Loans for Used Trucks
There is an active market for used trucks for activities in the logistics, transport, construction and manufacturing industries. Compared to brand new trucks, used trucks are often a smart buy because at a lower cost, they still deliver in power, configuration and material handling ability. However, one disadvantage that comes with acquiring used trucks is the financing aspect. Lenders discount the useful life of the second hand asset and do not favour this type of asset over new ones. In our recent used car truck finance deal, we were able to secure a loan for our client for a truck that was a 2008 model (i.e. 14 years old) with a Tier One lender, Westpac Business.
The Business Case for an Older Truck
Our client owns and operates a landscaping business in Western Sydney. One of the key processes in landscaping is to dig up earth and then remove it with anything else that is found in the ground (e.g. rocks, vegetation). Landscapers would typically hire machines to remove this earth into ‘skip bins’ which are then removed later by another supplier. However, this method is convoluted, costly and doesn’t add value to the customer.
The client has identified a solution to simplify the work steps and which would bring in significant cost savings as well as being an additional revenue stream. He purchased a HINO 500 FC Series which has the ability to remove rubbish on site AND transport it away in one go. The size of this truck is small enough to manoeuvre into tight access sites for this purpose.
Other value-adding features of this asset include a built-in tipping tray, side access and a crane. This used truck would enable our client to generate additional revenue from a mobile rubbish removal service, a second objective of purchasing this truck.
Commercial Loan Application for Used Truck
The biggest hurdle in getting finance for used trucks is that the lenders see little useful life remaining in the asset. For a commercial loan term of 5 years, a 2008 model would have been 19 years old at the end of the term. Therefore, to put a case forward, we submitted the loan application along with a list of mitigants and security commentary. The mitigants include:
- A large deposit i.e. $30K or 39% of the purchase price
- No balloon payment i.e. paying down the loan to nil over 5 years
- Low mileage (65,000km) i.e. the truck has plenty of useful life despite age
- Our client was an experienced landscaper
- No adverse credit history for its existing asset finance facilities
- Good references can be provided by existing lenders
- Full doc application based on FY21 financials
- All existing asset finance facilities would be paid out except for one non-heavy vehicle
- A strong landscaping business
“Outside of Policy” Scenario For Second Hand Asset
For this second hand truck acquisition, a strong security commentary was added in the loan application.
“The HINO truck although is a 2008 model it has very low km’s of 65,912 which equates to an average of approximately 5,000 km per year. It comes very well equiped with a crane and tipping tray which are fit for purpose, ready to go. Further to this it includes a 3.5 Tonne Tow Bar assembly, Rotating Beacons and UnderBody Tool Boxes. The truck has an up to date maintenance history as it is an ex-government council truck and comes with dealer warranty. It is a small size truck at 10,400 GVM so it can get on to tight access sites which again is a perfect fit for purpose as many rubbish removal services cannot do this for landscaping jobs which are often in tight spaces.”
As the finance broker for this important asset purchase, we were able to understand the client’s business, features of the asset and how it would add value to the business. This enabled us to explain the scenario to a Tier One bank’s credit department in a way that did not comprise the risk profile of the deal.
The mitigants, a strong business case for the asset, as well as quality attributes of the security contributed towards the success of this truck loan application.
The Second Hand Truck Deal
- Purchase Price: $70,000
- Total Additional Costs Financed: $450
- Total Amount Financed: $47,450
- Term: 60 months (payments In arrears)
- Balloon: $0
- Conditions: Licensed dealer / authorised supplier tax invoice
Contact our Asset Finance Specialist
If you are in the market for second hand trucks or heavy machinery, please feel free to reach out to me. My experience in handling “outside of policy” scenarios for used trucks will be invaluable to you and most important of all get your loan submission over the line. Contact us on: or 02 8004 1888.
Fill out our Online Assessment Form
We have created an online assessment form for clients who would like to leave a few details about their scenario before my team gives you a call to discuss. This can be done on your mobile, tablet or desktop and takes a few extra minutes to complete: