YOUR GUIDE TO BUSINESS TRUCK FINANCE


Historically low interest rates and unprecedented tax breaks mean there’s been no better time to buy a truck

YOUR GUIDE TO BUSINESS TRUCK FINANCE
Are you looking at buying a new truck?

If you’re in the market for a new truck for haulage, logistics or heavy-duty roles, there’s never been a better time to buy. Interest rates are currently at historic lows. With special loans for business such as chattel mortgages, you can benefit even further from 100 per cent finance, tax deductions, and the extended instant asset write-off.

So how can you make the most of business finance and tax deductions when buying your next truck?

CHATTEL MORTGAGE AND BUSINESS LOANS

Record low interest rates and tax incentives have spurred on truck sales, preventing them from becoming "much worse", according to the Truck Industry Council. A statement from the council said June "resulted in the best monthly sales ever recorded in Australia".

For most owner-drivers who have an ABN, they’ll be buying a truck exclusively for business purposes. This means you can apply for business-oriented loans such as chattel mortgages and hire purchases. Though functionally similar, there is one big difference – where the truck ends up on your books. 

In both types of loans, you’re given finance to purchase a truck. The truck is used as collateral for the loan. When you’ve paid off the loan, the mortgage is removed. In the case of a hire purchase, the same happens in practice except your bank or lender retains ownership. This makes it "off the books" and not counted as an asset on your balance sheets. This may be better for your business structure; ask your accountant or financial adviser before you decide.

One of the biggest advantages in either type of loan is you can borrow 100 per cent or more of the value of your truck, which means you won’t have to come up with a deposit. Truck finance expert and Savvy CEO Bill Tsouvalas says this means your truck can start making money straight away. "Since you don’t have to come up with a deposit and can borrow more than the value of your truck, you can pay for insurance, registration, licencing and even the first scheduled service in instalments instead of upfront. It could give your business a huge starting advantage, especially in leaner times."

As chattel mortgages are tied to the value of the truck, interest rates are usually more competitive than other types of unsecured business loans. 

TAX ADVANTAGES AND THE INSTANT ASSET TAX WRITE-OFF

As an owner-driver, you can take advantage of tax breaks such as claiming back GST, depreciation, interest paid and the fuel input tax credit on your Business Activity Statements (BAS).

Your business may be eligible for the instant asset tax write-off, which has been increased to $150,000 until December 31, 2020. The write-off is available "for new or secondhand assets first used or installed ready for use in this timeframe." For more information, visit the ATO.  

TALK TO A BROKER

To get the best deal on chattel mortgages or hire purchases, it’s best to talk to a truck loan broker. They can find many different loans from their lending panel and help you secure a package that works for you. It’ll also save you a lot of time doing the research and calculations yourself.

 

This article is brought to you by Savvy Finance.

 

 

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