Used Lorry Financing Malaysia: Aged Vehicle Loan Interest Rates
Used lorries cost 40-60% less but carry higher financing interest rates. Learn how to calculate whether used lorry financing makes financial sense despite higher rates.
The Used Lorry Dilemma: Lower Price, Higher Rates
You're starting a logistics business or expanding your fleet. You see two options:
New 5-Ton Lorry: RM200,000, 5% financing rate
Used 5-Ton Lorry (2018 model, 6 years old): RM100,000, 7% financing rate
The used lorry costs half as muchβbut carries 2% higher interest. Is it worth it?
The answer isn't as simple as comparing interest rates. You need to calculate total cost of ownership, remaining useful life, and revenue potential. For many logistics companies, used lorries with higher rates are financially superior to new lorries with lower rates.
Why Used Lorry Rates Are Higher
Risk Factors for Lenders
Banks and finance companies charge higher rates for used lorries due to:
- Uncertain Remaining Lifespan: A new lorry lasts 10-15 years. A 6-year-old lorry might last 4-9 more years (uncertain)
- Higher Maintenance Risk: Older lorries need more repairs. If you default, the repossessed asset may have degraded value
- Resale Value Risk: Used lorries depreciate faster. If repossessed, recovery value is lower
- Technology Obsolescence: Older lorries may not meet emerging emissions or safety standards
Typical Rate Structure
New Lorry Financing: 4-6% flat per annum
Used Lorry (Under 5 years old): 5-7% flat per annum
Used Lorry (5-10 years old): 7-9% flat per annum
Used Lorry (10+ years old): 10-15% flat per annum (if financing available at all)
The Total Cost Analysis: Beyond Interest Rates
Scenario: 5-Year Financing Comparison
Option A: New Lorry
β’ Purchase price: RM200,000
β’ Down payment (20%): RM40,000
β’ Financing amount: RM160,000
β’ Interest rate: 5% flat per annum
β’ Term: 5 years (60 months)
Monthly Installment: ~RM3,400
Total Payments: RM204,000
Total Interest: RM44,000
Total Cost: RM244,000 (including RM40,000 down payment)
Option B: Used Lorry (6 Years Old)
β’ Purchase price: RM100,000
β’ Down payment (0% with Ing Heng Credit): RM0
β’ Financing amount: RM100,000
β’ Interest rate: 7% flat per annum
β’ Term: 5 years (60 months)
Monthly Installment: ~RM2,100
Total Payments: RM126,000
Total Interest: RM26,000
Total Cost: RM126,000 (0% down payment)
Cost Comparison Over 5 Years
New Lorry Total Cost: RM244,000
Used Lorry Total Cost: RM126,000
Savings with Used: RM118,000 (48% lower total cost)
But: This analysis doesn't account for:
β’ Remaining useful life difference
β’ Maintenance cost differences
β’ Resale value at end of financing
The Remaining Life Factor: When Higher Rates Make Sense
Age-Based Remaining Life
New Lorry (0 years): 10-12 years remaining life
Used Lorry (5 years old): 5-7 years remaining life
Used Lorry (8 years old): 2-4 years remaining life
Cost-Per-Year Analysis
This is where used lorries often shine:
New Lorry Cost per Year:
β’ Total cost: RM244,000 Γ· 10 years = RM24,400/year
β’ Annual depreciation: RM20,000/year
Used Lorry (6 years old) Cost per Year:
β’ Total cost: RM126,000 Γ· 5 years = RM25,200/year
β’ Annual depreciation: RM20,000/year (already depreciated significantly)
Result: Similar annual costs, but used lorry requires 50% less upfront capital and generates revenue immediately.
Maintenance Cost Reality: What to Expect
Maintenance Cost Comparison
New Lorry (Years 1-3):
β’ Routine maintenance: RM8,000-RM12,000/year
β’ Warranty coverage: Most repairs covered
Annual Out-of-Pocket: RM8,000-RM12,000
Used Lorry (6-8 Years Old, Years 1-3 of Ownership):
β’ Routine maintenance: RM12,000-RM18,000/year
β’ Major repairs: RM8,000-RM15,000/year average
β’ No warranty coverage
Annual Out-of-Pocket: RM20,000-RM33,000
Maintenance Cost Difference: RM12,000-RM21,000 higher annually for used lorry
Net Calculation:
β’ Used lorry saves RM118,000 in purchase cost
β’ Used lorry costs RM15,000-30,000 more in maintenance over 5 years
Net Savings: RM88,000-RM103,000 despite higher maintenance
When Higher Rates Are Worth It
Scenario 1: Limited Capital, High Revenue Potential
Situation: Starting logistics business, RM50,000 capital available
If Buy New:
β’ Need RM40,000 down payment
β’ Remaining RM10,000 insufficient for operations (fuel, driver, insurance)
β’ Must borrow additional capital or delay operations
If Buy Used with 0% Down:
β’ No down payment required
β’ Full RM50,000 available for operations
β’ Immediate revenue generation
β’ Higher financing rate offsets by earlier profitability
Scenario 2: Proving Business Model
Situation: New logistics route, uncertain long-term demand
Strategy: Buy used lorry at 50% cost:
β’ If route succeeds: Upgrade to new lorries in 2-3 years
β’ If route fails: Easier to sell used lorry (lower capital loss)
β’ Higher rate on RM100,000 is less risky than lower rate on RM200,000 when success uncertain
Scenario 3: Short-Term Contract (2-3 Years)
Situation: 3-year port haulage contract secured
Strategy: Buy used lorry:
β’ Contract pays RM180,000 annually
β’ Used lorry cost: RM100,000 (financed at 8%)
β’ Annual financing cost: RM12,000
β’ Net profit: RM168,000/year
β’ Contract ends: Sell lorry for RM60,000-RM80,000 (still has value)
ROI: Used lorry generates strong profit despite higher rate
Banks vs Ing Heng Credit: Used Lorry Financing
Bank Position on Used Lorries
Most Malaysian banks:
β’ Won't finance lorries older than 7-10 years
β’ Require 20-30% down payment even for younger used lorries
β’ May reject lorries with high mileage (200,000+ km)
β’ Prefer new lorries for approved financing
Ing Heng Credit Position
We finance used lorries that banks reject:
β’ Lorries up to 10 years old (verified condition)
β’ 0% down payment available (preserves working capital)
β’ High-mileage lorries considered (if well-maintained)
β’ Fast approval (24-48 hours) for time-sensitive purchases
Why We Can Finance Used Lorries
Our 40+ years in equipment financing teaches us:
β’ Well-maintained used lorries are reliable assets
β’ Lorry age matters less than maintenance history
β’ Logistics companies maintain fleets (not like individual car owners)
β’ Commercial use means lorries are earning assets, not depreciating toys
Inspection Checklist: Before Financing Used Lorries
Engine and Mechanical
- Compression test (engine health verification)
- Oil analysis (check for contaminants, wear metals)
- Turbocharger condition (critical for modern lorries)
- Clutch and gearbox operation (smooth engagement, no slipping)
- Differential operation (no unusual noises or vibrations)
Chassis and Body
- Rust inspection (structural integrity, especially frame rails)
- Accident history (check with PUSPAKOM, paint overspray indicates repairs)
- Tire condition (even wear, appropriate tread depth)
- Suspension performance (no sagging, worn bushings)
- Brake system performance (stopping distance, pad/lining thickness)
Documentation
- Service history (available? complete?)
- Previous ownership (single owner better than multiple)
- PUSPAKOM inspection report (current)
- JPJ registration (clean title, not cloned)
- APAD permit (if applicable, transferable)
Real-World Used Lorry Success Stories
Selangor Start-Up Fleet
"Starting logistics business with RM80,000 capital. Needed 2 lorries immediately. Banks required 30% down payment on new lorries (RM120,000). Would drain all capital. Ing Heng financed 2 used 2017 lorries (7 years old, well-maintained) at 0% down. Rate was 8% (vs 5% for new), but lower purchase price made total cost lower. 5 years later, both lorries still running strong, business profitable, upgraded to newer units while maintaining original used lorries as backup."
β R. Kumararaj, Logistics Director
Johor Contract Haulage
"Won 3-year port haulage contract. Needed 3 lorries fast. New lorries: RM600,000, 20% down required (RM120,000). Budget constrained. Bought 3 used 2016 lorries at RM240,000 total. Financed at 8% interest, 0% down. Contract revenue: RM540,000/year. Financing cost: RM76,800/year over 5 years = RM384,000 total. Net profit over 5 years: RM1,180,000 after all costs. Used lorries generated strong ROI despite higher rates."
β Ahmad Zaki, Operations Manager
Decision Framework: New vs Used Calculator
Step 1: Calculate Total Financing Cost
New: (Purchase price - down payment) Γ interest rate Γ term + down payment
Used: Purchase price Γ interest rate Γ term + 0 down payment (if available)
Step 2: Add Maintenance Costs
Add expected maintenance over financing term:
β’ New: RM10,000/year Γ term
β’ Used: RM25,000/year Γ term
Step 3: Add Revenue Loss from Downtime
Consider:
β’ New lorry downtime: 5-10 days/year
β’ Used lorry downtime: 15-25 days/year
β’ Daily revenue loss: RM1,500-RM3,000
Step 4: Compare Total Costs
Choose option with lower total cost (purchase + financing + maintenance + downtime), not just lower interest rate.
The Bottom Line: Used Lorries Win When Capital is Limited
The used lorry financing rate premium (2-4% higher) is worth it when:
- Capital Preservation: 0% down payment preserves cash for operations
- Fleet Expansion: Buy 2-3 used lorries for price of 1 new lorry
- Proving Demand: Test routes with used equipment before committing to new
- Short-Term Contracts: Match equipment to contract duration
Banks avoid used lorry financing. We specialize in it. With 40+ years of equipment financing experience, we assess used lorries based on condition, not just age.
Don't let higher rates deter you from used lorry opportunities. The total cost is often lower, especially with 0% down payment preserving your working capital.
Ready to Finance a Used Lorry?
We finance lorries up to 10 years old with 0% down payment. Get approved in 24 hours despite higher interest rates on aged vehicles.
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