On a five-year truck loan at 8.5% p.a., every $100K you borrow costs about $2,050 a month with no balloon. A 30% balloon brings that down to about $1,650 a month, but you pay more interest overall and still owe the balloon at the end.
The short version
- $300K over five years at 8.5% is about $6,155 a month. That is roughly $1,420 a week.
- A balloon lowers the monthly repayment and raises the total interest.
- A longer term does the same. Seven years instead of five cuts $1,400 a month off a $300K loan and adds about $29,800 in interest.
- Your rate depends on the truck's age, how long you have traded, and whether the deal is full-doc or low-doc.
All the numbers below are chattel mortgages paid monthly. The rates are examples, not quotes. Lender fees are not included.
Repayments over five years
At 8.5% p.a. over five years:
| Borrowed | No balloon | 20% balloon | 30% balloon |
|---|---|---|---|
| $100K | $2,052 | $1,783 | $1,649 |
| $150K | $3,077 | $2,674 | $2,473 |
| $300K | $6,155 | $5,349 | $4,946 |
| $500K | $10,258 | $8,915 | $8,243 |
Take the $300K row. A 30% balloon saves $1,209 a month. Over the loan you pay $86,758 in interest instead of $69,298, so about $17,460 more. You also owe the $90K balloon at the end. You can pay it out, refinance it, or trade the truck in to clear it. Our guide to balloon payments covers when that trade is worth it.
What a longer term does
$300K at 8.5% p.a. with no balloon:
| Term | Per month | Total interest |
|---|---|---|
| 3 years | $9,470 | $40,929 |
| 4 years | $7,394 | $54,936 |
| 5 years | $6,155 | $69,298 |
| 7 years | $4,751 | $99,079 |
Seven years costs $1,404 a month less than five, but $29,781 more in interest. Lenders also look at how old the truck will be when the loan ends. Most cap that at 15 to 20 years, so a long term on an older truck may not be offered.
What the rate does
$300K over five years with no balloon:
| Rate | Per month | Total interest |
|---|---|---|
| 6.5% | $5,870 | $52,191 |
| 8.5% | $6,155 | $69,298 |
| 11% | $6,523 | $91,364 |
| 14% | $6,980 | $118,829 |
The gap between 6.5% and 14% is about $1,110 a month, or $66,600 over five years.
In our truck finance guide, a new truck for an established business on full-doc sits around 6.5% to 8.5%. Low-doc deals and trucks five to ten years old sit around 8.5% to 11%. Trucks over ten years old, unusual bodies and new ABNs sit around 11% to 14%.
What these numbers leave out
- Lender fees. Most loans carry an establishment fee and a monthly account fee. Add them in when you compare quotes.
- The balloon. It is due at the end of the term, on top of the last repayment.
- GST. If the price includes GST, you can usually finance it and claim it back on your next BAS.
Running costs like fuel, tyres, rego and insurance are not part of the loan. Budget for them on top of the repayment.
Run your own numbers
Use our asset finance calculator to put in your own price, deposit, rate, term and balloon. It shows the monthly repayment and the total cost.
For prime movers, our article on prime mover finance works through new and used trucks and what lenders want from an owner-driver. Truck loans are a type of asset finance, with the truck as the security.
If you want real numbers for your truck, send us the truck details and how long you have been trading. We will tell you which lenders fit and what it should cost. Start an application. It takes under a minute, and most enquiries get a response within four business hours.