The short answer
Truck finance is a business loan or lease used to buy a prime mover, rigid truck, tipper or light truck, with the truck as the lender's main security. Most truck deals are written as a chattel mortgage, so the business owns the truck from settlement, although finance leases and hire purchase are also available. Terms usually run from three to seven years. Many lenders limit how old a truck can be when the loan ends, which shortens the term on older trucks. A balloon lowers the regular repayments when the truck should hold its value. Lenders look at how long your ABN has been active, your licence and industry experience, the work lined up for the truck and your credit history. For tax, the ATO caps the effective life of trucks over 3.5 tonnes GVM at 7.5 years if you use the Commissioner's determination (ATO). FundFox arranges truck finance for business use only.
Which trucks can be financed?
| Truck type | Typical work | What lenders focus on |
|---|---|---|
| Light trucks (up to 4.5 tonnes GVM, drivable on a car licence) | Trades, parcel delivery, landscaping | ABN history and how the truck earns its keep |
| Medium and heavy rigids (LR, MR and HR licence classes) | Local freight, tilt trays, refrigerated bodies, waste | Body and fit-out value, contracts and customer base |
| Tippers and specialised bodies | Construction, quarry and civil work | Body type, resale depth and the work pipeline |
| Prime movers (HC and MC classes) | Linehaul, interstate and B-double work | Driving experience, kilometres, contract and maintenance |
The body is usually financed with the cab-chassis. A refrigeration unit, tipper body or crane fitted by a separate builder needs its own tax invoice, and lenders want both invoices before they pay anyone.
How do lenders assess truck finance?
A truck lender wants to know three things: that the business can carry the repayment, that the truck will keep working, and that it could be resold if things went wrong. In practice that means:
- ABN age and experience. Two or more years of trading opens the widest choice. Specialist lenders will often consider a newer ABN when the driver has years in the industry and either a deposit or property behind them.
- The work. A subcontract with a carrier, regular customers or a letter confirming work gives the lender confidence the truck will earn from day one.
- The truck. Make, age, kilometres, service records and body type. Mainstream makes with deep resale markets are the easiest to finance.
- Credit and commitments. The credit files of the business and its directors, plus repayments on the existing fleet.
How old can the truck be?
Lenders usually set a maximum age for the truck at the end of the loan, not at purchase. If a lender's limit is around 15 to 20 years at term end, a ten-year-old prime mover may only qualify for a five-year term, while a two-year-old truck can go the full seven years. Older trucks are still financeable, though often with a shorter term, a deposit or an independent inspection. Private and auction purchases need a valuation or inspection and a PPSR search to confirm nobody else has a security interest in the truck.
Should you use a balloon on a truck?
A balloon suits a well-maintained truck from a make that holds its value. Using an assumed rate of 9% a year, a $200,000 truck over five years costs about $4,152 a month with no balloon. A 20% balloon brings that down to about $3,621 a month, with $40,000 still owing at the end. Total interest rises from roughly $49,100 to roughly $57,300, because more of the debt stays outstanding for longer.
The risk is timing. The balloon falls due when the truck is five years older and may need tyres, a rebuild or replacement. Plan how you'll pay it: a sale, a trade-in, refinancing the balloon or cash set aside. The repayment calculator shows the effect of different balloons.
Example only. It isn't a real client, and the rate is an assumption for illustration. Your rate depends on the lender, the asset and your business. Run your own numbers in the repayment calculator.
What about GST, depreciation and on-road costs?
With a chattel mortgage, a GST-registered business can usually claim the GST in the purchase price as a GST credit on its next BAS, provided it holds a tax invoice. For depreciation, trucks over 3.5 tonnes GVM have a capped effective life of 7.5 years when the Commissioner's determination is used, against a determined life of 15 years. Budget separately for stamp duty on the vehicle transfer, which varies by state, and for heavy vehicle registration and insurance. Lenders will want comprehensive insurance noting their interest before settlement.
Tax treatment depends on your business. Ask your accountant how the purchase affects your return and BAS.
How does truck finance work through FundFox?
- Tell us about the truck, the price and the work it will do.
- Your broker shortlists bank, non-bank and asset lenders whose age, ABN and private-sale policies fit the deal.
- The lender approves, and you provide the tax invoice, insurance and any inspection report.
- The lender pays the dealer or seller directly, and you collect the truck.
Example scenario
An owner-driver with eight years in linehaul and a two-year-old ABN subcontracts to a national carrier. They find a six-year-old prime mover for $165,000 through a private seller. The broker arranges an inspection, a PPSR search and a five-year chattel mortgage with a modest balloon. The seller is paid on settlement day, and the carrier contract supports the repayment.
Example only. It isn't a real client.
