Truck Finance

Truck Finance

If you’re buying you’re joining the Ford Trucks Club with your first Ford truck or in the market for an upgrade, you’ll be in the market for a great truck finance deal. As the majority of truck purchases are for business use, we’re presenting an outline of the commercial finance products available for truck finance.

Types of Truck Finance

The main types of loan types for trucks are:

  • Chattel Mortgage
  • Truck Leasing
  • Truck Rent to Own
  • Commercial Hire Purchase for Trucks

Which is right finance for your business?

Any of the above finance types may be suited to all types of business operations, dependent on a number of factors. Suited to:

  • Sole traders
  • Owner operators
  • Businesses buying a vehicle for use in the business
  • Transport operators
  • Trucking businesses
  • SMEs, small fleet and large fleet businesses.

Deciding Factors

What determines which is the finance type most suited to your business and your particular Ford truck is consideration of the features of each finance product and how they best suit your business structure to deliver benefits to your operation. It is always advised that such decisions be made in consultation with your accountant.

  • Tax deductibility: different elements of each finance type are treated differently in regard to what is and isn’t a tax deduction. Eg with leasing, the repayments are tax deductible, with Chattel Mortgage only the interest is tax deductible.
  • GST: each has varying treatments of GST. Eg with Chattel Mortgage and CHP the borrower can claim the GST on the full purchase price at time of purchase but no GST applies to repayments. While leasing and rent to own will have GST applied to repayments. GST does not apply to the interest.
  • Accounting method: Chattel Mortgage and CHP are suited to a cash accounting methods while leasing and rent to own are suited to accruals accounting systems.
  • Balance sheet: leasing and rent to own are off-balance sheet options so the truck appears on the balance sheet of the lender not the borrower.

Features

Despite the differences, all commercial finance products follow a similar structure:

  • Fixed interest rate
  • Fixed monthly payment
  • Fixed loan term
  • Balloon/residual/buyback an option.

Sourcing Truck Finance

So you have an idea of what’s involved so where do you go for truck finance. Most banks and finance companies will offer truck finance. It may be categorised under the heavy equipment loans or under their commercial vehicle loan category.

While you can approach the lender yourself, you will want to be prepared to devote the time required to effectively source a range of quotes for comparison, ask all the right questions, submit all the necessary paperwork and have the financial knowledge to understand the terminology in the loan contract.

Many Ford Trucks Club members are more astute and engage a professional finance broker that specialises in truck finance to do all that for them and source them a great truck loan easily and quickly.

If you would like to discuss your truck finance requirements with a broker, we know people who operate in that area and we’re happy to pass on their details. Just get in touch with us.