Lorry Insurance & Road Tax: How to Bundle in Your Financing Package

The Annual Compliance Cash Crunch

You financed your lorry with 0% down payment. Monthly installment: RM5,000. You're managing cash flow well.

Then January arrives. JPJ sends road tax renewal notice. Insurance company sends premium invoice. Both due before you can renew your road tax.

5-Ton Lorry Annual Costs:
• Insurance premium: RM4,000-RM6,000
• Road tax: RM1,500-RM2,500
Total Annual Compliance Cost: RM5,500-RM8,500

For a 5-lorry fleet: RM27,500-RM42,500 due annually in January.

The Problem: This is cash that should be used for operations—fuel, driver salaries, tolls—not tied up in compliance payments.

Understanding Lorry Insurance Costs

Insurance Premium Calculation

Lorry insurance depends on:

• Vehicle Value: Higher value = higher premium
• Lorry Type: Prime mover > 10-ton > 5-ton > 1-ton
• Cargo Type: Hazardous materials highest, general cargo lowest
• Usage: Long-distance > local delivery > private use
• Claims History: No-claim discount up to 55%

Typical Insurance Premiums by Lorry Type

1-Ton Lorry: RM2,500-RM3,500 annually
5-Ton Lorry: RM4,000-RM6,000 annually
10-Ton Lorry: RM6,000-RM9,000 annually
Prime Mover: RM8,000-RM12,000 annually

Insurance Coverage Types

Third-Party Only:
• Covers damage to other vehicles/property
• Does NOT cover your lorry damage
• Premium: RM1,000-RM2,000 annually
• Minimum legal requirement

Comprehensive:
• Covers damage to your lorry + third party
• Covers theft, fire, flood damage
• Premium: RM4,000-RM12,000 annually
• Recommended for financed lorries

Understanding Road Tax Costs

JPJ Road Tax Calculation

Road tax depends on:

• Vehicle Weight: Heavier = higher tax
• Seating Capacity: More seats = higher tax
• Region: East Malaysia higher than West Malaysia
• Usage: Commercial higher than private

Typical Road Tax by Lorry Type (West Malaysia)

1-Ton Lorry: RM300-RM500 annually
5-Ton Lorry: RM1,500-RM2,500 annually
10-Ton Lorry: RM2,000-RM3,500 annually
Prime Mover: RM2,500-RM4,500 annually

Additional Compliance Costs

Beyond insurance and road tax:

• PUSPAKOM Inspection: RM30-RM60 per inspection
• APAD Permit: RM200-RM400 annually (commercial vehicles)
• JPJ Late Renewal Penalty: Up to RM100
• Service Fees: RM50-RM150 (agent processing)

Total Annual Compliance per Lorry: RM6,000-RM13,000

The Cash Flow Impact of Annual Compliance

Scenario: 5-Lorry Fleet

Annual Compliance Costs (All Due in January):
• Insurance: RM25,000 (RM5,000 × 5)
• Road tax: RM10,000 (RM2,000 × 5)
• PUSPAKOM inspections: RM200 (RM40 × 5)
• APAD permits: RM1,000 (RM200 × 5)
Total Due: RM36,200 in January

Operating Costs (January):
• Fuel: RM15,000
• Driver salaries: RM15,000
• Maintenance: RM5,000
• Toll: RM3,000
January Operating Total: RM38,000

January Cash Requirement: RM74,200

Challenge: January often has slower business (post-holiday slowdown). But compliance costs are due regardless.

Result: Cash Flow Crisis

Many logistics companies:

• Delay driver salary payments to cover compliance costs
• Reduce maintenance (leading to breakdowns later)
• Turn down new contracts (can't afford operations)
• Miss installment payments (repossession risk)

Financing Solution: Bundle Compliance in Loan

How Bundled Financing Works

Instead of paying insurance and road tax annually from operating cash flow:

Traditional Purchase:
• Finance lorry: RM200,000
• Pay insurance annually: RM5,000 from operations
• Pay road tax annually: RM2,000 from operations

Bundled Financing:
• Finance lorry: RM200,000
• Include first year insurance: +RM5,000
• Include first year road tax: +RM2,000
Total Financed: RM207,000

Monthly Impact:
• Additional monthly installment: RM140-RM200
• No RM7,000 annual cash drain
• Cash preserved for operations

Multi-Year Bundling

Financing term 5-7 years. Include compliance costs accordingly:

Example: 5-Year Financing
• Lorry price: RM200,000
• 5 years insurance: RM25,000 (RM5,000 × 5)
• 5 years road tax: RM10,000 (RM2,000 × 5)
Total Financed: RM235,000
Monthly Installment: ~RM4,500 (includes compliance)

Advantage: Predictable monthly payment. No annual cash crunch.

Ing Heng Credit: Compliance Bundling Specialists

1. We Finance Complete Compliance Package

We include in financing:
• Comprehensive insurance
• JPJ road tax
• PUSPAKOM inspection fees
• APAD permit fees

Result: One monthly installment covers all compliance requirements.

2. 0% Down Payment Preserves Compliance Cash

Traditional financing (20% down):

5-Lorry Fleet:
• Down payment: RM250,000
• Remaining for compliance: RM0
• Must fund RM36,000 annual compliance from operations

With 0% Down Payment:
• Down payment: RM0
• RM250,000 preserved for:
- First year compliance: RM36,000
- Driver salaries
- Fuel and toll advances

3. Compliance Management Support

We help you track:

• Insurance renewal dates
• Road tax expiration
• PUSPAKOM inspection schedules
• APAD permit renewals

Optional Service: We can coordinate with insurance partners to ensure continuous coverage.

4. Flexible Payment Structures

We understand compliance costs are annual. Your revenue may be seasonal.

Options:
• Level monthly payments (compliance costs spread across all months)
• Seasonal payments (higher during peak months, lower during compliance month)
• Compliance skip months (reduce payment in January, make up later)

Real-World Compliance Bundling Stories

Selangor Logistics Fleet

\"Operated 8 lorries. Every January, RM60,000 in insurance and road tax due. Disrupted cash flow—delayed driver salaries 2-3 times. Ing Heng refinanced fleet: bundled 5 years of compliance into financing. Monthly payment increased RM400 per lorry (RM3,200 total). But January cash crunch eliminated completely. Driver salaries paid on time. No more PUSPAKOM late fees. No JPJ penalties. Business more stable. 0% down payment preserved RM160,000 used for first year compliance and operations. Bundling transformed cash flow management.\"

— Zainal Abidin, Operations Director

Cross-Border Haulage Specialist

\"Singapore-Thailand route. Compliance complicated: Malaysian insurance, road tax, APAD permits PLUS Singapore coverage, Thailand permits. Annual compliance costs: RM15,000 per lorry (higher due to cross-border). Previously paid annually—severe cash flow disruption. Ing Heng financed 3 lorries with compliance bundled: Malaysian insurance, road tax, APAD, plus cross-border coverage. Monthly installment higher, but predictable. No more RM45,000 annual hit (3 lorries × RM15,000). 0% down preserved RM90,000 used for customs bonds, border permits, driver visas. Cross-border business now sustainable.\"

— Steven Boon, Managing Director

Planning Your Compliance Bundle

Step 1: Calculate Current Compliance Costs

For each lorry:
• Insurance premium (comprehensive recommended)
• Road tax amount
• PUSPAKOM inspection frequency
• APAD permit fees

Step 2: Project Annual Totals

Fleet-wide:
• Total compliance cost annually
• Month(s) when costs cluster (often January)
• Cash flow impact during those months

Step 3: Request Bundled Financing Quote

Ask financier:
• Can compliance be bundled?
• How does monthly installment change?
• What's included in bundle?
• How are renewals handled?

Step 4: Compare Annual vs Monthly Costs

Calculate:
• Annual compliance payment (current method)
• Additional monthly cost with bundling
• Cash flow impact comparison

Decision: If bundling provides cash flow stability at reasonable cost, proceed.

The Bottom Line: Bundled = Predictable

Annual insurance and road tax payments create cash flow crises. RM5,500-RM8,500 per lorry due every January disrupts operations.

Bundled financing converts unpredictable annual expenses into predictable monthly costs.

0% down payment preserves capital for operations instead of tying it up in compliance payments.

Don't let compliance costs derail your logistics business. Bundle them into financing and stabilize cash flow.

Join 4,000+ businesses who have trusted Ing Heng Credit since 1985.