If your business relies on heavy vehicles to keep it running smoothly from one day to the next, making sure you have a fleet of reliable trucks on hand is essential. However, if you’re searching for the funds you need to purchase your next heavy vehicle, there are several truck loan options available that can help you access the money you need.
Each option has its own benefits, drawbacks and unique features, so let’s take a closer look at truck finance and how you can find the right solution for your business.
What is truck financing?
Truck financing can help provide the funds your business needs to purchase a heavy vehicle. Rather than paying the full purchase price of a truck upfront, truck financing allows you to enjoy all the benefits of owning a truck but with the freedom and flexibility to pay it back over a period of time.
However, just like any other type of commercial vehicle finance, the way truck loans work can vary substantially based on the finance option you choose.
What trucks can I finance?
There are truck finance options available to help you purchase an extensive range of heavy vehicles including:
Prime movers
Refrigerated trucks
Tilt-tray trucks
Tipper trucks
Livestock trucks
Cement trucks
Crane trucks
Car carriers
Isuzu trucks
Water trucks
Looking for a non-commercial truck? Compare online truck loan lenders
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What are the different ways to finance a truck or fleet of trucks?
There are several types of truck finance available to help you purchase a heavy vehicle for your business:
Finance lease. Under this arrangement, the lender purchases a truck on your behalf and then leases it back to you. This gives you all the benefits of ownership, including full use of the vehicle for your business, even though you don’t actually own the truck. Monthly lease repayments are required, allowing you to budget in advance, and when the lease ends you have the option to pay out the remaining value to purchase the truck.
Commercial hire purchase. If you choose a commercial hire purchase, your business hires a truck from a lender for a predetermined period. Your business doesn’t own the vehicle during this period but you will need to make fixed monthly repayments. Once the term ends and you’ve paid off the full price of the vehicle, you take ownership.
Chattel mortgage. A chattel mortgage involves a lender providing the money you need to purchase a truck, and you are then required to make regular repayments to pay down the loan amount. You get to immediately enjoy all the benefits of vehicle ownership and also take advantage of the security of fixed repayments. However, the lender also takes out a mortgage over the vehicle as security for the loan, and this mortgage is only removed when the loan term ends and you’ve repaid the money you borrowed.
Personal loan. A personal loan is only really an option for purchasing a truck if you’ll use the vehicle for both personal and business reasons. However, the higher interest rates that apply to personal loans mean that they are usually not a viable option for most people.
How to compare truck finance options
Consider the following factors when comparing truck financing solutions:
Loan term. How long will you have to continue making regular repayments towards the truck? Remember that while shorter loan terms may mean larger repayment amounts, longer loan terms may increase the total cost of the loan.
Interest rate. The interest rate has a huge bearing on how much you will need to repay each week, fortnight or month, as well as the total cost to you over the loan term. Compare interest rates across multiple finance providers.
Fees. Will you need to pay any upfront fees or ongoing monthly charges? These can quickly add up, so make sure you’re aware of all fees that apply, including penalties for late payments.
Repayment amount and schedule. Can the repayment schedule be tailored to suit your business’s cash flow? Also, take a look at how much your regular repayments will be and calculate whether this is an amount you can realistically afford.
Tax treatment. Depending on your business and the truck finance option you choose, you may be able to claim your business loan or lease repayments as a tax deduction. Ask your accountant for advice on which finance solution could be the most tax-effective choice for your business.
Truck financing risks and traps
Before you choose a truck finance option, make sure you’re aware of the following risks:
Getting in over your head. Before you sign anything, make sure the regular repayment amount is at a level your business can comfortably afford.
Buying the wrong truck. Research your new truck purchase thoroughly before you commit any funds. This will ensure that you get a truck that meets all your needs and that will be affordable to own and run.
Not getting expert advice. Your accountant or a trusted finance broker can help you determine which truck financing product is right for your business.
How to select the right truck for your business
With such a wide range of high-quality heavy vehicles in Canada, it can be difficult to know which truck is the best fit for your business. Consider the following factors before making a decision:
What you need to use the truck for. Are you transporting heavy goods, refrigerated items, or do you need a tipper truck to discharge a load? Also consider who will be using the vehicle and whether or not they’ll need to obtain a special licence.
Performance. How efficiently can the truck you’re considering get the job done? Is it fast, durable and frugal with fuel?
Safety considerations. How safe is the truck for drivers and passengers? Is it easy to get in and out of the truck when on the road? Is there a comfortable sleeping cabin for drivers working longer routes?
Service intervals and maintenance needs. Servicing and maintenance costs for heavy vehicles can be very expensive, so find out what sort of regular maintenance your truck will need.
Appearance. If your vehicle is going to be all over Canadian roads and highways representing your business, be sure to choose a vehicle that’ll leave people with a good impression.
This depends on an extensive range of factors, including everything from the type of business you run to your current financial situation. Ask your accountant for advice tailored to your business.
Yes, there are lenders who can help you find financing to buy a used vehicle for your business. You can also look into getting a general business loan, which can be used to cover a wide range of business expenses including buying used vehicles and equipment.
Yes, but you will usually be required to pay an upfront deposit or offer another asset as security for the loan.
The best rates are generally offered to operators who have been in business for several years and have a good credit history. You may also need to provide comprehensive financial statements and assets to offer as security.
Alex Jeffs is the senior publisher for personal, car and business finance at Finder. He has been building websites since he was 14 years old and has tested cars everywhere from race tracks to Oodnadatta. See full bio
Stacie Hurst is an editor at Finder, specializing in a wide range of topics including stock trading, money transfers, loans, banking products, online shopping and streaming. She has a Bachelor of Arts in Psychology and Writing, and she completed one year of law school in the United States before deciding to pursue a career in the publishing industry. When not working, Stacie can usually be found watching K-dramas or playing games with her friends and family. See full bio
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