Five Things to Consider Before Applying for Truck Finance
Investing in a new truck or equipment is a big decision requiring some forward planning, consultation and research for the right truck finance. The wrong choice can be financially draining to your business, impact future contracts, and damage employee engagement — after all, having the right tool for the job makes a huge difference to those using it day-to-day. Avoid common pitfalls by following these five steps.
1. Do you need the equipment or heavy vehicle you’re looking to purchase?
While this question might seem obvious, it’s surprising how frequently businesses invest in new equipment or technology that doesn’t actually fit their needs.
Answering the question of ‘need’ requires a two-pronged approach.
Firstly, you need to assess whether you have (enough) work lined up for it. Simply put: will the income generated or time saved by purchasing the additional equipment be greater than the cost of repaying and maintaining it? Secondly, you need to confirm whether the equipment is the right age and type for your intended use (see below).
2. Are you purchasing the right equipment for the task and your future clients?
To work with any business, you must sign a contract outlining any terms and conditions. In the world of heavy vehicles and equipment, it’s common to see contract requirements concerning the age of vehicles permitted onto job sites. Before investing in a new truck or equipment, be sure you know the fleet requirements of your major clients as well as any you hope to work with down the track.
Then, it would help if you considered whether the equipment is suited to the job. Think horsepower, size, body type, safety specs and more. Taking the time to assess the capabilities of your future purchase and how your clients will regard it can save plenty of headaches in the long term.
3. Do you have good credit?
Without a good credit history, securing finance can be either very expensive or impossible, especially if you’re applying for a loan without expert advice from a finance broker.
Our highly skilled brokers at AGM Finance ensure we have all the facts before we submit any applications, ensuring there are no unnecessary delays. By securing a copy of your credit file, we can determine your financial eligibility and decide the best course of action for you and your business, as well as your next acquisition.
4. What sort of loan is right for your needs?
Choosing the right type of finance is as important as selecting the right truck or equipment. To determine the best loan type, you need to if you want to own your new acquisition outright at the end of the loan or pay a balloon payment.
The determining factors for this decision will be how long you want to own the vehicle or equipment, and how you want to structure your cash flow.
If you intend on retaining your truck or equipment for a long time, a long-term loan with a balloon payment can be more suitable. Short-term equipment purchases may be better off with a shorter loan demanding higher monthly repayments and no exiting balloon payments.
To decide the best loan type for your business, always seek expert advice from your financial advisor or accountant.
5. Utilise the buying power of financial brokers to secure the best finance deal.
You may assume it doesn’t make much difference whether you apply for a loan in person or use a finance broker. The truth is, individual loan applications will never have the buying power of a broker, and you run the risk of missing opportunities should your self-submitted finance application be unsuccessful.
At AGM, we have a 98 percent success rate for loan approvals and access to over 40 different lenders. Meaning, we can guide you through your finance opportunities to ensure the best possible outcome.