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From application through to settlement
How truck finance works
Truck finance allows a business to purchase or lease heavy vehicles, including trucks and machinery transport, without needing to make the large upfront investment that would be required to buy the vehicle outright.
- Borrow anywhere from $10,000 to $1,000,000+
- Loan terms from 1-7 years
- Buy from a dealership, auction, or via private sale
- Interest rates based on the vehicle and your risk profile
- Term loan and lease options available
- Weekly, fortnightly or monthly repayments to suit your cash flow
- No deposit required, with option to include a balloon payment
- Business loan interest and fees may be tax deductible
‘Vehicles or transport’ is one of the top reasons for business loan requests through Money.com.au, accounting for 41.50% of all requests. This reflects the record levels of capital expenditure on equipment and machinery among Australian businesses in 2024, with monthly spending exceeding $19 billion for the quarter to June this year.
4 ways to get the best truck loan deal
Get a secured loan
This will generally mean a lower interest rate compared to an unsecured business loan, because secured finance is less risky for lenders. Most lenders will accept a truck as collateral for a secured loan.
Buy a new or nearly new truck
Lenders often apply higher rates (known as a ‘loading’) on older vehicles, e.g. if the truck is more than 5 or 10 years old expect a rate loading of 0.5% - 1.50% p.a. depending on the lender.
Buy from a dealer
Lenders prefer dealer sales and you may pay a higher rate (an extra 0.5% - 1.00% p.a.) if it’s a private sale. Dealer sales are generally more straightforward and less risky for lenders.
Look for a short finance term
This means you pay less interest. 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.
Tip: It also helps if you have the flexibility to pay off the loan sooner (without penalty) if you have available cash flow. Use our truck loan calculator to estimate your repayments based on different loan durations.
Who’s eligible?
Truck finance eligibility criteria vary between lenders, but these are the most common requirements among the lenders Money works with:
- You must be an Australian citizen or permanent resident
- Your business must have an active ABN or ACN
- Your business must have 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)
- The truck you’re financing must be used for business at least 51% of the time
- You'll need 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)
What types of trucks can you finance?
Eligible 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
Before applying, check your credit score for any issues you might not be aware of or have forgotten about (payday loan applications, for example), and make sure your bank statements and other financials are clean before applying.
What are the interest rates on truck finance?
Truck finance interest rates are fixed and start from around 7.50-15% p.a. Keep in mind that your personalised rate will likely differ from the lender's advertised rate.
Your actual rate will depend on:
The truck's usage, weight, and age
Based on analysis by Money, 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.
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)
If you’re a newer business, your lender may request work contracts as proof of ongoing work to assess your loan serviceability as your limited trading history may not be enough to assess this.
Compare truck loans & lease options
There are three main truck finance options for businesses — truck loans, small business loans, and 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.
Pros
- Repayments are fixed over the loan term
- You own the truck from the outset
- Interest on the loan and depreciation might be tax-deductible, and businesses may also claim a credit for the GST paid on the truck
Cons
- The lender can reclaim the truck if you default on the loan
- Early payout fees generally apply
- If there’s a balloon payment, you’ll pay more interest overall
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.
Pros
- You own the truck from the beginning
- No risk to business assets if you default on the loan
- Interest on the loan and depreciation might be tax-deductible, and businesses may also claim a credit for the GST paid on the truck
Cons
- Generally higher interest rates compared to secured truck finance
- Typically shorter repayment terms (which means higher repayments)
- Eligibility criteria & lending requirements vary significantly between lenders
3. Truck lease
Under a truck lease (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 in return for 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; or return the truck to the lender if you no longer need it.
Pros
- Option of full ownership at the end of the finance term
- You have full use of the truck even if you decide not to purchase it at the end of the lease term
- Lease payments may be tax-deductible over the lease term
Cons
- You'll pay nearly the entire value of the truck (including interest) during the lease term, making it an expensive option
- Your business is responsible for all upkeep costs
- Leases are non-cancellable contracts & may be difficult to terminate
Shop for low truck finance fees
Establishment fees: $150 - $550
Monthly account keeping fees: $0 - $10
Extra repayment fees (Depends on loan amount & term)
Early payout fees: $0 - $450
How to apply for truck finance
Here's our quick guide on how to get a business loan to finance a truck in four steps:
1
Decide on a truck finance option
Depending on your business structure and industry, owning the vehicle outright will have more benefits than leasing it. For example, if you’d like the option to pay off the finance early, a truck loan may be more suitable, as leases are notoriously hard (and expensive) to terminate. Additionally, speak to an accountant about the potential tax implications of each truck financing option, as this could 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.
3
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 do 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 pre-approval. This is conditional approval to borrow a specific amount before you actually purchase the vehicle. To get unconditional approval, you'll need to sign a purchase contract and provide registration paperwork for the truck.
Should 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).
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.
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