When the moment arrives to purchase a new truck, searching for the right truck loan can be akin to navigating through congested traffic. It’s like being surrounded by numerous vehicles headed in the same direction, offering a multitude of routes to choose from. The aim is to hope for a smooth journey, with green lights all along the way, and to avoid any unexpected delays caused by incidents.
In lending industry speak, the truck loan sector includes -
- Several categories of loan providers or options to choose from including banks, non-banks, finance companies, manufacturer or dealer finance and finance brokers.
- Within each of the above there are multiple companies to select from.
- Financial advisors and accountants add to the mix, or traffic, to be consulted in regard to tax matters.
- Different equipment finance products all presenting tax and other benefits.
- Individual loans need to be structured to meet individual truck buys and business goals.
We’re sharing our extensive experience and expertise in truck lending sector to give you a clearer understanding of what all of the above involve so you have a clearer and hassle-free route to a workable truck loan.
Loan Providers and Lenders
With the risk of stating the obvious to savvy operators, we’re covering the basics and providing simple explanations of each type of lender.
- Banks: the major Australian banks are the biggest lenders and offer truck finance usually under their equipment loan categories. Banks can be competitive on interest rates but usually have strict guidelines and loan criteria. If you have issues with docs or credit, the bank may not be the best choice for your loan. Banks are also not known for negotiating.
- Non-Bank Lenders: these are finance companies and other entities that are approved and authorised to provide finance but do not hold the status of a bank. Many tend to be more flexible and the better option for those seeking specialty no financials truck loan, low docs, ABN and bad credit. Some operate only through brokers.
- Manufacturer and Dealer Finance: increasingly common across the truck sector and can appear convenient and the easy option. Can be competitive but will usually offer no choice of lender. It is just the one offer. May have commissions in the fees and charges.
- Finance Brokers: lenders such as Jade Truck Loans we consider are the better option as they have access to many lenders, work for you and in your best interests and we are very sharp when it comes to negotiating on rates and loan terms. Checking our interest rates against what some banks are offering proves our point.
- Financial Advisors and Accountants: should be consulted in regard to the choice of loan to ensure it meets your business requirements. Many aspects of truck loans relate to accounting matters and they should have the answers in regard to how they prepare your business accounts.
Selecting which bank, which non-bank lender or which finance broker would come down to personal choice. By selecting Jade, you have multiple banks and lenders in your mix. If tossing up between Jade and another broker, selection criteria should include having experience in providing low interest rate truck finance, extensive non-bank lender accreditations and having your interests, not any lender’s, as their only focus.
Finance Product Selection
The selection of loan types for truck loans includes Leasing, Chattel Mortgage for truck loan, Rent-to-Own and Commercial Hire Purchase. Each offer tax benefits to businesses but in different ways. There are differences in when GST is claimed, how the truck is treated as an asset on the business balance sheet and other variations.
The various loan types come with distinct structures, rendering each more or less appropriate for either the cash method of accounting or the accruals method of accounting. Businesses determine their chosen accounting method based on several factors, which we won’t delve into in this context. Typically, you and your accountant would have discussed and established this approach when you initiated your business. Therefore, when it comes to choosing the suitable loan type for your truck, we consistently advise that you consult your accountant for guidance.
Structuring Your Loan
With the loan type selected, you now discuss with your Jade broker or the bank or finance company if you’re going down the DIY route, how you want your loan structured. By that we mean what loan term you would prefer and how much you want in the balloon/residual, you can calculate monthly repayments using our truck finance calculator.
Both the size of the balloon/residual amount and the duration of the loan term, along with the option of Refinancing Truck Finance Balloon or Residual, play a role in determining the monthly repayment amount. Ultimately, the choices come down to whether you prefer lower monthly repayments or an earlier ownership of the truck, while also factoring in the projected resale value of the truck at the conclusion of the loan term. It's important to consider the possibility of owing more than the truck's value at the end of the term if a balloon payment is too aggressive, which might not align with the aim of achieving the lowest repayment.
To further add complexity or simplicity to the decision-making process, it's worth noting that banks and finance companies will have their own specific guidelines concerning the allowable length of loan terms they offer.
Getting the Green Light
So that’s a basic overview of truck loans for those addressing the issue for the first time or the first time in a long time. To save your time, just contact Jade Trucks Loans and one of our consultants will handle much of the loan process for you.
To discuss a clear route to a cheaper truck loan, speak with Jade Truck Loans about finance on 1300 000 003.
DISCLAIMER: INFORMATION, CONTENT, DATA, REFERENCES AND HINTS CONTAINED IN THIS ARTICLE ARE INTENDED PURELY FOR GENERAL INFORMATION AND NO LIABIILTY FOR ERRORS OR SIMILAR IS ACCEPTED. THE INFORMATION IS NOT INTENDED TO FORM THE SOLE BASIS FOR FINANCIAL DECISIONS. ANY READER CONSIDERS THAT MAY REQUIRE ADVICE ON THEIR PERSONAL OR BUSINESS FINANCIAL SITUATION, THEY ARE ADVISED TO SEEK THE PROFESSIONAL ASSISTANCE OF A FINANCIAL ADVISOR.