How do lenders handle loan applications for used commercial vehicles?

When applying for a loan to purchase a second-hand commercial vehicle, lenders will take a thorough approach to your application. They will look carefully at the age, the condition and how you will be using the vehicle for your business. Generally, newer vehicles or those with less wear and tear are considered more readily because they are less likely to require significant repairs and are less likely to lose their value quickly.

You will first need to supply a number of document types, which will usually include documents that will provide proof of your business trading, recent bank statements, income tax returns and business activity reports. Lenders are looking to see that your business is viable enough to service the loan repayments. If you are a small business owner, you may also be required to supply additional information about your experience in the transport or logistics industry.

The approval process most often involves an inspection and valuation of the vehicle. This is to help lenders confirm the vehicle's value and overall condition against the current market valuation.

The commercial vehicle loan product may have different terms than traditional personal vehicle loans; sometimes requiring more of a down payment or more collateral, especially if the vehicle is older and/or has high kilometres on it.

Getting extremely organised and providing the required documentation all at once will expedite the application process. You're more likely to achieve a loan approval that suits you if you are as transparent and as thorough as possible.