Can I Finance a Used Truck That Is More than 20 Years Old? What a Truck Loan Experts Says

 

When it comes to buying a vehicle, whether it’s commercial or personal, looking for second-hand options rather than a new one is a great idea.

In Australia, used cars average age is usually 10.1 years. Therefore, if you choose one, not only could you pay an affordable price, but it would have less depreciation over its useful life.

However, you may still have questions about the process, especially if you expect to buy commercial vehicles, including trucks.

Can you rely on a car finance solution to buy a large and heavy motor vehicle? Are there truck loans that can allow you to buy a second-hand model? How old could it be? Read on and find the answers to those questions!

Can I Use Car Loans to Buy Trucks?

Auto or car loans are divided into two categories: personal and business. Therefore, if you hope to buy a truck, you should look for a specific type of heavy commercial vehicle loan.

What Is Truck Finance?

 

In this sense, to buy a truck or other used car that you plan to use to support your company’s operations, you need business financing.

Whether you want to buy an old or new truck, business vehicle financing solutions allow you to get secured or unsecured loans to cover its cost.

Depending on the type and age of the vehicle, the interest may fluctuate. However, truck finance alternatives are usually secured, meaning you must give the vehicle itself or other goods as collateral.

If the lender has an asset they can claim as theirs if you fail and or pay back your loan, the interest rates for truck financing options tend to be lower.

Types of Trucks That You Can Finance with a Loan

 

As long as you meet the eligibility criteria, you can find truck finance options for all brands, including market-leading ones, such as Mercedes-Benz, Western Star, Scania, or Volvo.

In addition, most lenders offer loans to different types of truck models, including:

• Semi-trucks
• Light trucks
• Medium trucks
• Heavy-duty trucks
• B-doubles
• Car carriers
• Livestock transporters
• Tippers
• Water truck
• Tankers
• And more!

Some lenders also finance prime movers for interstate or long-distance haulage, while others have asset age restrictions to provide loans.

Different Truck Loan Options Available

 

If you need funds to finance a used car for business purposes, including trucks or other vehicles, you can find four types of loans: chattel mortgage, commercial hire purchase (CHP), finance lease, and operating lease.

Chattel Mortgage

Also known as a commercial loan, a chattel mortgage is an equipment or car finance option that allows a lender or bank to finance a vehicle or tool for business purposes.

While you retain the asset’s full ownership if you choose this option, the lender can use the vehicle or piece of furniture itself as security or collateral. In other words, they can claim the good if you fail to repay the debt.

Commercial Hire Purchase (CHP)

The lender buys an asset on behalf of the borrower, who hires it back for a specified period. During that time, you retain no ownership of the vehicle or piece of equipment.

However, if you pay the interest charges and the asset’s full price when the term ends, ownership is transferred to you.

Finance Lease

The financier also buys the equipment or truck on your behalf, but you must rent it back instead of hiring it. Once you complete the residual payments, the vehicle is officially yours!

Operating lease

You can lease the truck for a period of time. Once the term ends, you can either return the vehicle or purchase it at a fair market price.

Can Businesses of All Sizes Apply?

 

Many small business owners who need vehicles and equipment believe getting loans is impossible if they don’t have years in the industry. However, there are multiple truck financing options for all types of companies and commercial entities.

Moreover, whether receiving new or used car loans, all borrowers must use the vehicles for business purposes (more than 50%). Therefore, the minimum requirement applicants must meet to be eligible is holding a current Australian business number (ABN).

Used Car Finance for Commercial Purposes

 

Commercial vehicles are not cheap. However, many businesses depend on them to stay afloat. Therefore, when new cars are way out of budget (even if you find financing), buying a used one is the ideal alternative.

A used car loan can help you save on initial costs. However, depending on the vehicle’s age, you may have to cover other expenses.

Average Age Limit on Used Truck Loans

 

The age limit on used trucks for financing depends on the lenders’ or banks’ requirements. In some cases, it also depends on the financial information you can provide.

If you get a no-doc or low-doc loan from a bank, the truck’s age may be limited to four years. However, if you have your current financials, you could buy older vehicles. Also, most non-bank lenders are more flexible.

Does It Mean Can I Get Financing for a Truck over 20 Years Old?

Yes, it does! While the average age is only half that, some lenders and finance companies offer used car financing options to buy trucks that are over 20 years.

Used Vs New Trucks

 

Before applying, you should also know the differences between the loan alternatives you can find to buy a new or an old one.

Loan Term

Most truck loan terms are between 36 and 60 months, with monthly repayments that change according to their length. The longer the loan term, the lower the repayments can be.

In some cases, when you apply for a used car loan to buy a truck, balloon payments may be available. If you choose this option, you can reduce your monthly payments throughout the term and pay a lump sum when it ends.

Interest Rate

Used truck loans generally have higher interest rates compared to financing options for new ones.

The older the vehicle, the higher the car loan rate can be. Also, the interest rate could be affected by other factors, such as your credit score or if you choose secured financing.

Tax Benefits

Unlike most personal loans, commercial vehicles and equipment finance have some tax benefits.

Under chattel mortgage and CHP options, you can claim depreciation and interest as a tax deduction, for example. Also, you can claim the Good and Services (GST) tax on your input tad credit if you can prove that the truck was used for business purposes.

Final Thoughts

 

Obtaining second-hand truck finance can greatly benefit your business as long as you find the best used truck loans.

However, while a used truck may be cheaper than a new car, the cost may be increased by a higher interest rate.

Also, if you have a low credit score or plan to pay off your car loan early, there may be other fees. Keep that in mind!