If you’re thinking about a loan approval to finance a truck, one question arises: can you finance an older truck? It feels obvious that an older or a second hand truck would cost a lot less than a new one, hence it would be far easier and budget-friendly to finance it. But is it, really? Let us break it down for you today.
Old Truck Finance
Truck financing for new trucks may differ considerably from that for used trucks. At the very least, on a monthly basis. When repaying a loan for a new truck, you’ll be paying an average of 40% more per month than you would for an older one.
For example, let’s assume that the new version of the same model costs $200,000 and the older one costs $100,000. You’ll be paying ~$3000 per month for the new one, and probably ~$1800 for the old, with a $1200 difference each month.
Let’s take a look at all the important factors contributing to this trivial difference.
1. How Much Is the Finance Amount?
In the previous example, of course the total amounts for both differ by a huge margin, but on the other hand the loan for a higher amount, i.e., amounts higher than $100,000 attract lower interest rates as well. Hence, it’s paramount that you consider all the factors and pros and cons involved for both options.
Asset Finance Shop Tip: To get more ideas on how much you’ll have to repay after financing a truck, you can try some online loan repayment calculators available. Of course, they aren’t 100% accurate, but they’ll definitely give you a ballpark of how much you’ll have to repay.
2. How Long Is the Truck Loan Term?
The maximum loan payback period is five years if the truck is older than 10 years. Some banks will only allow you to work for three years, resulting in excessive repayments, but this is where our expertise comes in.
If a truck is more than 5 years old but less than 8 years old, then you’ll get a loan for the term of 5 years with the option of a balloon. This is of course more comfortable option as you’ll have to pay less monthly amounts as compared to those for older trucks.
Therefore, it’s a good idea to deal with a reliable truck finance broker like us here at the Asset Finance Shop. We’ll guide you every step of the way and let you know what we can do to get you the best deal for your overall business goals.
3. What Are the Approval Criteria?
As we mentioned earlier, it’s hard for a Bank to get a finance approval for a truck that’s over a decade old. Trucks of this age range are considered high risk assets. Even if the Bank does agree on approving the loan, they might ask for a deposit, which doesn’t happen in the case of financing comparatively newer trucks. We at the Asset Finance Shop can avoid these issues and get you the truck or machinery you need at any age!
4. What Are Tax Deductions Like?
The ATO has introduced a very popular instant asset write off up to $150,000
Asset Finance Shop Tip: It’s best to speak with a finance broker like the Asset Finance Shop, who can break down the tax deductions based on the truck you’re financing, the amount of loan you want to take out, and the methods used to make those deductions.
In Conclusion
Although used truck finance is less expensive in terms of the total loan amount, for some people, the advantages of financing a new truck may outweigh the advantages of financing an older truck. New vehicles are considered to be safer with a lower risk of mechanical or electrical failure, but older assets may be helpful in terms of freeing up cash flow for your business. Having said that, the majority of our customers are small business owners who prefer to finance older assets. Whether they are just starting out or have been in business for years, they put their trust in us to ensure that they get the best deal possible for their specific needs.
Need advice on financing old trucks or truck financing in general? Contact us on 1300 558 758 or via website live chat. You can also fill in this form and our expert will get back to you.
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