At Trademate we get many applications and enquiries from clients looking on how to finance a truck when starting a new business.
We have prepared a simple list of things to prepare when looking to finance a truck.
Do you have an ABN?
When starting out as an owner driver some transport companies will require their contractors to have a company registered. At minimum most lenders will require you to have an active ABN to apply for a truck loan as you are financing a commercial asset for business purposes.
This process of applying for an ABN and registering a company can take some time and is required to start the loan process. Reactivating an old ABN can take even longer (sometimes months) so keep that in mind. Some lenders may also require that you are registered for GST.
What is your experience?
If you have previous experience as a truck driver or similar industry it can be beneficial in your loan application. Lenders like to see that you know what your getting yourself into. Also, a lot more than just driving a truck goes into being an owner-driver, so the lender might like to see that you have an accountant or someone else to help manage the bookkeeping and office work, this might be a casual employee or even your a spouse.
Do you have work ready?
It is required my almost all lenders to see that you have work ready to go. This usually in the form of a work source letter confirming that Company A is going to use you as a contractor and you will be earning X amount per week. Or you might be able to present a signed work contract between yourself and the company you will be working for.
Do you have a deposit?
If you are starting a new trucking business you might need to come up with an upfront deposit. This is usually because of the high risk associated with start-up businesses. If you cannot come up with a deposit or enough deposit you might be able to offer assets that you own as security for the truck loan.
Are you Asset backed?
It is viewed favourably by the lenders if you have equity in property, if in the event of an emergency or a breakdown on the truck, you can borrow against your house to cover repairs so that you can get back on the road sooner.
Having access to savings or other working capital is also something that a lender would look at favourably. When you start driving you might not get paid for 30 days or more and therefore need to cover short term business expenses like fuel, insurance and maintenance while still making truck payments on time.
What is your credit score?
A low credit score or bad credit will affect you chances of getting truck finance. If you do have bad credit or a low credit score don’t worry there might be a solution that we can find for you. In addition to traditional financing options, we also have rent to own truck options available.
How old is the truck?
Most banks and mainstream lenders will not look at a truck that is over 7 years old at time of purchase. If you are looking at an older truck you might have to pay a higher deposit or go with a lender that will finance older trucks but at a higher rate.
There is a lot to take into consideration when you’re arranging commercial truck finance for the very first time. Luckily the team at Trademate has the experience and expertise to get your truck loan over the line and on the road. To get a quote you can visit this link to truck finance.