There are two parts or components to a truck finance deal and both can incur unnecessary cost imposts to your business depending on how you decide to approach them. There is the actual loan itself and there is the process by which you acquire that loan. Most likely just like the truck make and model you’re considering purchasing, these two components have variants. Different options vary in regards to cost-benefit analysis. For one, the choices are quite cut and dried and decided primarily on a technical basis. For the other, it can be a more personal choice but with consequences. Intrigued? We elaborate to enlighten you on how you can secure a cheap truck via a process that won’t overburden your capacity.
Truck Loan Options
Businesses have the choice of a number of finance products for the purchase of trucks. Cost savings and tax benefits can be realised by selecting the right loan product and by ensuring the interest rate is the cheapest achievable.
Loan products for truck acquisitions include:-
- Truck Rental or Rent to Own
- Truck Leasing
- Chattel Mortgage or Truck Finance
- Commercial Hire Purchase
These loan products feature varying benefits to business dependent on the accounting method used by the business and the financial objectives of the business. The individual features of each also vary in regard to when and how tax deductions are realised; how GST is applied and claimed; whether the lender or the borrower retains ownership of the truck over the time of the loan which then impacts the balance sheet; and the interest rate.
The interest rate varies across the types of loans due to the structure of each finance facility. Chattel Mortgage and CHP typically attract the lowest interest rate, Leasing is the next best and Rent to Own the highest. Though we point out at this point that Business Finance does focus on achieving as cheap interest rates as possible across the board. View our truck finance interest rates here.
But rushing into simply opting for the cheapest interest rate loan product, may end up costing you in terms of the more attractive benefits offered by other products. In deciding which loan product will deliver the greatest all-around benefit to your business, we recommend that business owners consult with their accountant or tax agent. Most of the reasoning behind loan product selection is based on accounting issues so your professional accountant will be best placed to assist you with this.
Another aspect to consider is if you are interested in realising the benefits of IAWO or temporary full expensing. These require the truck to be listed on the borrowing company’s balance sheet, so Chattel Mortgage is preferable for this purpose.
The same products are available for the purchase of all types of trucks from light through medium and onto heavy-duty vehicles. So aspects of the actual truck, except for the purchase price, of course, should not influence the loan product decision.
The Loan Acquisition Process
The other critical component of the truck loan to consider carefully is the process. The way you actually source your commercial finance.
If you or one of your employees spend xx amount of time engaged in sourcing your business finance, do you factor the cost of that lost productivity or your own lost working hours into the overall cost of the loan? If you’re intent on getting multiple quotes to compare, you may have to be prepared to commit a significant time element to this process. Getting quotes from multiple banks and finance companies can involve a lot of phone calls, answering (the same) questions about your business and the truck you’re buying and then having to wait for calls back with quotes. Could that mean you having to give up a lucrative job for a customer? Hiring extra staff or giving extra shifts to cover your hours while you’re working on your loan? And if you do go down this path are you 100% certain you have actually connected with banks and lenders that offer the best deals on truck finance?
Yes, there are questions to be answered.
To avoid the cost of your own time or one of your team spending all that time to get wherever there is a cost-effective and common-sense alternative – just engage a Business Finance broker. We take on the entire task of sourcing truck finance for our customers so they and their staff can remain working productively throughout the process. Yes you will need to answer some questions (but phew only once) and provide us with the required information, but then it’s over to us to do our job.
As we specialise in commercial finance, we have connections with lenders, including non-bank lenders that are experts in certain fields of finance, such as heavy vehicle finance. Some of these only operate through industry connections and therefore not accessible to businesses except through a broker.
By providing you with this level of access and to lenders that are renowned for offering better interest rates, we can source the cheapest truck loans quickly and easily. We save you the costs involved in embarking on the task yourself plus we save you money by sourcing a genuine cheap interest rate loan. It’s a win-win.
When you’re buying a new truck, you don’t want the repayments on the loan to overload your cash flow and you don’t want the process of securing that loan to overload your resources. Both scenarios can end up costing, or more correctly wasting, your money.
Our experts at Business Finance can help source your truck finance today.
To discuss your lending, call 1300 000 033
DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.