4 Options for Low Doc Truck and Heavy Vehicle Finance
As seen in previous articles on our site, there are many different factors that impact on truck finance and heavy equipment finance. The world of low doc lending even further complicates this process. Below is list of different low doc funding options available to customers of Heavy Vehicle Finance.
Option One – Replacement Finance
This option is available when a client is purchasing a new item of equipment that will replace an existing item – i.e. trading in current truck for a new one.
What are the requirements under Replacement Policy?
Finance Amount to not exceed $500K
Amount being financed does not exceed 125% of the previous loan amount
Monthly payments to increase no more the 25% of the previous monthly payment
Good payment history on existing loan contract for at least 12 months
Goods being purchased to be through a dealer (no private sales)
No adverse credit for applicant
Features
Quick turnaround times
Good base interest rate offered to client
No inspections required on the items of equipment being purchased
Minimal paperwork required in order to complete settlement
Very easy and simple process for the client
Online finance approval available
Option Two – No Financials Available
This option is taken up by clients when they need to move on the purchase of a particular item of equipment even though their accountant has not prepared financial statements for their business.
What are the requirements under No Financials?
Amount financed not to exceed $500K
Applicant to have equity in property
Client to have good payment history on an existing loan contract for 12 months
Copy of last business activity statement to be provided
Copy of current tax portals to be provided (on both integrated client account and income tax account)
5-year maximum loan term with goods to be no older than 8 years old at end of term
Goods to be purchased through a dealer (no private sales)
Clear credit history for applicant
Features
Great base interest rate offered to client
No inspections required to goods being purchased
Fast application process
Online finance approval available
Option three – Low Doc Finance for Older Trucks and Heavy Equipment
This type of funding is suited to clients that are looking to purchase equipment greater than older than five years or not being purchased through a dealer.
What are the requirements of low doc lending for older equipment?
Last three months’ bank statements on client’s business trading account
Private sales and dealer purchases are acceptable
Deposit is required or collateral security taken over another item of unencumbered equipment
Paid defaults are acceptable under this policy
Features
Assessment and turnaround times on this type of funding takes a little longer
More paperwork is required from the customer in order to get truck finance approvals
Risk premium added to base rate given the age of the goods
Inspections to be completed (by a licenced dealer) on goods being purchased as well as the collateral security
Option Four – Low Doc Finance for New Ventures
What are the requirements for new start truck and heavy equipment finance?
Cash flow projection to show income and expenses for the first 12 months of operation
Work source letter from a company client will be working for showing they will be a preferred contractor
Upfront deposit of between 10 and 20 percent of the purchase price is required
If no deposit is available, collateral security can be taken over client’s property or equipment they own outright
Applicant to have sound asset backing
Preferable that applicant have relevant industry experience
Goods being financed need to be roughly no older than 7 years old at time of purchase
Features
New venture truck finance can be difficult to secure, unless deal is assessed by a specialist truck finance company
Upfront deposit can be difficult to raise without putting a strain on working capital position
More documentation is required in order to settle these types of deals
Heavy Vehicle Finance has been facilitating full doc and low doc loans for the Transport and Heavy Industries for the last 15 years and have helped many clients that were not able to secure finance elsewhere. Most customers only consider the major banks as finance options relating to truck finance, but do not look to an equipment finance specialist like Heavy Vehicle Finance.
Our competitive advantage over other Financial Institutions, is that we can offer clients a more diverse range of products compared to only a limited few offered by the big four Banks. This can make a big difference for those in the market that might miss out on securing capital equipment if they were unable to secure finance to do so. For instance, if a client was looking to purchase an additional truck in order to meet the requirements of a new contract – but were declined on finance by the bank, they could potentially loose the contract along with the increased earnings. However, if the same customer came to Heavy Vehicle Finance for finance approval, their change of succuss would be increased significantly.
In brief
If you are looking to finance a truck or any type of heavy equipment to either grow your business or keep it competitive, it is recommended that you give a specialist equipment finance lender a go before narrowing your options with the big four banks.
Our consultants are ready to take your call on 1300 788 740 or you can apply via the pre-approval page of our website.
