Paying for your truck

There is no one 'best' way to finance a truck

Paying for your truck requires some type of finance. And each method of finance has different benefits which vary, based on whether you own the vehicle, whether it will be used to generate income, and if you are a registered VAT vendor.

Some useful objectives to keep in mind include the need to make cost-effective use of cash resources. How trucks are paid for has an impact on the total operational cost for the duration of the period in which repayments must be made. Regardless of how a truck is paid for, the cost of finance is a significant expense.

Paying for your truck: Getting finance

With stricter credit laws in place, traditional financial institutions require a comprehensive set of documentation detailing all aspects of the business and viability of the transport operations, as well as a significant investment from the buyer in the form of a deposit.

In-house finance, also known as a lease contract, provides buyers with an alternative form of financing where finance is provided by the manufacturer directly. This type of finance is offered by most truck manufacturers.

Paying for your truck: Lease contract

Many businesses today accept the notion that the availability and use of trucks is more important than ownership. It is not always possible, or desirable, to raise a loan or additional capital to pay for trucks.

Leasing enables users to return trucks on termination of the lease and replace them with new ones. Lessees may acquire trucks they have been leasing or extend the period of the lease for a further year or two, depending on the agreement.

Paying for your truck: Instalment sale

An instalment sale is where the financial institution agrees to provide finance to the buyer of the truck over an agreed period, at an interest rate determined by the institution. The instalment includes the principal amount and the interest for the term until the last instalment is paid. At the end of the agreement, the buyer owns the truck.

Paying for your truck: Paying cash

Successful companies with sufficient cash resources and no immediate need to use it prefer to pay cash for trucks.

Type of finance



Lease Contract

Easier for start-up businesses to be approved for finance. The qualifying criteria of this type of financing is much easier to achieve. Unlike financial institutions, clients are able to apply for finance without having to submit a minimum of one (1) year’s financial statements.

Instalment terms can be negotiated based on the requirements of the client.

A deposit can be made to reduce the level of periodic payments (rentals).

Interest rates may be higher than with other financial institutions.

The average repayment terms are shorter than with other forms of finance.

Instalment Sale

Longer repayment terms can be negotiated, reducing the monthly repayment amount.

Lower interest rates may be applicable.

Stricter qualifying process.

Application process is very long and complicated, and financial institutions require an extensive list of documentation, making it difficult for new businesses to be approved.


Freedom to choose your supplier and the ability to negotiate better discount.

No additional amounts/fees to be paid.

Can be financed through overdraft funding – more cost-effective than a loan.

A reduction in capital.

Lost opportunities to invest in a more profitable or strategic investment.


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