SPONSORED CONTENT | Putting the extra effort in planning for your truck finance can save you and your business a bundle
According to the Australian Bureau of Statistics, there are 132,843 trucks registered in Australia (2012-2017). Most, if not all of them, are commercial vehicles.
Financing a truck is like financing a business; if you run freight, you can’t live without it.
Putting the extra effort in planning for your truck finance can save you and your business a bundle. So here’s five way to ace and save money on truck finance.
1. Put together a business plan
Since your truck is a performing asset, i.e., something you own that will make you money, you should approach your lender or broker with a business plan when applying for a truck loan; it’s not just a case for owning a truck.
You should show your lender why your chosen truck would profit the business in the short- and long-term, with estimates for depreciation, profit, and growth.
“It’s true; without trucks, Australia stops,” says Savvy CEO Bill Tsouvalas, “and without a truck in your business, you can’t move.
You have to make this clear to your lender or broker. You should see them as potential investors in your business. Impress them the same way you would a private shareholder.
2. Risk management – insurance and fail-safes
You should present a risk management plan as part of your business plan. What happens if your truck breaks down, requires extensive maintenance, or becomes damaged?
You should already know the threats to your business asset and arrange for business insurance, income protection insurance (if you’re a sole trader) and of course, comprehensive truck insurance.
3. Buy new, or close enough to
If you have done the sums around depreciation, you know that a truck that’s factory fresh, or near enough to (perhaps a six month to one-year ex-lease) has higher residual value in it than older, used trucks.
A lender or broker will look upon your choice with favourable eyes more so than trying to cut corners by going for something nearing the end of its life cycle.
“More value means lower risk,” Tsouvalas says. “This means lenders are more inclined not only to say yes, but even offer lower interest rates as a sort of reward.”
4. Buy with economy in mind
Do you leave your lights on when no one’s home? If you answered no, there’s no point buying a truck that uses extra fuel just because.
When presenting the models of truck in your plan, show your lender that you’re opting for aerodynamic trucks or trucks with high efficiency or fuel economy.
5. Put your own skin in the game
If you want to save even more money long-term, set aside capital for a deposit on your truck.
Though chattel mortgages and hire purchases don’t require a deposit, having your own “skin in the game” gives you equity in the purchase and offsets risk for the lender.
“A deposit is extra security for a lender, which is another win for you,” Tsouvalas says.
“You will also be able to claim depreciation, interest, the GST paid, and fuel input tax credit – so you may even end up breaking even or profiting from the get go.”