2022 has been a massive year for truck sales with the annual result heading for a record year with many operators making the decision to upgrade and/or expand their fleets. The investment in new vehicles can be an extremely productive move for many businesses and made even more effective and profitable with affordable truck finance.
The decision to embark on new vehicle acquisitions and fleet upgrades involves careful consideration of numerous variables. Among these, the cost of truck finance emerges as a pivotal determinant. The alignment of truck loans with the business's cash flow is crucial to the realization of its objectives. This underscores the importance of prioritizing cost-effective truck loans for a multitude of new vehicle purchases.
Securing favourable interest rates for truck finance is paramount, with the added emphasis on sourcing and structuring finance tailored to the specific requirements of each business. This tailored approach holds the potential to play a decisive role in facilitating business plans and achieving set targets. Accessible and affordable truck finance becomes an instrumental tool in enabling the acquisition of new vehicles, which in turn can significantly foster business growth, diversification, and heightened productivity, profitability, and efficiency.
Achieving Business Objectives
After several disruptive years, many business operators will be looking to 2023 for more normal operations achieve growth and development. Dealing with the tight labour conditions, rising costs due to inflation, supply chain issues and the ongoing disruptions from further waves of COVID are all issues to be considered by businesses as we move into the new year.
New vehicle acquisitions may play a part in advancing the business goals:-
- Improve productivity: With labour shortages a major issue in the Australian economy, upgrading to newer vehicles may deliver improved productivity. This may include vehicles with higher payloads to transport larger cargo in the one trip, cutting down time and transport costs.
- Increase efficiency: Truck manufacturers focus closely on developing more efficient engines and features which contribute to ease of operation for more efficient work days.
- Reduce operating expenses: Fuel costs are a major business expense for truck operators. New vehicles with more efficient engines may reduce those costs to improve the overall bottom line.
- Reduce cash flow pressures: New vehicles can cut down on service costs which may be draining cash flow.
- Increase income potential: Reduce downtime as a result of maintenance required on older vehicles and increase productive working hours. Have vehicles on the road for longer each week.
- Achieve emissions reduction targets: Upgrading ageing fleets as noted by the TIC in releasing recent truck sales results can make a significant contribution to the achieving the industry’s emissions reduction targets.
- Grow the operation: The purchase of new vehicle may enable expansion of the business into new markets or to take on more work.
- Capitalise on emerging opportunities: Having the right vehicles in the fleet to take on new projects can be extremely advantageous.
- Realise additional tax deductions: Attractive tax measures are currently available through temporary full expensing. Utilising this measure with Chattel Mortgage Truck Finance may reduce taxable income in 2022/23 financial year.
These are just some of the more general objectives and targets which may be achieved through new vehicle purchases.
Truck Finance Options
While the purchase of new trucks has potential to assist in achieving operational objectives, the level of achievement may be marred or turbo-charged depending on the truck finance. The first step is to select the type of truck loan that works with the business accounting methods and approach to tax and the balance sheet.
Businesses can select from:-
Operators are encouraged to speak with their accountant re this decision as many of the variations in the loan types involve accounting issues. Chattel Mortgage has been extremely popular over the past few years due to its suitability for Instant Asset Write-Off and temporary full expensing. But it may not suit all businesses and all business finance does include tax deductible elements.
Achieving Cheaper Interest Rates
Optimizing Truck Lease & Financing Rates is the key to ensuring that truck finance contributes seamlessly to achieving business objectives. The interplay of factors such as the interest rate and the loan structure and conditions is crucial. By securing a more favorable interest rate, you can effectively lower your monthly repayments. This reduction not only eases the strain on your cash flow but also contributes to the reduction of overall operational expenses.
The finance structure must also work for the business. We address this issue by personally sourcing and negotiating each truck loan in regard to finance term, balloon/residual and of course interest rates to achieve a workable solution.
If the finance term is too short, it can result in higher repayments which can pressure cash flow. If the preferred balloon is not approved by the lender, it may result in higher repayments. The overall truck finance package should be considered to ensure all elements are considered and a positive solution negotiated.
Contact Jade Truck Loans on 1300 000 003 to discuss how affordable truck finance may support your business to achieve its objectives.
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.