Owner-Operator Trailer Finance: Everything You Need to Know
For an owner-operator, the trailer is part of the business engine. Here's how lenders look at owner-drivers and how to set up finance that works with the way you earn.
Trailer alone, or with the prime mover?
You can finance a trailer on its own or bundle it with a prime mover. Bundling keeps everything in one loan with one repayment, which is simpler. Financing separately can make sense if you're adding a trailer to a truck you already own, or if you want different terms, such as a shorter term on a trailer that works harder than the truck.
What lenders look for in an owner-operator
- Industry experience. Years behind the wheel, even as an employee driver, count for a lot, particularly for newer ABNs.
- Work lined up. A contract or regular work with a carrier or principal contractor shows where the income will come from.
- Trading history. Established operators with a couple of years of financials have the most options.
- Credit history for you personally, and for any company you trade through.
- The equipment. Mainstream trailer types from known builders are easiest to fund.
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Going from employee driver to owner-operator is a common path, and some lenders specialise in it. Expect them to look closely at your experience, any contract you have, your credit and whether you can put a deposit in. Starting with a late-model used trailer rather than brand new can keep the loan size realistic.
Matching finance to cash flow
- Payment timing. If principal contractors pay you on 30-day terms or longer, make sure your repayment dates leave room for that.
- Balloons. A sensible balloon can keep repayments down in the early years, provided the trailer will be worth at least that much at the end.
- Running costs. Tyres, brakes, rego and insurance are significant on trailers. Keep a buffer rather than stretching the loan to the limit.
GST and BAS: most owner-operators are GST-registered and use a chattel mortgage, which usually lets you claim the GST on the trailer in your next BAS. Plan with your accountant how you'll use that refund.
Paperwork to prepare
- ABN and GST details
- Driver licence and evidence of driving experience
- Any contract or letter of work
- Bank statements, and BAS or financials if trading
- The trailer quote or invoice