Used Prime Mover Financing: Aged Truck Loan Interest Rates Malaysia
Used prime movers cost 40-50% less but carry higher financing interest rates. Learn how to calculate total cost and determine if aged truck financing makes sense for your haulage business.
The Used Prime Mover Advantage: Lower Price, Higher Rates
New prime mover: RM500,000. 5% financing rate.
Used prime mover (2018 model, 7 years old): RM250,000. 7% financing rate.
The used prime mover costs half as muchβbut carries 2% higher interest. Is it worth it?
The answer requires looking beyond interest rates to total cost of ownership, remaining lifespan, and revenue potential. For many haulage companies, used prime movers with higher rates generate superior ROI.
Why Used Prime Mover Rates Are Higher
Risk Factors for Lenders
Banks and finance companies charge higher rates for used prime movers due to:
- Uncertain Remaining Lifespan: New prime movers last 15-20 years. 7-year-old prime movers might last 8-13 more years (less certain)
- Higher Maintenance Risk: Older prime movers need more repairs. If you default, the repossessed asset may have degraded value
- Resale Value Risk: Used prime movers depreciate faster. If repossessed, recovery value is lower
- Technology Obsolescence: Older prime movers may not meet emerging emissions standards
Typical Rate Structure
New Prime Mover Financing: 4-6% flat per annum
Used Prime Mover (Under 5 years old): 5-7% flat per annum
Used Prime Mover (5-10 years old): 7-9% flat per annum
Used Prime Mover (10+ years old): 10-15% flat per annum (if financing available at all)
Total Cost Analysis: Beyond Interest Rates
Scenario: 5-Year Financing Comparison
Option A: New Prime Mover
β’ Purchase price: RM500,000
β’ Down payment (20%): RM100,000
β’ Financing amount: RM400,000
β’ Interest rate: 5% flat per annum
β’ Term: 5 years (60 months)
Monthly Installment: ~RM8,500
Total Payments: RM510,000
Total Interest: RM110,000
Total Cost: RM610,000 (including RM100,000 down payment)
Option B: Used Prime Mover (7 Years Old)
β’ Purchase price: RM250,000
β’ Down payment (0% with Ing Heng Credit): RM0
β’ Financing amount: RM250,000
β’ Interest rate: 7% flat per annum
β’ Term: 5 years (60 months)
Monthly Installment: ~RM5,200
Total Payments: RM312,000
Total Interest: RM62,000
Total Cost: RM312,000 (0% down payment)
Cost Comparison Over 5 Years
New Prime Mover Total Cost: RM610,000
Used Prime Mover Total Cost: RM312,000
Savings with Used: RM298,000 (49% 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 Prime Mover (0 years): 15-20 years remaining life
Used Prime Mover (7 years old): 8-13 years remaining life
Used Prime Mover (10 years old): 5-10 years remaining life
Cost-Per-Year Analysis
New Prime Mover Cost per Year:
β’ Total cost: RM610,000 Γ· 15 years = RM40,667/year
β’ Annual depreciation: RM25,000/year
Used Prime Mover (7 years old) Cost per Year:
β’ Total cost: RM312,000 Γ· 8 years = RM39,000/year
β’ Annual depreciation: RM20,000/year (already depreciated significantly)
Result: Similar annual costs, but used prime mover requires 50% less upfront capital and generates revenue immediately.
Maintenance Cost Reality: What to Expect
Maintenance Cost Comparison
New Prime Mover (Years 1-3):
β’ Routine maintenance: RM15,000-RM25,000/year
β’ Warranty coverage: Most repairs covered
Annual Out-of-Pocket: RM15,000-RM25,000
Used Prime Mover (7-9 Years Old, Years 1-3 of Ownership):
β’ Routine maintenance: RM25,000-RM40,000/year
β’ Major repairs: RM15,000-RM30,000/year average
β’ No warranty coverage
Annual Out-of-Pocket: RM40,000-RM70,000
Maintenance Cost Difference: RM25,000-RM45,000 higher annually for used prime mover
Net Calculation:
β’ Used prime mover saves RM298,000 in purchase cost
β’ Used prime mover costs RM100,000-RM135,000 more in maintenance over 5 years
Net Savings: RM163,000-RM198,000 despite higher maintenance
When Higher Rates Are Worth It
Scenario 1: Limited Capital, High Revenue Potential
Situation: Starting haulage business, RM100,000 capital available
If Buy New:
β’ Need RM100,000 down payment
β’ Remaining RM0 for operations
β’ Must borrow additional capital or delay operations
If Buy Used with 0% Down:
β’ No down payment required
β’ Full RM100,000 available for operations
β’ Immediate revenue generation
β’ Higher financing rate offset by earlier profitability
Scenario 2: Proving Business Model
Situation: New haulage route, uncertain long-term demand
Strategy: Buy used prime mover at 50% cost:
β’ If route succeeds: Upgrade to new prime movers in 2-3 years
β’ If route fails: Easier to sell used prime mover (lower capital loss)
β’ Higher rate on RM250,000 is less risky than lower rate on RM500,000 when success uncertain
Scenario 3: Short-Term Contract (2-3 Years)
Situation: 3-year port haulage contract secured
Strategy: Buy used prime mover:
β’ Contract pays RM600,000 annually
β’ Used prime mover cost: RM250,000 (financed at 8%)
β’ Annual financing cost: RM25,000
β’ Net profit: RM450,000/year after financing
β’ Contract ends: Sell prime mover for RM120,000-RM150,000 (still has value)
ROI: Used prime mover generates strong profit despite higher rate
Banks vs Ing Heng Credit: Used Prime Mover Financing
Bank Position on Used Prime Movers
Most Malaysian banks:
β’ Won't finance prime movers older than 10-12 years
β’ Require 20-30% down payment even for younger used prime movers
β’ May reject prime movers with high mileage (1 million+ km)
β’ Prefer new prime movers for approved financing
Ing Heng Credit Position
We finance used prime movers that banks reject:
β’ Prime movers up to 12 years old (verified condition)
β’ 0% down payment available (preserves working capital)
β’ High-mileage prime movers considered (if well-maintained)
β’ Fast approval (24-48 hours) for time-sensitive purchases
Why We Can Finance Used Prime Movers
Our 40+ years in equipment financing teaches us:
β’ Well-maintained used prime movers are reliable assets
β’ Prime mover age matters less than maintenance history
β’ Haulage companies maintain fleets (not like individual car owners)
β’ Commercial use means prime movers are earning assets, not depreciating toys
Inspection Checklist: Before Financing Used Prime Movers
Engine and Mechanical
- Compression test (engine health verification)
- Oil analysis (check for contaminants, wear metals)
- Turbocharger condition (critical for modern prime movers)
- 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 Prime Mover Success Stories
Port Klang Startup Fleet
\"Starting haulage business with RM120,000 capital. Needed 2 prime movers immediately. Banks required 30% down payment on new prime movers (RM150,000). Would drain all capital. Ing Heng financed 2 used 2017 prime movers (8 years old, well-maintained) at 0% down. Rate was 8.5% (vs 5% for new), but lower purchase price made total cost lower. 5 years later, both prime movers still running strong, business profitable, upgraded to newer units while maintaining original used prime movers as backup.\"
β R. Kumararaj, Logistics Director
Cross-Border Contract Haulage
\"Won 3-year port haulage contract. Needed 3 prime movers fast. New prime movers: RM1.5 million, 20% down required (RM300,000). Budget constrained. Bought 3 used 2016 prime movers at RM750,000 total. Financed at 8% interest, 0% down. Contract revenue: RM1.8 million/year. Financing cost: RM180,000 over 5 years = RM900,000 total. Net profit over 5 years: RM3.6 million after all costs. Used prime movers 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: RM20,000/year Γ term
β’ Used: RM50,000/year Γ term
Step 3: Add Revenue Loss from Downtime
Consider:
β’ New prime mover downtime: 5-10 days/year
β’ Used prime mover downtime: 15-25 days/year
β’ Daily revenue loss: RM2,000-RM4,000
Step 4: Compare Total Costs
Choose option with lower total cost (purchase + financing + maintenance + downtime), not just lower interest rate.
The Bottom Line: Used Prime Movers Win When Capital is Limited
The used prime mover 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 prime movers for price of 1 new
- Proving Demand: Test routes with used equipment before committing to new
- Short-Term Contracts: Match equipment to contract duration
Banks avoid used prime mover financing. We specialize in it. With 40+ years of equipment financing experience, we assess used prime movers based on condition, not just age.
Don't let higher rates deter you from used prime mover opportunities. The total cost is often lower, especially with 0% down payment preserving your working capital.
Ready to Finance a Used Prime Mover?
We finance prime movers up to 12 years old with 0% down payment. Get approved in 24 hours despite higher interest rates on aged vehicles.
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