If you're sitting on a prime mover loan that's two or three years in, there's a good chance refinancing has crossed your mind. Maybe the rate looks high compared to where the market is now. Maybe you want to take some cash out for working capital. Maybe the original lender's repayment shape doesn't match the way the work has actually run. Refinance is one of the more common files across the desk, and it's also one of the most commonly knocked back when operators go direct to a bank without prep.
Knock-backs on truck refi usually trace back to the same three things. Once you know what they are and how to read them in your own file, the conversation with a broker becomes a lot more useful — you'll know what to send across and you'll know what to expect.
This piece walks through what credit teams actually look at on a prime mover refinance, the three patterns that most often kill approvals, and what you can do at your end to tighten the file before it goes anywhere.
Why operators refinance a prime mover
Three reasons cover roughly 90% of the refinance files that come across the desk:
- Lower repayments or a better rate. The original loan was set up at a point in time. Maybe the rate's higher than what the market currently writes. Maybe you've added trading history that opens a better lender category. Maybe the original loan was through a captive (manufacturer-aligned) finance product and a broker-market non-bank refi would shave 100–200 basis points off.
- Cash out for working capital. The truck has paid down, the asset value hasn't dropped as fast as the loan balance, and there's equity sitting in the asset. Refinancing into a larger loan releases that equity as cash — useful for supplier payments, an ATO bill, fitting out the next truck, or working through a slow quarter. There's a whole article on when cash-out works and when it doesn't.
- Restructure the end-of-term. The original loan has a balloon coming due in 18 months and you don't want to pay it out in cash or trade in the truck. Refinancing the balloon into a new short loan gives you another two to four years of monthly repayments on what would otherwise be a lump sum.
A fourth, smaller bucket is moving away from a finance company that's been hard to deal with — slow settlements, an awkward repayment shape, opaque end-of-term communications. That's a valid reason on its own; you don't need a rate improvement to justify moving.
Whatever the reason, the refi file you build looks similar. What changes is which credit team will engage with it.
What credit teams actually look at
A credit team assessing a prime mover refinance is looking at four things, in roughly this order:
- The asset. Make, model, year, hours or kilometres, condition. They need to know what the truck is genuinely worth today — not what it was worth when you bought it, and not last year's trade-in price. They'll accept a valuation from a recognised valuer, an inspection report, or for older assets a physical inspection.
- The existing finance. Payout figure, original financier, conduct over the past 12 months, any arrears, the security position. This is where the file tightens up or falls apart in the next 24 hours.
- The business. ABN, trading history, GST registration, recent turnover, profit trend. They're reading whether the business that's been paying the current loan can pay the new one — and whether the trajectory is up, flat, or down.
- The borrower or guarantor. Personal credit file, asset position, history with the lender category. For a sole trader or small Pty Ltd, the borrower and the business are largely the same picture.
Those four lenses come together into one read: is the file high-conviction, conditional, or shape-doesn't-fit. Three patterns most often push a refi from high-conviction into shape-doesn't-fit. Here they are.
Killer #1 — LVR after depreciation
This one catches the most files, and it catches operators who've otherwise done everything right. Loan-to-value ratio is the loan amount divided by the asset value. A lender funding a refinance is writing a new loan secured against the truck, and they need the truck to be worth enough to cover that loan with some margin. The trap is that the truck depreciates faster than you pay the loan down.
Take a stylised example: a $200,000 truck financed at $180,000 with a 30% balloon over five years. After two years the loan balance might be around $145,000 — but the truck's market value, depending on hours and condition, might have dropped to $130,000. The LVR on a refi of that loan is over 110%. No mainstream lender writes that. A specialist or sub-prime category might engage, but the rate goes up and the file gets more conditional. Add a cash-out request on top and the conversation usually stops.
What to do at your end. Before approaching anyone, get an honest read on what your truck is worth today. Online tools give a starting point, a local dealer gives a 60-second read for free, and a valuer gives a formal report (around $300–500) the lender will accept directly. If the LVR is tight, the refi might still work with a different structure — a smaller loan, a longer term, or cash topped up from your end.
Lender categories read LVR differently. Tier 1 banks are tight — often 80–85% maximum on a refi. Broker-market non-banks have more room, 90–100% depending on asset and business strength. Specialist non-banks will go higher for the right file. This is exactly where panel breadth matters: the same truck and the same numbers get a different LVR ceiling depending on which category the file goes to. Reading the file and matching it is the job.
Killer #2 — arrears or conduct on the existing contract
A refi asks the new lender to take over the security position from the existing financier, so they want to see the existing loan has been kept clean. A clean 12-month conduct history is the standard — no missed payments, no reschedules, no payment arrangements.
The reality on a lot of files is messier, and credit teams read those events as risk signals. A single isolated late payment from 14 months ago is usually background noise. Three late payments in the past 12 months — even if all caught up — is a different file. A formal payment arrangement, even one honoured, is another.
- Usually forgiven: single isolated events with clear context and clean conduct since.
- Flagged conditionally: a handful of late payments in the past year. Approval still possible, but the rate and file shape tighten, and the conversation moves to a category that reads conduct in context.
- Not forgiven on a refi: active arrears at application, a registered default, or a payout stuck because the existing financier is mid-recovery. These move into sub-prime or specialist territory with rate costs that change the economics.
What to do at your end. Pull the past 12 months of statements from the existing financier and look at them with fresh eyes. If conduct is clean, the broker uses that directly. If there are events, decide how you'll explain each one — "two payments were a week late when a big customer paid 30 days late" is a much better conversation than "it's been a tough year". If conduct is materially compromised, a hardship variation with the existing financier is sometimes a better path than refinancing the same problem into a higher rate. There's more on refinancing with arrears here.
Killer #3 — business trajectory going backwards
The third killer shows up through the financial documents rather than the front-end conversation. Credit teams read turnover, profit, GST position and trend from your BAS, tax returns and bank statements. A flat year is usually fine. A growing one is great. A declining one — even if you're still profitable — is where files get conditional or knocked back.
A 20% year-on-year drop in turnover raises the credit team's hand even on a serviced loan. They want context. "We lost one major customer and have already replaced 70% of that revenue" moves the file forward. "The industry's slower and we're not sure when it'll come back" moves it to a different category. Bank statements tell their own story too — consecutive overdrafts, repeated dishonoured direct debits, or a heavy BNPL pattern signal cash-flow stress the BAS doesn't show.
What to do at your end. If last year was your best year, the file is straightforward. If it was a down year, it isn't dead — it needs framing. "Turnover dropped 18% because we deliberately exited a low-margin contract" is a workable file; the same drop with no context is a longer conversation. If the down year is well in the past and recent BAS quarters show the recovery, the trend tells the right story. The companion piece on equipment finance after a bad year goes deeper.
When more than one killer is in play
Two or three killers stacking on the same file is when refis become genuinely hard deals — the file a bank knocks back without a real explanation. High LVR after depreciation, a few late payments, and a down trading year: each is workable alone; all three together needs panel breadth and specialist appetite. Three things happen to those files: the lender category steps down (and the rate rises, typically 200–500 basis points over a clean file), the structure tightens (shorter terms, larger deposits, lower LVR ceilings), and timing stretches — a clean refi settles in five to ten business days, a hard file often two to four weeks.
The promise on hard deals isn't "we'll get every file through". It's "we'll read the file properly, tell you what's possible, and run the lender shortlist that actually fits". Sometimes that means "this will cost more than you'd like, and here's why". Sometimes it means "this isn't a refi file today — here's what you'd change first".
What to send when you enquire
For a prime mover refi, sending these up front saves a day or two: the existing finance contract and any variation letters; the last 12 months of statements; a current payout figure (most financiers issue one within one to three business days); a year of trading numbers (BAS, tax return, or accountant letter); asset details with condition photos; and a one-line reason for refinancing. If any of the three killers are present, flag it in the first conversation rather than discovering it at credit stage. You can see how the rest of the file moves on the how it works page.
If you're sitting on a prime mover refi and want a second read before you commit to anyone, send the asset details and a one-line context and we'll start the file — same-day shortlist back, no obligation.