When it comes to financing a truck or trailer, the structure you choose matters as much as the interest rate. Different finance types have different tax treatment, ownership outcomes, cash flow impacts and eligibility requirements. This guide covers every major truck and trailer finance option available through Overdrive Funding's lender panel.
Chattel Mortgage
A chattel mortgage is the most common commercial truck finance structure in Australia. You take ownership of the truck from day one while the lender registers a mortgage over the asset as security. Once the loan is repaid in full, the mortgage is discharged. Because you own the asset, you may be able to claim the full GST on the purchase price upfront, depreciation, and interest as tax deductions — subject to your accountant's advice.
Chattel mortgages suit GST-registered businesses buying trucks for commercial use. Fixed interest rates are standard, so repayments are predictable for the full term. A balloon payment at the end of the term can reduce monthly outgoings if preferred.
Finance Lease
Under a finance lease, the lender (lessor) owns the truck while your business leases it for an agreed term — typically two to five years. Lease payments are made monthly and may be fully tax-deductible as a business expense. At the end of the lease term, you usually have three options: purchase the truck at its residual value, refinance the residual amount, or return the truck and upgrade.
Finance leases are often chosen when a business wants to keep trucks off the balance sheet or prefers to upgrade equipment regularly. The truck does not appear as an owned asset — the lease payments flow through the profit and loss statement.
Commercial Hire Purchase
Commercial hire purchase (CHP) is a hybrid structure: the lender buys the truck and hires it to your business for a set term with regular repayments. Ownership transfers to your business automatically once the final payment is made — there is no option at the end, it is guaranteed. CHP is similar in tax treatment to a chattel mortgage and can suit businesses that want certainty of ownership outcome.
Rent-to-Own Truck Finance
Rent-to-own allows a business to take possession of a truck immediately and use it while making regular payments. Ownership transfers to the business at the end of the agreement. This structure is particularly useful for operators who need the truck generating revenue straight away but want a simple, fixed payment schedule leading to full ownership.
Rent-to-own can also be more accessible for operators with limited credit history or non-standard business structures, as some lenders offering this product apply different assessment criteria compared to traditional finance.
Operating Lease
An operating lease is suited to businesses that regularly upgrade their trucks. You use the truck for an agreed period, make monthly payments, and return it at the end of the lease without any obligation to purchase. Because you never take ownership, the residual value risk sits with the lessor. This structure suits fleets where technology upgrades, fuel efficiency or emission standards make regular replacement preferable.
Equipment Loan
A standard equipment loan is a business loan secured against the truck. You own the asset from settlement, make regular principal-and-interest repayments, and the loan is discharged at the end of the term. Equipment loans are straightforward in structure and work well for businesses that prefer a traditional lending arrangement. Interest may be tax-deductible and the truck can be depreciated.
Low Doc Truck Finance
Low doc truck finance is designed for owner-operators and small transport businesses that cannot provide traditional income verification — typically no tax returns, BAS or financial statements required. Approval is based on ABN history, credit profile and the truck being purchased as security. Most specialist lenders offer low doc up to $500,000.
Low doc is particularly well-suited to subcontractors, owner-operators earning under contracts, and businesses that have recently restructured. Interest rates are slightly higher than full doc products, but the speed and simplicity of approval often outweighs the cost difference.
Low Deposit Truck Finance
Low deposit truck finance allows businesses to acquire a truck with a small upfront contribution — often 10% or less — rather than the standard 20% deposit that banks typically require. Lender approval is based on the strength of the overall application: ABN tenure, credit profile, and the truck's value relative to the loan. Lower deposit requirements mean more of your working capital stays in the business.
No Deposit Truck Finance
Eligible businesses may be able to finance up to 100% of the purchase price of a truck with no upfront deposit. This is available for prime applications — typically two or more years ABN and GST registration, a clean credit file, and a strong bank statement history. No deposit financing means you preserve capital for fuel, tyres, insurance and operating costs while still putting a new truck or trailer on the road.
Refinancing Existing Trucks
If your business owns trucks outright or with existing finance, refinancing can unlock equity to fund growth, improve cash flow, or consolidate debt. A refinance effectively means placing new finance against a truck your business already owns — releasing the difference between its market value and the new loan amount as usable cash. This can fund a deposit on an additional truck, cover a tax bill, or simply improve working capital.
Refinancing also applies where you want to move from a high-rate facility to a more competitive rate available on today's market. If your existing truck finance was arranged more than 12 months ago, it is worth comparing current lender rates.
Sale and Leaseback
Sale and leaseback allows a transport business to sell a truck it already owns to a financier and immediately lease it back, continuing to use it for operations. The transaction releases the equity tied up in the truck as working capital — which can be used for any business purpose. The business then makes regular lease payments to the financier for the agreed term.
This structure is often used by businesses that have built up equity in their fleet and need to free up capital without disrupting operations. It can also be an alternative to a traditional business loan where the truck acts as the security.
Which Truck Finance Structure Is Right for Your Business?
The right structure depends on your tax position, how long you plan to keep the truck, whether you need the asset on your balance sheet, and what documentation you can provide. A chattel mortgage suits most GST-registered operators buying to keep. A finance lease suits businesses that upgrade regularly or want operating expense treatment. Low doc suits owner-operators with limited paperwork.
Overdrive Funding compares 80+ banks and specialist lenders in one application — at no cost to you. Contact us for a free comparison across all available truck and trailer finance structures.