A Chattel Mortgage is a financing option where a lender will provide the funds for you to purchase the truck which you will take ownership of immediately and make payments regularly to pay off the loan. The financier places a mortgage on the machinery whereby the item acts as security against the loan. Though once the contract ends and you finish paying off the loan, you take complete ownership over the machine. You can pay back the loan installments on a monthly, fortnightly or weekly basis as it all depends on the arranged agreement. For this loan, you can choose to pay a lump sum amount to reduce the amount you owe which is normally referred to as a Balloon Payment.

A Commercial Hire Purchase Loan is a finance product used by business owners where they get to hire the truck from the lender for a fixed monthly repayment over an agreed period of time. Note that your business does not own the vehicle.The Lender may agree to purchase the machinery on your behalf then hires it back to you over a set period of time. Once you complete making the repayments in full as per the contract including any interest fees, that’s when ownership is transferred to you. As much as the lender is the one who fully owns the assets at the moment, you still have access to use the truck for your own benefit. Also for this financing option, a balloon payment may be involved.

A finance lease is a great way for your business to acquire a truck with flexible terms to match your cash flow requirements. The financier AKA a lessor will purchase the truck on your behalf and rent it to you as the borrower referred to as the Lessee. Also for this finance option, the financier owns the car until you finish your lease term and make the residual necessary payments. As the borrower, you are required to pay a fixed monthly lease rental for the term of the lease. Once the lease expires, you could pay off the remaining amount and own the vehicle fully, you could also trade it in or refinance the lease. For a finance lease, you will be liable for maintenance, insurance, registration and other costs.

An operating lease is a contract that permits the use of an asset without transferring the ownership rights of said asset, in this case the truck. It is similar to a finance lease except for operating lease, once the lease agreement ends, the truck is returned to the lender. There is usually no option to buy the equipment once the lease ends. With this financing option, budgeting is much easier as you agree on the fixed price for the term of the lease. It also provides cash flow certainty. For an operating lease, costs like insurance and registration are included within the lease agreement.