Truck and Commercial Vehicle Loans

Commercial car finance is a type of vehicle loan used to purchase a heavy vehicle.
Most truck and commercial vehicle finance will be secured against the vehicle you purchase, and many include high loan limits exceeding $1 million.

They work similarly to other types of vehicle finance:

• You’ll borrow an amount of money to finance the purchase of a vehicle
• You’ll make regular repayments to the lender to repay the total loan amount
  

The total loan amount includes the principal borrowing amount, and may include:

• Interest charges applied to the loan relative to the lender’s interest rates
• Establishment fees
• Early break fees
• Ongoing monthly fees
• Other costs or fees
  

The repayment period is the frequency you will make repayments. These will differ between lenders but are generally flexible to suit the borrower, and usually offered as either weekly, fortnightly or monthly. To be eligible for truck finance, you’ll need to prove your business has the cash flow needed to repay the loan.

Who offers truck loans?

Several different lenders offer truck finance including banks, dealerships and vehicle finance brokers.

Banks often have strict credit policies and detailed applications for vehicle finance. Your business must have good cash flow, accurate and up-to-date financial statements and high turnover (at least $75,000).

Vehicle finance brokers are a great option to consider if you need help selecting, structuring and applying for truck finance. They’ll offer expert advice and shop around to find you suitable loan terms and a low rate.

How much can I borrow with truck finance?

Each lender and each type of loan has different minimum and maximum loan amounts. Your lender will also decide how much you can borrow based on your ability to service the loan. Generally truck loans start at $5,000 to $7,500 and have maximum loan amounts from $250,000 to $20,000,000 or more.

Loan minimum and maximum amount

Commercial vehicle loan lenders generally offer finance at a minimum amount of $5,000 with no maximum limit.

What is the loan term?

In New Zealand, most truck finance options have loan terms from one to seven years. Small business loans generally have shorter terms from one month to two or more years.

What truck finance rate should I expect?

Interest rates will differ based on several factors including:

• The type and age of the vehicle you’re purchasing '
• The type of finance you choose
• How risky lenders perceive you to be as a borrower.
• Vehicle type and weight

Generally speaking, loans to purchase heavy commercial vehicles tend to attract higher interest rates, especially if they’re for a specialised or niche use. That’s because lenders may find it more difficult to sell such vehicles and recoup their losses.

Vehicle age

Loans to purchase brand-new vehicles usually have the lowest rates, with higher interest rates for used vehicles under five years of age, and higher rates again for used vehicles over five years of age.

Your risk profile as a borrower

Your lender will weigh up a number of factors to assess your risk as a borrower. That might include:

• How long your business has been trading
• How profitable your business is
• Your business cash flow
• Your business assets and liabilities
• What documentation you’re able to provide (low doc loans may attract a higher rate)
• If your lender identifies you as a high-risk borrower, they may charge you higher rates to cover themselves against that risk.
  

Who can apply?

Any person living in New Zealand over the age of 18 and currently holding a learner driver licence can apply for a vehicle loan. However, every application is different, so be sure to check qualifying criteria for the specific loan you wish to apply for.

In general, the majority of lenders will require borrowers to be:

• 18 years of age or older; and
• A New Zealand citizen or hold a work permit or permanent resident (PR); and
• currently employed or have regular income; and
• holding a minimum of a New Zealand Learner Licence.
  

When you apply, you will also need to provide photo identification and proof of address to verify your identity with the lender.

Do I need anything else to apply?

Even if you meet the minimum requirements for a vehicle loan, there are many ways you can improve your chances of receiving approval and the best interest rate possible.

Depending on your personal circumstances and credit history, there will be variations on how difficult the process is and how much you can borrow. If you have a history of defaults or bad credit, you may find it more difficult to gain approval or obtain a competitive rate.

Likewise, if you are a younger borrower, you may not have the credit history to offer a lender peace of mind in approving your application. In both cases, there will often be stricter qualifying criteria.

What fees will I pay?

Fees differ depending on the type of truck finance you choose, the lender you apply with and the type of vehicle you’re buying, but generally, they will include:

• Establishment fees
• Monthly account keeping fees
• Early loan termination fees
• Early termination fees
• Early repayment fees
  

Summary

Truck finance is a method of financing a heavy vehicle purchase that helps to spread the upfront costs of buying a vehicle over a longer period of time. To be eligible for truck finance your business must pass lender criteria, you will be assessed as a borrower and the vehicle’s type, age and weight could affect your loan’s interest rate.

Truck and commercial vehicle finance typically have minimum loan amounts of $5,000 and maximum loan amounts of $200,000 or higher to reflect the higher cost of large, commercial vehicles. Generally, this type of finance has loan terms from one to seven years.

Truck and Commercial Vehicle Loans FAQ

How long does it take to be approved for truck finance?

Some lenders offer approval for truck finance as little as 24 hours after you apply but in most cases, it’ll take three to five business days. Applying with your bank will generally take the longest amount of time to process.

Can I apply for truck finance if I’ve just started my business?

Yes, you can, however you may be charged higher interest rates and/or have your application denied. You can speak to a broker at Vehicle Loans to help assess your situation and find a suitable lender for your commercial vehicle purchase.

What are the tax benefits of truck finance?

Buying a heavy vehicle with truck finance may have a number of tax benefits for your business. You may be able to claim interest payments, depreciation and loan fees to reduce your business’s taxable income, but you should always speak to your accountant first.

Do I need a deposit to get truck finance?

Most lenders will lend 100% of the value of heavy vehicles and do not require a deposit. However, if you’re deemed to be a high-risk borrower or your business has been in operation for less than two years you may need to pay a deposit of 30% of the vehicle’s value.