the vehicle you purchase and you can usually borrow 100% of the truck’s purchase price.
Initial deposit / Trade-in amount
This is optional. Enter an amount here if you are contributing a deposit toward the cost of the truck, or the amount you are offered when trading in your current vehicle. The final truck loan amount is calculated by subtracting the deposit or trade-in amount from the purchase price.
Interest rate and fees
The fixed interest rate and any upfront fees the lender will apply to your truck loan, and is used to calculate both the total amount of interest you will pay over the loan period and your scheduled repayment amount.
Loan term
This is the length of your truck loan as dictated by your loan agreement. The loan term is important as it will allow you to accurately calculate your monthly, fortnightly, or weekly payment amount and the overall interest cost. The shorter your loan term, the higher your scheduled repayments will be. But you’ll pay less in interest overall.
How are my truck loan repayments calculated?
The truck loan calculator estimates your regular repayments using the same formula lenders use to calculate loans. This means you get an accurate estimate of what your regular repayments will be.
Here’s how it works:
- The regular repayments on your truck finance will depend on the loan amount, the interest rate and the loan term.
- Interest (which is generally tax deductible if the truck is used for business purposes) is added to your truck loan every month, meaning your regular repayments need to cover the loan amount (the principal) and the interest.
- At the start of the loan, more interest is added each month (because the loan amount is at its highest and interest is charged as a percentage of the loan amount).
- But as you pay down the loan, the interest charges decrease. This means over time more of your repayments are used to pay off the principal.
- The lender adjusts for this so that your repayment amount is always the same.
- Truck loans generally have a fixed term and interest rate, so it’s unlikely your regular repayment amount will change during the loan term (it will if you get a variable rate truck loan)
Example of monthly truck loan repayments
| Business loan amount | Monthly repayments (7.50% p.a.) | Monthly repayments (9.50% p.a.) |
|---|---|---|
$10,000 | $200.38 | $210.02 |
$20,000 | $400.76 | $420.04 |
$30,000 | $601.14 | $630.06 |
$40,000 | $801.52 | $840.07 |
$50,000 | $1,001.90 | $1,050.09 |
$60,000 | $1,202.28 | $1,260.11 |
$70,000 | $1,402.66 | $1,470.13 |
$80,000 | $1,603.04 | $1,680.15 |
$90,000 | $1,803.42 | $1,890.17 |
$100,000 | $2,003.79 | $2,100.19 |
How is truck loan interest calculated?
The interest charged to your truck loan is calculated taking these factors into account:
1
Interest is applied to truck finance at an annual percentage rate (APR) of the loan balance (e.g. 8% p.a. or per annum)
2
But because the loan balance is constantly decreasing as you pay it off gradually, the interest is calculated daily based on the balance that day
3
Lenders then add interest to your loan monthly based on the total daily interest charges for the month
How is my truck finance interest rate calculated?
The interest rate on a truck loan will be calculated based on information you provide when you apply for the loan.
There are several factors involved, but it all boils down to how risky the loan is for the lender.
More risk equals a higher interest rate. Here are the main factors that determine the interest rate on a truck loan:
- The loan amount
- The loan term
- The age of the truck
- The size of the truck and its purpose
- How long your business has been operating
- Your and your business’s credit history (bad credit truck loans have higher interest rates)
- Your business’s financial position
- The type of truck finance you choose
