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Highs and lows of truck financing in a pandemic

Mick Wheeler can reel off all the upsides to truck investment in the Covid-era in his sleep: record low interest rates, government guaranteed loans, and generous new depreciation write-offs, to name just three industry-first incentives.

There’s never been a better time to upgrade the fleet, underlined treasurer Josh Frydenberg on federal budget night last October.

But for Wheeler, who was just trying to get back on his feet after a horrific hay run rollover at the end of 2019, every time he tried to cash in on those inducements, the door would slam in his face.

“I was caught in a desperate situation and it spiralled downward from there,” said Wheeler, who was lucky to escape with his life from the fiery crash that wrote off the truck.

While he was recovering in hospital thieves broke into his depot.

It was his company’s second rollover write-off that year – the other at the hands of another driver – and to add insult to injury, while recovering in hospital, grubs broke into Wheeler’s NSW yard and siphoned more than 1000 litres of diesel from a B-double and stole a range of expensive equipment.

Now down to one prime mover, Wheeler was desperately trying to trade his way out of a $180,000 hole.

But lenders still wouldn’t take the punt on an operator who had spent the previous 12 months carting water and hay to drought-ravaged farmers.

Wheeler was forced to take a “loan-shark” deal to consolidate finance, and when the full impacts of Covid hit soon after he said his fate was sealed.

“I couldn’t go back to using contractors because no one was paying their bills,” said Wheeler, who wanted to share his story to highlight the fact securing finance in 2020 wasn’t as easy as some would have you believe.

“I couldn’t put other people in the hole just so I could put myself above it. I wasn’t prepared to do that.

“I went from a multi-fleet operation down to one truck with multi-fleet expenses. With an extra truck I could keep up with outgoings, but I was denied – it’s been a shit year for finance.”

George Morfoulis, Managing Director of AGM Finance, a leading truck finance brokerage, wasn’t familiar with Wheeler’s situation but told us he’d be more than willing to help the operator find a lender, or at least devise a strategy to improve his chances of finding finance in the future.

He told us that banks did tighten lending criteria immediately after Covid hit, but there has been a noticeable relaxing of those restrictions in recent months.

His biggest advice to those shopping for finance is to make sure you don’t still have any existing loans still on a deferred payment arrangement.

“That paints a picture to a bank that okay, you have gone through a tough period and maybe it’s not the best idea to lend you money so soon,” he said.

Morfoulis also cautioned against lodging too many direct applications, as each rejection will have a negative effect on your credit rating.

If you go with a broker, he said, your success rate will be higher, the processing quicker, you don’t pay any upfront fee and have access to dozens of lenders who will offer lower interest rates because of the broker’s collective buying power.

Richard Jefferies, owner of heavy vehicle finance specialists, Gold Coast-based Jade Finance, was also not familiar with Wheeler’s case, but told Big Rigs that there was a definitely some “shyness” from lenders and banks at the start of the pandemic.

“That was probably reflected in every industry,” he said. “But in the last four months we have seen an easing of restrictions and appetites for approvals for those with large fleets down to owner-drivers jumping into their first truck.

“We’re seeing some banks opening their low-doc, or no-doc policies [without financials], and also on other side seeing lot of operators are removing their coronavirus deferred payments they may have put on at the beginning of coronavirus.

“I think we’ve seen a flow-on effect back into the lenders’ appetite.

“I’ve never seen lending so cheap. Your truck loans at the moment start from about 2.79%, with used trucks from just above 4%. So there is cheap lending out there.”

Meanwhile, we’re happy to report that Wheeler is now starting 2021 with renewed hope.

Despite his initial financing setbacks last year, never-say-die Wheeler switched to hauling caravans, campers and cars and has finally cleared the foreboding debt hanging over his head at his Newcastle-based Hot Wheels Haulage.

“A massive challenge this year due to a worldwide pandemic,” he writes on his company Facebook page.

“Thank you to my wife, family, friends and businesses that stood by me and didn’t write me off as a no-hoper.

“It’s a real life lesson.”

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