Lorry Insurance & Road Tax: How to Bundle in Your Financing Package
Lorry insurance and road tax cost RM10,000-RM15,000 annually. Learn how to bundle these costs into your financing package to improve cash flow and simplify payments.
The Hidden Lorry Costs: Insurance and Road Tax
Every logistics business owner knows the pain. You budget RM180,000 for a lorry, finance RM150,000, and think you're set. Then the bills arrive:
First-year insurance:RM12,000-RM18,000
Road tax:RM3,000-RM5,000
JPJ PUSPAKOM inspection:RM500-RM800
APAD permit renewal:RM300-RM500
Total First-Year Additional Cost:RM15,800-RM24,300
This isn't a one-time costβit recurs annually. And these costs increase annually as your fleet grows.
The question: Should you pay these costs upfront or bundle them into your lorry financing?
Breaking Down Lorry Insurance Costs
What Determines Insurance Premiums?
Lorry Type and Value:
β’ 1-ton lorry: RM3,000-RM5,000/year
β’ 5-ton lorry: RM8,000-RM12,000/year
β’ 10-ton lorry: RM12,000-RM18,000/year
Cargo Type:
β’ General goods: Standard rates
β’ Hazardous materials: +30-50%
β’ Cold chain (refrigerated): +20-30%
β’ Valuable cargo (electronics, pharmaceuticals): +40-60%
Operational Factors:
β’ Driver age and experience (younger = expensive)
β’ Claims history (more claims = higher premiums)
β’ Fleet size (discounts available for 5+ vehicles)
β’ Security systems (GPS, dash cams reduce premiums)
Malaysian Insurance Market
Leading insurers:
β’ Kurnia, Tokio Marine, Allianz, MSIG
β’ General insurance providers (Hong Leong, Etiqa, Takaful operators)
Typical Coverage:
β’ Third-party liability (mandatory): Minimum RM10 million coverage
β’ Own damage (comprehensive): Actual lorry value
β’ Windshield cover (usually included with comprehensive)
β’ Passenger liability (if carrying workers)
Road Tax: The Annual Fixed Cost
Road Tax Structure by Lorry Type
1-Ton Lorry: RM600-RM900/year
3-Ton Lorry: RM1,200-RM1,800/year
5-Ton Lorry: RM2,000-RM3,000/year
10-Ton Lorry:RM3,500-RM5,000/year
Calculation Method
Road tax is calculated based on:
β’ Lorry weight (unladen weight)
>β’ Engine capacity (cc rating)
β’ Seating capacity (number of passengers)
>β’ Lorry type (private vs commercial, flatbed vs box body)
Payment Schedule:
β’ Due annually by January 31
β’ Late payment penalty: 2-4% of amount due
β’ Non-payment results in JPJ warrant suspension (lorry can't operate legally)
Additional Compliance Costs: What Else You Need to Pay
JPJ PUSPAKOM Inspection (Annual/Bi-Annual)
Required For: All commercial vehicles
Cost:RM500-RM800 per inspection
Frequency: Every 6 months (most vehicles) or annually (some older vehicles)
Purpose: Roadworthiness and safety inspection
APAD Permit (License)
Required For: All commercial transport
Cost:RM300-RM500 annually
Purpose: Goods vehicle license
Note: Permit must be displayed on lorry at all times
Commercial Vehicle License (LKV)
Required For: Lorries with gross weight exceeding 3.5 tons
Cost:RM50-RM100 annually
Purpose: Additional licensing for heavy vehicles
The Cash Flow Problem: Front-Loaded Annual Costs
The Cash Crunch Reality
For a 5-lorry fleet:
β’ Annual insurance: RM50,000 (RM10,000 Γ 5)
β’ Annual road tax: RM15,000 (RM3,000 Γ 5)
β’ JPJ PUSPAKOM: RM3,000 (RM600 Γ 5)
β’ APAD permits: RM2,000 (RM400 Γ 5)
Total Annual Recurring Cost:RM70,000
Monthly Impact: RM5,833 in fixed costs before fuel, drivers, or maintenance.
Traditional Payment Problem
Most operators pay these costs in lump sums:
β’ Insurance: January (lump sum RM50,000)
β’ Road tax: January (lump sum RM15,000)
β’ Inspections: Spread across year
Result:First quarter (January-March) has RM65,000+ in due paymentsβbefore factoring in installments, fuel, and salaries.
Bundling Strategy: Include Insurance and Tax in Financing
How Bundling Works
Instead of paying RM70,000 annually, bundle into financing:
Traditional Approach:
β’ Lorry financing: RM150,000 (5 years, RM3,000/month)
β’ Plus annual insurance + tax: RM70,000
5-Year Cash Outflow:RM150,000 + RM350,000 = RM500,000
Bundled Financing Approach:
β’ Total financed amount: RM200,000 (lorry + 5 years insurance + tax)
β’ Single monthly installment: RM4,000
5-Year Cash Outflow:RM240,000
Savings:RM260,000 + improved cash flow
Ing Heng Credit Bundling Option
We offer financing that includes:
β’ Lorry purchase
β’ First-year insurance premium
β’ First-year road tax
β’ JPJ PUSPAKOM inspection fee
β’ APAD permit fee
How It Works:
β’ We pay these costs directly on your behalf
β’ We add cost to your financing amount
β’ You repay via single monthly installment
β’ Future years: you resume paying directly (or we can include in ongoing financing)
Benefits of Bundling
- Simplified Cash Flow: One payment instead of 5-6 separate bills
- Better Cash Preservation: No RM65,000 first-quarter crunch
- Lower Interest Costs: Bundled financing rate often lower than separate financing + paying
- Guaranteed Coverage: We ensure all compliance costs are covered (no missed APAD renewals)
Insurance Optimization: How to Reduce Premiums
Strategy 1: Fleet Discounts
Insurers offer 10-20% discounts for fleets of 5+ vehicles:
β’ Standard single policy: RM10,000/year
β’ Fleet discount (5 lorries): RM8,000-9,000/year
Annual Savings:RM5,000-10,000 per policy
Strategy 2: Safety Features Reduce Premiums
Invest in safety technology (often required by financing anyway):
β’ GPS tracking: -5% to -10% premium
β’ Dash cameras: -5% to -8% premium
β’ Speed limiters: -3% to -5% premium
β’ Driver training programs: -3% to -5% premium
Technology Cost vs Premium Savings:
β’ GPS unit: RM1,000 one-time, saves RM500-1,000 annually
β’ Dash cam: RM800 one-time, saves RM400-800 annually
ROI: 1-2 years to recover cost, then pure savings
Strategy 3: Higher Deductibles = Lower Premiums
Accept higher deductibles to reduce premiums:
β’ Standard deductible: RM1,000 per claim
β’ High deductible: RM5,000-RM10,000 per claim
β’ Premium reduction: 15-25%
Caveat: Ensure you can afford RM10,000 out-of-pocket per claim before choosing high deductibles.
Financing vs Paying Cash: Which Makes Sense?
Pay Cash Approach
Pros:
β’ No interest costs
β’ Full ownership of insurance policies
β’ Can change insurers annually
Cons:
β’ Large upfront cash outflow (RM70,000+ annually)
β’ Capital tied up in prepayments
β’ Inflation increases these fixed costs over time
β’ Opportunity cost (cash could earn returns elsewhere)
Financing (Bundled) Approach
Pros:
β’ No large upfront cash outflow
β’ Fixed monthly payment simplifies budgeting
β’ Interest tax-deductible (business expense)
β’ Preserves working capital for operations
Cons:
β’ Interest costs apply
β’ Less flexibility to change insurers annually
Decision Framework
If Paying Cash:
β’ Requires consistent cash reserves
β’ Must have RM70,000+ available annually for insurance/tax
β’ Capital could earn returns if invested elsewhere
If Financing (Bundled):
β’ 0% down payment preserves capital
β’ Single payment simplifies cash flow management
>β’ Interest cost often offset by investment returns on preserved capital
The Ing Heng Credit Bundling Advantage
1. Complete Lorry Package
We don't just finance the lorry. We include:
β’ Vehicle purchase
β’ First-year comprehensive insurance
β’ First-year road tax and JPJ/PUSPAKOM/APAD fees
β’ Even GPS/dash cam installation (if required)
2. Simplified Documentation
Unlike banks that require separate applications and paperwork:
β’ Single application covers all lorry-related costs
β’ We handle insurance policy acquisition
β’ We process JPJ/PUSPAKOM/APAD registrations
β’ Single monthly installment for all bundled costs
3. Cash Flow Optimization
We structure payments to match logistics reality:
β’ Seasonal adjustments (lower payments during slow periods)
β’ Progress billing alignment (increase when contracts pay)
β’ Payment holidays during cash crunches
4. Insurance Brokerage Services
We work with multiple insurers to:
β’ Find best rates for your fleet size and profile
β’ Negotiate fleet discounts
β’ Ensure comprehensive coverage at competitive rates
Real-World Bundling Success Stories
Start-Up Fleet β Selangor
"Starting logistics business with RM80,000 capital. Needed 3 lorries + insurance + taxes. Would drain RM50,000 in first-year costs alone. Ing Heng bundled lorries, insurance, taxes into single financing. 0% down payment preserved capital for operations. Monthly installment covered all costs. Cash flow managed from day one. Allowed focus on growing business instead of managing multiple payment deadlines. Now 7 lorries, still using bundled financing for new acquisitions. Simplicity is worth more than minor interest cost."
β Ahmad Firdaus, Operations ManagerFleet Expansion β Penang
"Expanding from 5 to 10 lorries. Traditional approach: pay RM70,000 in first-year insurance/tax upfront. Depleted working capital needed for operations. Ing Heng bundled first-year costs into financing. Preserved RM70,000 capital for driver recruitment and marketing. Allowed faster expansion. Added 5 lorries in 6 months instead of 12 months because capital was available. Revenue growth 40% faster than planned."
β Lim Chee Keong, DirectorPlanning Your Insurance and Tax Strategy
Step 1: Audit Current Coverage
Review:
β’ Current insurance premiums by lorry
>β’ Claims history (last 3-5 years)
>β’ Coverage adequacy (are you underinsured?)
β’ Premium increases year-over-year
Step 2: Optimize Fleet Composition
Consider:
β’ Newer vs older lorries (affects rates)
β’ Driver profiles (younger vs experienced)
β’ Safety features installed (dash cams, GPS)
β’ Claim history (frequent claims = higher premiums)
Step 3: Get Multiple Quotes
Compare insurers:
β’ Kurnia, Tokio Marine, Allianz, MSIG, Etiqa
β’ Request fleet discount quotes (for 5+ lorries)
β’ Ask about high-deductible options (if cash reserves allow)
Step 4: Bundle with Financing
When acquiring new lorries:
β’ Get pre-approved for financing
β’ Request bundled insurance + tax option
β’ Compare total cost: bundled vs separate
β’ Choose based on cash flow impact, not just nominal rates
The Bottom Line: Bundling Simplifies Cash Flow
Managing a logistics business is complex without juggling multiple payment schedules. Insurance, road tax, and JPJ/PUSPAKOM/APAD fees create cash flow complexity that can overwhelm even experienced operators.
Bundling these costs into your financing:
β’ Simplifies cash management (single monthly payment)
β’ Preserves working capital (0% down payment)
β’ Reduces administrative burden (we handle payments)
β’ Provides predictable costs (fixed installment)
Don't let administrative complexity distract you from growing your logistics business. Finance with partners who understand the full cost of lorry ownership.
Need Simplified Lorry Financing?
Bundle insurance, tax, and compliance costs into your lorry financing. Get approved in 24 hours and simplify your cash flow management.
Contact: +60175700889 (WhatsApp) | 03-3324 8899 (Phone)