For most owners and operators, the acquisition of new vehicles is a major investment that is made with the expectation of a certain return. An ROI may be in improved productivity, increased output, greater efficiency and the bottom line – a rise in profitability. The choice of financing facility can significantly affect the overall investment costs and the outcomes. Before purchase, operators can compare truck loan options to ensure they are securing the right financing product for their business and the type of vehicle.
The right product is generally determined by aspects of the business operation rather than the type of truck. The accounting method and the approach the business takes to tax deductions and entering assets into its balance sheet are key deciding factors as to which truck loan product is most appropriate. However, rates and some loan conditions may be different for different trucks, especially used models.
To address any queries that operators may have regarding selecting the right finance product, we provide this overview to easily compare truck loans for new, used and emerging technology fuel vehicles.
Truck Finance Facilities
Essentially there are four types of commercial financing facilities available for asset acquisitions. These facilities vary in several respects which we will outline. A key aspect is regarding the method of accounting that the business utilises to prepare the accounts. There are two methods used by Australian businesses – the cash method and the accruals method.
In brief, the cash method accounts for income and expenses at the time the transactions are made. The accruals method enters invoices and accounts payable into the books when the invoices are issued and when bills are received.
To compare truck loans, owners can consider the features of each available option. Note that with all options, we secure finance with our best rates which are fixed, with fixed terms and fixed repayments.
Truck Leasing suits the accruals method of accounting and the monthly lease payments are fully tax deductible. GST is applied to the monthly payments and can be claimed on the appropriate BAS return by operators registered for GST.
Leasing is commonly referred to as an off-balance sheet loan because the lender holds ownership of the truck and leases it to the business. A residual in line with ATO rulings is an option.
Rent-to-Own is also an off-balance sheet product that also suits the accruals method. The rental payments are tax deductible and a buyback option is included for the business to acquire full ownership of the truck at the end of the term. While similar to Leasing, Rent-to-Own differs in certain structures and attracts a higher interest rate than Leasing.
Chattel Mortgage is a very popular option as it suits the cash accounting method. Businesses get ownership from day one and enter the vehicle in their balance sheet. As an asset, the truck is depreciated to provide the tax deductible element. The full GST on the truck price can be claimed on the first BAS return after purchase. A balloon is optional and can be used effectively to tailor repayments. This loan attracts the lowest interest rate of asset acquisition finance.
Commercial Hire Purchase has elements similar to both Leasing and Chattel Mortgage as it can be used by businesses that use either accounting method.
For more details on each product, head to our dedicated web pages and discuss the selection with your accountant.
Compare Loans for New Trucks
New trucks can be financed with the business owner's choice of the above facilities. This includes heavy, medium and light duty models with and without trailers and bodies. New trucks are typically easily accepted as security against the finance.
Used Truck Loans Considerations
All types of used models can be financed with the same selection of credit facilities, including options for second hand truck loans. However, the age and the condition of the vehicle come into consideration when lenders assess the application. The condition of the vehicle may result in different rates, loan terms, and loan amounts than for new vehicles. If buying at auction, it can be smart to contact us prior for pre-approved finance.
Battery-electric and New Fuel System Truck Loans
With the growing range of alternate fuel vehicles including battery-electric models, operators may require clarification of their truck loan options. All types of battery-electric vehicles such as the Fuso Ecanter and Volvo range can be financed with the selection of loan options detailed above.
Compare Truck Loans Interest Rates
Interest rates on truck loans are one area that can have significant variations. Rates are different with the different credit facilities, vary across the commercial lending market and can vary with the profile of the business.
Jade Trucks Loans provides the best rates on the full range of financing options, including commercial truck financing, to easily compare truck loans to suit the business and the vehicle type. Refer to our current rates as a guide and contact us for an exact quote for your vehicle.
To compare truck loans for your upcoming purchase contact Jade Truck Loans on 1300 000 003
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.
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