Prime mover finance is a business loan for a prime mover, with the truck as the security. Most owner-drivers use a chattel mortgage over five years. On a new prime mover that comes to about $7,300 to $9,200 a month. On a used one it is closer to $3,800 to $4,700.
The short version
- A chattel mortgage is the usual way to finance one. You own the truck from day one and claim the GST back on your next BAS.
- Rates sit around 6.5% to 8.5% p.a. for a new truck and an established business. Older trucks, low-doc deals and new ABNs pay more, up to about 14%.
- For an owner-driver, the contract matters most. A letter from the principal showing your rate and the work goes a long way with lenders.
What the repayments look like
These are five-year chattel mortgages. The rates are examples, not quotes.
| The deal | Borrowed | Rate | Balloon | Per month | Total paid |
|---|---|---|---|---|---|
| New $460K truck, established operator | $460,000 | 7.5% | None | $9,217 | $553,047 |
| Same new truck with a 30% balloon | $460,000 | 7.5% | $138,000 | $7,315 | $576,883 |
| Used $230K truck, 10% deposit | $207,000 | 10% | None | $4,398 | $263,888 |
| Same used truck with a 20% balloon | $207,000 | 10% | $46,000 | $3,804 | $274,246 |
| Same used truck on a new ABN | $207,000 | 13% | None | $4,710 | $282,593 |
Total paid includes the balloon. Lender fees are not included.
The balloon cuts the new truck's repayment by about $1,900 a month, but you pay about $24,000 more over the loan. Our guide to balloon payments covers when that trade is worth it.
A new ABN costs about $310 a month more on the used truck. That is about $18,700 over five years.
If the price includes GST, you claim it back on your next BAS. On a $460K truck that is about $41,800.
What lenders want to see from an owner-driver
Lenders look at you, the work and the truck.
You
- An ABN. Two years of trading gets the best rates and the low-doc option. A new ABN can still get finance, usually with a deposit and a higher rate. See equipment finance with a new ABN.
- Clean credit, for you and the business.
- Recent BAS or tax returns. Low-doc uses six to twelve months of BAS or a letter from your accountant.
The work
- A signed contract, or a letter from the principal showing your rate and how long the work runs.
- Lenders are happier when you have more than one customer. If all your work comes from one principal, expect to be asked what happens if that contract ends.
The truck
- Its age at the end of the loan. Most lenders cap this at 15 to 20 years.
- Kilometres and service history.
- For a private sale, an inspection and a PPSR check for any finance the seller still owes.
How much deposit you need depends on the same things. Our article on truck finance deposits covers it in detail.
New or used?
A new prime mover usually comes with a warranty, a lower rate and often no deposit. The truck makers' finance arms sometimes run very sharp rates on new stock. Compare the total cost, including any add-ons in the contract.
A used prime mover roughly halves the repayment, which matters when you are starting out. The risk is repairs. Ask for the engine history.
A common path is to start with a used truck, build two years of trading and clean repayments, then upgrade on better terms.
Tax on a financed prime mover
A prime mover is not a car under the ATO's rules. The car limit only applies to vehicles that carry less than one tonne and fewer than nine passengers. So the GST credit is not capped and neither is depreciation.
Under Division 40, the ATO's effective life for a truck over 3.5 tonnes is 15 years. A cap in the law lets you depreciate it over 7.5 years instead. The interest in each repayment is deductible too. Check the details with your accountant before you sign.
Prime movers are one part of the asset finance we arrange for transport and logistics businesses. Our truck finance guide covers rigids, trailers and dealer finance.
If you have a contract lined up and a truck in mind, send us the truck details and the contract letter. We will tell you which lenders will write it and what it should cost. Start an application. It takes under a minute, and most enquiries get a response within four business hours.