How tow truck finance works in Australia: tilt trays and wheel lifts, towing licences, on-hook cover and what lenders check before they approve.
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Tow Truck Finance · Tilt Tray · Towing Licence
A towing operator with one tilt tray wins a roadside assist contract and wants a second truck. Before the lender looks at the truck, it asks for the licence, the on-hook certificate and the contract. Here is why, and what else goes in the file.
Quick Answer
Tow truck finance is usually a chattel mortgage or equipment loan over the truck and its tilt tray or wheel lift body, and lenders want your towing licence, on-hook insurance and evidence of towing income before they approve. Get the licence file in order first, then choose the truck.
Also called: tow truck loan, tilt tray finance, tow truck financing. "Tilt tray finance" is the same product for the most common tow body.
How does tow truck finance work?
Tow truck finance works like most truck finance: a lender funds the cab chassis and the tow body together, usually through a chattel mortgage or an equipment loan, and takes security over the truck. The difference is everything around the truck. A towing business earns under a licence, carries other people's vehicles under on-hook cover and lives on a mix of jobs, so the lender reads those before it reads the dealer quote.
Take an illustrative operator running one tilt tray who wins a roadside assist contract and wants a second truck. From the underwriter's seat, the first request back is rarely for the truck details. It is for the operator licence, the on-hook certificate and a copy of the contract. The licence file comes first, and the truck is assessed once that file is in order.
Most tow trucks are light or medium rigid trucks, so lenders treat them as heavy vehicle assets rather than cars. Where a truck sits in a lender's vehicle bands is set out in our ute, van and truck tiers post, and the wider picture of funding a work vehicle is in the business vehicle finance guide.
Which tow truck bodies and equipment can be financed?
Most lenders will finance tilt trays, slide trays and wheel lifts, along with the winches, lighting and recovery gear fitted when the truck is built.
- Tilt trays and slide trays. The most common tow body for car carrying, dealer work and breakdowns. Usually the easiest build for a lender to value.
- Wheel lifts and under-lifts. Common on accident and private property work, and often fitted alongside a tray. Lenders typically want the body specification on the invoice.
- Winches, lighting and accessories. Usually bundled into the same contract when they are fitted at the build and listed on the tax invoice.
The part to watch is how the price splits. On a new build the body and fit-out can be a large share of the invoice, and the body wears differently from the chassis under it. Chassis and body, valued apart, is how a lender decides how much of the invoice it will fund and over what term. Recovery gear bought later, away from the truck, can sometimes be funded on its own through equipment finance.
How do lenders value a new or used tow truck?
Lenders value a tow truck on the age of the chassis at the end of the term, the condition of the body, and whether the price is in line with what similar builds sell for.
A used tilt tray bought privately needs a PPSR search to confirm no one else holds security over it, and our PPSR checks post runs through how that works. Body wear matters more than many buyers expect. A tray that has carried heavy loads for years can be worth far less than the chassis it sits on, even when the odometer looks fair. On older or modified builds, a lender may ask for a formal valuation before it settles.
Can you put a balloon on a tow truck loan?
A balloon payment can usually be set on a tow truck loan, but it has to make sense against what the truck will be worth when it falls due. The usual approach, which varies by lender, is a balloon sized to the body's working life, and lenders typically keep balloons more conservative on tow trucks than on general freight trucks because the body takes a harder working life.
Does your tow truck licence affect finance approval?
Your towing licence affects approval directly, because without it the truck cannot earn regulated towing income and the lender has no clear way for the loan to be repaid from that work.
At the time of writing, the NSW Government guidance on tow truck operator licences says a Tow Truck Operator Licence from NSW Fair Trading is needed to run a tow truck business in New South Wales. Licences come in categories A (accident and breakdown or trade), B (breakdown or trade) and B Restricted (towing for vehicle dismantling and recycling). Each truck needs a certificate of currency for on-hook insurance and current registration papers, nominated drivers need a tow truck driver certificate, licence terms run for 1, 3 or 5 years, and Category A needs evidence of a holding yard. Assessment can take up to 12 weeks for a NSW licence, at the time of writing (page last updated 26 May 2026, read 30 October 2026), which matters if you are timing a truck purchase around a new or varied licence.
Other states run their own schemes, and some license the truck itself as well as the operator. Check with your own state's towing regulator before you sign for a truck.
Licence ready
- Operator licence current for the category of work the truck will do
- The truck can be added with its on-hook certificate and rego papers
- Drivers hold current tow truck driver certificates
- Holding yard evidence on file where accident work is planned
Licence pending
- Application lodged but not yet granted
- Truck bought before it can be added to the licence
- Income forecast leans on accident work not yet permitted
- No on-hook certificate issued for the new truck
How do accident towing schemes and set fees shape towing income?
Accident towing schemes shape towing income by controlling where, when and sometimes at what price you can tow, so a lender reads accident work as regulated income rather than open market income.
Some states set accident towing charges for lighter vehicles in metropolitan areas, while charges outside those schemes must typically be reasonable, so check your state regulator's current fee schedule. Some schemes also allocate accident jobs through rosters or allocation systems, which spreads the work across licensed operators rather than giving it to whoever arrives first.
Most operators blend accident, trade and contract work. Trade towing for dealers, workshops and auction yards tends to be steadier week to week. Roadside assist and fleet contracts can be the steadiest of all, as long as the contract has a reasonable term left to run. What a lender wants to see is that the business does not hang on a single stream.
What do funders check before financing a tow truck business?
Funders check the licence, the income mix, the trading history and the bank statements before they finance a tow truck, and they usually check them in that order.
From the underwriter's seat, the question is whether the business keeps earning if one stream dries up. A tow operator taking most of its income from one roadside contract is read differently from one with a spread of accident, trade and contract work, even at the same turnover. Trading history of around two years or more typically opens more options, and bank statements showing regular deposits from contract clients carry real weight. Where tax returns are behind, low doc options may be available on BAS and statements, varies by lender.
| Item | What the lender looks for | Why it matters (indicative, varies by lender) |
|---|---|---|
| Operator licence | A current licence for the category of work, with the truck able to be added | Without it, regulated towing income cannot be counted |
| Driver certificates | Current certificates for the drivers who will run the truck | A truck with no eligible driver earns nothing |
| On-hook insurance | A certificate of currency naming the truck | Typically a condition before funds are released |
| Truck and body valuation | Chassis age at end of term, body condition, a price in line with the market | Sets how much of the invoice is funded and any balloon |
| Income mix | A spread across accident, trade and contract work | One stream carrying the business reads as higher risk |
| Contracts | Roadside assist or fleet agreements and the term left on them | A contract near its end may not be counted in full |
| Trading history | ABN age, BAS and bank statements over recent months | Longer history usually means more lender choice |
If you want a read on where your file sits before you shop for a truck, check your eligibility first.
What insurance does a financed tow truck need?
A financed tow truck needs on-hook cover for the vehicles it carries, public liability for the work, and comprehensive cover on the truck itself with the lender's interest noted on the policy.
On-hook cover, sometimes called carried goods cover, protects the customer's vehicle while it is on your tray or lift. In New South Wales it is a licence requirement for each truck, and lenders lean on it too, so they typically make it a settlement condition: no certificate, no funds released. Public liability covers damage or injury at the roadside or in your yard. Comprehensive insurance covers the truck and its body, and the lender will want its interest noted.
How lenders treat insurance on financed trucks more generally, including timing before settlement, is covered in our truck finance insurance requirements post.
Can a new towing business get finance for its first truck?
A new towing business can often get finance for its first truck, though lenders usually want industry experience, a larger deposit and the licence granted or close to it.
The most common case is a driver who has worked for another operator and is now going out on their own. A new ABN with years behind the wheel of a tow truck reads very differently from a new ABN with no towing background. Our guide to truck finance for a new business covers new ABN lending for trucks in detail.
More for truck operators sits in the Truckie Hub and the truckie loan pack, which lists the documents worth having ready. For the full range of vehicle lending, see vehicle finance, and for other options for business owners, the Business Owners Hub.
Tow truck finance is approved on the licence file as much as on the truck. Lenders fund the chassis and body together but value them apart, want on-hook cover in place before settlement, and read the business through its mix of accident, trade and contract work. A clean licence, a spread of income and a balloon that matches the body's working life put an application in the strongest position.
Key takeaway: get the operator licence, driver certificates and on-hook certificate in order before you choose the truck.Frequently Asked Questions
Getting finance for a tow truck usually means a chattel mortgage or equipment loan over the truck and its body, with the lender checking your towing licence, on-hook insurance and income before it approves. Have the licence, the on-hook certificate, recent bank statements and the truck details ready before you apply. Where the truck sits in a lender's vehicle bands is covered in our ute, van and truck tiers post.
Low doc finance for a tilt tray is available from some lenders, typically for operators with an established ABN who can show income through BAS and bank statements instead of recent tax returns. Expect a larger deposit or a smaller balloon than on a full doc loan, though this varies by lender. Our low doc glossary entry explains how it works.
Most lenders want the operator licence granted, or close to it, before they fund a truck for regulated towing work, though this depends on the lender and the state. A truck bought before it can be added to a licence cannot earn from that work. New operators can read our guide to truck finance for a new business.
On hook insurance for a tow truck covers the customer's vehicle while your truck is carrying or towing it. It is commonly a licence requirement, and lenders typically want the certificate in place before settlement. General cover requirements for financed trucks are in our truck finance insurance requirements post.
A tow truck operator licence in NSW can take up to 12 weeks to assess, at the time of writing, according to NSW Government guidance. Licences run for 1, 3 or 5 years and need on-hook insurance and registration papers for each truck. Build that time into any truck purchase that depends on a new licence.
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