Table of Contents
01 — CLIENT SCENARIO
Arranging truck finance through a dealer can feel like the easiest option, but it isn’t always the cheapest one.
A client came to us after finding a 2015 truck through a dealer, with a finance offer already on the table. On the surface, it looked like a done deal. In reality, it was a costly trap waiting to happen.
The dealer’s finance offer carried a 20% interest rate, along with a balloon payment at the end of the term. Together, these two factors meant she would end up paying significantly more over the life of the loan than the truck was worth.
The deal also included a trade-in on her existing vehicle, but with negative equity of more than 30%. This level of negative equity as high risk can make an application far harder to place.
Her financial profile added another layer of complexity. Her ABN had been active for over two years, which was a positive. However, she had only recently registered for GST, which on paper made her situation look inconsistent and difficult for a standard lender to assess.
Buying a first, or next, truck should be an exciting step for any owner-operator. Instead, this client was staring down an offer that could have locked her into years of expensive repayments, simply because it was the only option presented to her.
DEAL SNAPSHOT
| Loan Type | Truck finance |
| Asset | 2015 truck |
| Industry | Transport / Logistics |
| Business Stage | ABN 2+ years, recently GST registered |
| Key Challenge | 20% interest, balloon payment, 30%+ negative equity, mixed PAYG/business income |
| Solution | Restructured application using combined PAYG and business income |
| Approval Time | Fast-tracked |
| Outcome | Approved with a major bank at ~7%, no balloon payment |
02-THE CHALLENGE
The dealer’s offer looked convenient, but it was built on terms that worked against the client:
A 20% interest rate, well above market rates for a client with her profile
- A balloon payment at the end of the term, increasing the total cost of the loan
- Negative equity of more than 30% on the traded vehicle
- An ABN active for two years, but only recently GST registered
- A mix of PAYG employment income and business income that didn’t fit a standard application
From a lender’s perspective, this combination raised red flags. The recent GST registration made her business look newer than it was, and the negative equity added risk on top of an already complex profile. Left as it was, the dealer’s finance offer was the path of least resistance and the most expensive one.
03- THE APPROACH
Accepting the dealer’s finance as presented would have meant locking the client into a 20% rate and a balloon payment for years to come. We didn’t think that was necessary, or the right advice to give.
Instead, we took a full look at her financial picture, not just the numbers the dealer had used:
- She worked PAYG, with a stable, verifiable income
- She also ran a business on the side, generating additional income
- The truck was intended for business use
- Her ABN history, while recently GST registered, still showed two years of activity
Rather than relying on business income alone, which was harder for a lender to assess given the recent GST registration, we structured the application to include both her PAYG income and her business income. This gave the lender a fuller, more balanced view of her capacity to service the loan.
We took a different approach. By looking beyond the dealer’s offer and building an application around her complete income picture, we gave a major bank the confidence to approve the deal on far better terms.
04-THE OUTCOME
The client was approved with a major bank, at an interest rate of approximately 7%, with no balloon payment attached.
Compared to the dealer’s original offer of 20% with a balloon payment, this represented a substantial saving over the life of the loan, both in monthly repayments and total interest paid.
Most importantly, she avoided a deal that would have cost her thousands more than necessary, and secured the truck she needed on terms that actually made sense for her business.
In cases like this, the key question is often not whether finance is available, but whether the finance on offer is actually the right fit. This may come down to:
- The true cost of interest rate and balloon structures over time
- How trade-in equity is factored into an application
- Whether PAYG and business income can be combined to strengthen an application
- The lender best suited to a mixed or recently changed income profile
CONCLUSION
A dealer’s finance offer isn’t the only option and it isn’t always the best one. For owner-operators and business owners seeking truck finance, the first offer on the table is worth having checked before you sign. Sometimes, a proper review of your income and a better-suited lender can save you thousands over the life of the loan.
Xpress Finance has settled more than $300M in commercial finance and works with 50+ lenders to find practical solutions for complex truck finance application. Speak with our team today for clear, honest guidance on what may be possible.s.
Frequently Asked Questions
Is truck finance possible with a new ABN or recent GST registration?
Yes. A recent GST registration may make an application appear more complex, but lenders may still assess the broader financial position. This can include the length of time the ABN has been active, business income, industry experience and any additional income sources.
Does negative equity on a trade-in affect truck finance approval?
Yes. A high level of negative equity is generally viewed as an additional risk because the amount being financed may exceed the value of the replacement truck. However, it may not automatically prevent approval when income, serviceability and the overall application are strong.