Can You Finance a Truck Engine Rebuild? Yes – Here’s How It Works | Finlease

Yes, you can finance a truck engine or gearbox rebuild. If you own the truck, the rebuild can be financed against it. If it’s still under finance, the rebuild can often be added to your existing loan, as long as there’s enough equity in the truck.

It’s one of the most common questions I get from transport operators. Most assume they need to go to the bank for a business line of credit. Then they wait. Meanwhile the truck sits in the yard, not earning.

With fuel and running costs where they are, nobody can afford a truck off the road for weeks. Here’s what you need to know.

Engine rebuild vs a new truck: the numbers

For most operators, a rebuild is the far cheaper way to keep a good truck working.

There’s also resale to think about. In a competitive second-hand market, a truck with a tired engine is hard to sell for decent money. A rebuild protects what the truck is worth, whether you keep it or sell it.

How engine rebuild finance works

It comes down to one thing: equity in the truck. There are two common situations.

If you own the truck outright

The rebuild is financed against the truck itself. Say your truck is worth $200k and the rebuild is $70k. After the work, you’ve still got about $130k of equity. From a lender’s point of view, that’s a strong position. You’re putting money into an asset that’s worth well more than the loan.

If the truck is still under finance

You can still do it, as long as there’s enough equity. For example (illustrative): you owe $150k on a truck worth $300k, and it needs an $80k engine. We refinance the $150k you owe and add the $80k on top. You end up with one loan and one repayment, and the truck is back working with a near-new engine.

What you’ll need

• The workshop quote or invoice for the rebuild
• Details of the truck and any existing finance
• Your usual business financials

That’s usually enough to get started.

A real example: three weeks waiting on the bank

One of my transport client contacted me this morning and said, “I didn’t know if this was something you do. I’ve got a $70k rebuild and I’ve been waiting on the bank for three weeks.”

He owned the truck outright. So I told him to send through the invoice and we’d sort it. The truck was worth far more than the rebuild, so the lender was comfortable straight away.

He got his truck back on the road with an engine that’s as good as new. And he spent $70k, not $600k on a replacement.

Beyond rebuilds: three ways to ease fleet cash flow

I can’t do anything about the price of diesel. But if you’re running a fleet, your existing finance is often where you can find some breathing room. This isn’t about buying anything new. It’s about the assets you already have.

1. Early balloon rollovers. Most fleets of 5 to 20 trucks have something rolling off in the next 12 to 18 months. Say three of your trucks have balloons landing at different times over the next couple of years. Rolling them over early, as one package, can lower your repayments and take the surprise out of those big lump sums.

2. Combining existing loans. We recently worked with an established transport operator who had several commitments falling due within 18 months, about $25k a month between them. Packaging them into one facility cut their monthly repayments by around $10k.

3. Mid-term refinancing. You don’t have to wait until a loan ends. A regional removals business we worked with refinanced around $1.5M of existing finance and saved about $16k a month. That freed-up cash flow helped them buy their own commercial premises.

These are the conversations I’m having with operators most at the moment, especially with the quieter months over Christmas and January coming up.

As a member of the Livestock, Bulk and Rural Carriers Association, Michael Abberton knows what what keeps rural carriers moving, and how to find the best finance solutions for transport businesses. If you’ve got a rebuild coming and you’re not sure where to start, get in touch with Michael for a straight conversation about your options.