Commercial vehicle finance: What's the best duration of a loan?

When you’re running a business and it comes time to either add one or two new work vehicles to your existing fleet or replace a few that are getting a little long in the tooth, you’ve got a few different options in terms of financing.

Do you go with a chattel mortgage (also known as a commercial loan) so you have full ownership of the vehicle(s) right from the start and claim the instant asset write-off? Maybe you opt for a finance lease to take advantage of the typically lower interest rates available. Or perhaps you’re interested in a commercial hire purchase arrangement to have the vehicle as a cash flow item, not an operating asset.

… and these are just a few of the options available! But whichever direction you go, you’ll also need to choose how long you’d like the loan to be. And next to the type of finance, its length is arguably the most important element. So how do you decide which is best for you?

Choosing the right loan duration

First and foremost, it’s important to review the current financial standings of your business as this will show you how much you can afford to spend on monthly loan repayments without tipping the balance. Because as you might have guessed, the shorter the loan length the higher the monthly repayments will be.

This step should involve speaking with your accountant, as they’ll be able to provide their expert recommendations about budgets and even which of the finance types would be best for your business.

It’s also going to depend on the make of vehicle you’re looking to buy. It’s often a good idea to choose your financing term based on the warranty length that comes with the commercial vehicle you buy. Then you can trade it in at the time of expiry and get a new car that has a new-car warranty on a new financing deal.

But truthfully, it all boils down to individual circumstances when it’s time to choose your commercial vehicle’s loan duration. As already suggested, your accountant should be your first port of call as they’ll be able to lay it all out in black and white. The close second call should most definitely be to Stratton Finance.

Stratton Finance knows exactly how to find your ideal financing package

Whether you’re after a loan term of two years, seven or anything in between, we’ve got the expertise to find the car financing deal that aligns perfectly with your needs. Our team will help you through the process from start to finish, answering any questions you may have for us along the way.

So, find out today what the monthly repayments could be using our car financing quote tool. You can even change the loan duration to see how it affects your repayment amounts to better understand your budgeting requirements for each term.

If you would like to find out more about commercial vehicle financing, please get in touch with us today by calling 1300 787 288 or sending us a message online to which you’ll receive a response ASAP.