If you are a first-time buyer interested in financing the purchase of a commercial truck, such as a semi truck, dump truck, or other heavy-duty work vehicle, then you need to know what factors will provide you with the best opportunity to borrow money. Below is a list of five factors that make the financing process both easier and less costly.
Type of vehicle
With all other things being equal, financing a semi truck is going to be more difficult and expensive than the purchase of other types of commercial vehicles. Lenders will require you to provide a higher down payment, and the interest rates may be higher. In addition, equipment more than a decade old will become increasingly difficult to finance.
The reasons for this are due to the lower relative resale value of semi trucks, plus semi trucks generally do not have the longevity of other commercial trucks, such as cargo vans. Older semi trucks are that much closer to breakdown, and a lender does not want to take the chance of obtaining a broken vehicle through repossession.
With that in mind, seek to find a lender that specializes in your desired vehicle type. A specialist financing company will understand how to find you the best deal and be the most creative in getting an affordable financing package together.
Established business history
One of the first factors considered by prospective lenders is the stability and size of your business endeavor. Business owners with long-term experience, as well as owning a fleet of vehicles that is larger than two or three, will find it easiest to obtain financing. On the other hand, a new business enterprise formed by a solo trucker will have a harder time finding affordable credit. There is a substantial risk involved for lenders who finance trucks for new owner-operators, and that can result in down payments that are up to half the purchase price.
High cash reserves
Similar to the advantages obtained by owning a business with a successful track record, the finance companies are particularly interested in working prospective buyers who hold a lot of cash. High cash reserves indicate the buyer is prepared to weather the storms of business and can afford to both maintain and equip their vehicles as necessary. While it may seem like a vicious cycle, the reality is those who are in the best position to borrow money are those who typically need it least. However, smart buyers will recognize the need to accumulate adequate cash reserves from the beginning, even during the more lean years of business.
Purchase from a dealer
Another factor that can help you find a good financing deal is by purchasing from a dealer. Most lenders find that dealers sell less-risky vehicles and at a price range that is appropriate for a particular model. Private party sellers can be a risky purchase source, and it may be difficult to find a private party seller that can meet the requirements necessary for working out a suitable deal. If you locate a vehicle owned by a private party and are interested in purchasing it, find a dealer who will buy the truck from the seller, then turn the truck around and sell it to you. While this will add to a higher purchase price, it may be the only way to buy the exact truck you truly want.
No red flags
One of the last factors, but most important, is the critical need to avoid falling into one or more of these situations:
Each one of these scenarios is highly likely to prevent you from obtaining financing altogether. Even if you are able to obtain a loan, the costs will be prohibitive for most borrowers.
If you owe back child support, it is worthwhile to catch up on the payments to help lower your overall costs, even if it also lowers your cash reserves. In addition, be sure to wait until an existing bankruptcy is discharged before attempting to finance a truck. Keep in mind that multiple financing applications lower your credit rating, and this can hinder you needlessly during the process. For more insight, visit resources like http://www.arrowtruck.com/.
Share12 October 2015
Nothing is more frustrating than dealing with car problems, especially when you are on a long road trip. Unfortunately, if you are like most people, you might overlook key car maintenance responsibilities, which can land you in hot water on the road. A few years ago, I was traveling to visit my cousin in California, when my car died right in the middle of the desert. I didn't know what to do, but I knew that the problem was probably caused by not changing my car oil. This blog is dedicated to helping other car owners know how to take care of things, so that you aren't left in dangerous situations.
