Commercial vehicle financing
How the common options differ, and what to ask before you sign. This is general information rather than financial advice — your accountant and your lender are the people who should decide this with you.
The common options
- Equipment loan
- You borrow against the vehicle and own it outright at the end. Payments are usually higher than a lease, and the asset and its depreciation sit on your books. Suits businesses that keep vehicles a long time, which describes most commercial operators.
- Lease
- Lower monthly cost, and the lessor carries the residual value risk rather than you. The trade is mileage and condition terms, both of which commercial use breaches more easily than operators expect, and no asset at the end unless you buy it out.
- Line of credit
- Useful when you are cycling several vehicles through a year rather than buying one. Draw as you need it and repay as vehicles are sold, but the rate is usually less favourable than secured equipment finance.
- Manufacturer commercial programmes
- Ford, GM and Stellantis all run finance arms with commercial terms distinct from retail. These are frequently competitive and routinely overlooked by smaller businesses who assume they only apply to large fleets.
What lenders look at
Time in business, business and personal credit, and cash flow, broadly in that order. Commercial vehicle finance is asset-backed, so the vehicle itself matters too — a mainstream truck with a body from a recognised builder is easier to lend against than a specialist one-off, because the lender can value it and sell it if they have to.
Newer businesses without trading history should expect to provide a personal guarantee. That is normal rather than a red flag, but understand what you are signing.
Questions worth asking
- What is the total cost, not the payment? A longer term lowers the monthly figure and raises what you pay overall.
- Is the upfit included in the finance? The body is a substantial share of the purchase and is sometimes financed separately, which complicates things.
- What happens if I sell early? Early settlement terms vary widely and matter if your replacement cycle is shorter than the finance term.
- On a lease, what are the mileage and condition terms? Commercial use accumulates both faster than retail assumptions allow for.
Tax treatment
Depreciation schedules and deductions available to businesses buying commercial vehicles can change the real cost substantially, and they depend on your business rather than on the vehicle. We are not qualified to advise on it and will not pretend otherwise — ask your accountant before treating any comparison as final.
Compare running costs before you finance →