Recovery truck finance for operators, garages and the motor trade

Most recovery trucks are built in two stages: a commercial chassis from a manufacturer's dealer, and a recovery body fitted by a specialist body builder. Lenders usually finance both in one agreement, because the completed vehicle is the asset they are relying on.

The practical issue is timing. Body builders often ask for a deposit when the order is placed, the chassis may arrive before the body is ready, and build slots can stretch for months. Before ordering, agree with the lender:

• whether they will pay the chassis dealer on delivery to the body builder, or only once the truck is complete
• whether the body builder's deposit can be funded or must come from your own cash
• what happens if the build is delayed or the specification changes
• that the final invoice will show the chassis, body and equipment so the vehicle can be properly identified

Extras such as winches, light bars, wheel dollies, skates and tracking systems can usually be included where they are on the build invoice.

Goods vehicles over 3.5 tonnes gross weight normally need a goods vehicle operator licence. Recovery vehicles have an exemption, but it is narrow: the truck must be built or permanently adapted for lifting, towing and transporting disabled vehicles, and used for recovering broken-down vehicles. The government's guide to running a vehicle recovery business explains the definition, and the list of operator licence exemptions sets out the wider rules.

This matters for finance. If a slide bed over 3.5 tonnes is used to move cars that are not broken down, such as trade deliveries, auction collections or moving stock between dealer sites, that is transport work and an operator licence is likely to be needed. Lenders ask what the truck will be used for, and if the work needs a licence, they will expect you to hold one or have applied. Drivers also need the right driving licence category for the vehicle's weight.

Used recovery trucks are widely traded, and a good used slide bed or spec lift is often easier to justify than a new build with a long lead time. Lenders look at the age and mileage of the chassis, the condition and make of the body, and how long the truck will last against the term. Older trucks usually get shorter terms, and the body builder's name carries weight with lenders. Our page on used equipment finance explains how second-hand assets are assessed.

• Established recovery operators: lenders like to see trading history, the mix of work (motor club, insurance, police or council contracts, trade and private) and how the new truck fits in.
• Garages and MOT centres: adding a recovery truck to bring in repair work; see our garage and MOT centre finance page.
• Motor dealers and traders: moving stock and customer cars; see motor trade finance, and remember the operator licence point above.
• New operators: drivers setting up on their own after working for a recovery firm can often be funded, usually with a deposit and personal guarantee, especially on a used light recovery vehicle.

Borrowing of £25,000 or less by sole traders and small partnerships can be regulated consumer credit, which brings additional protections.

The truck is the main security. Light recovery vehicles and slide beds have a broad resale market, so they are relatively straightforward. Heavy recovery units are specialist and very expensive, so lenders look harder at the operator's experience, contracts and finances, and may ask for a larger deposit. Directors of smaller companies are usually asked for a personal guarantee.

A used truck from a dealer with a clear history can often be decided quickly once the lender has accounts and bank statements. New builds take longer overall because of the body build, even if the finance is approved early. Heavy recovery and first-time operators take more underwriting. Timescales depend on the lender and are not guaranteed.

Illustration. An independent garage loses repair work because customers' broken-down cars are recovered to other garages. It buys a used 7.5 tonne slide bed with a spec lift, a package of around £60,000, on hire purchase over four years. Because the truck will mostly collect broken-down customer vehicles, it is expected to fall within the recovery exemption; the garage also plans occasional trade deliveries, so it checks the operator licensing position before committing. The figures are hypothetical and each lender sets its own terms.

• Subcontracting recovery work: avoids the capital cost but loses margin and control.
• Short-term hire: for a contract trial or seasonal peak.
• A wider fleet facility: for operators who also run haulage or plant vehicles, our HGV finance, tipper truck finance and skip lorry finance pages cover related vehicles.