Commercial Truck Financing
A commercial truck on the road.
Obtaining commercial truck financing is one of the significant challenges to being successful in this business. What most people need to know about financing is the amount needed for the down payment and monthly payments. While these answers are important, they are not the only ones to consider when approaching financing options.
Qualifying For Financing:
Before being able to learn about commercial truck financing options, the beginning step is categorizing the truck since the type or truck and work will change financing options. A commercial truck are typically transportation vehicles like semis or vocational trucks like cement trucks or dump trucks. The rules are different because some financing sources won’t touch long haul deals while others may specialize in these areas. Because of these specializations, it may be necessary to research a few financing options. Should you be looking for semi truck financing, you could apply for a loan at Prudential Leasing Inc.
Down Payments for Loans and Leases:
In general, vocational trucks are easier to finance than ones that are used for long hauling. However, for anyone with an established business, good cash flow, and reasonable credit, a small down payment is usually all that is needed. However, commercial truck financing companies consider risk factors which may increase the down payment. These risk factors are as follows:
- Being a new business
- Poor credit
- Being an owner/operator
- Purchasing from private party
- Low cash reserves
- Buying an old truck
If these risk factors are present, prepare to pay anywhere from 10-25% on the down payment, although some companies may want 50% down as collateral.
Effect of Credit Scores:
When obtaining a commercial vehicle, a credit score matters more when determining the payment rather than qualifying altogether. With that said, there are scenarios where bad credit can prevent owners from qualifying. A person with bad credit an minimal down payment or collateral is going to have a difficult time trying to find commercial truck financing options. If some payment or collateral is present, it’s usually possible to obtain a truck unless of three unique cases. The three factors that will kill almost any financing deal are past due child support, recent vehicle repossession, and currently in BK.
Owner Operator Financing:
Typically, owner operator financing is more difficult to obtain. While lots of finance companies say that they are willing to finance trucks, but only with three or more vehicles. There are very few funders who will deal with single owner-operators. The reason for this is that as the number of trucks goes down, the liability increases. While there are some companies who may offer financing solutions, they are going to be more difficult to find than fleet financing. We recommend Prudential Leasing for commercial truck financing and leasing. See the video below for more information.
Financing Older Vehicles:
As the age of the vehicle goes up, financing options go down. While it’s fairly simple to finance anything less than ten years old, it will be a little more challenging to finance an older, 15-year old vehicle, although still possible. After a vehicle is 15 though, the number of available underwriters willing to make a deal drops by at least two third. This is because older equipment is going to break more often, meaning that owners may not be able to make their payments. When this happens, the funder has to take the truck and will probably lose money.
Financing Options:
Truck financing can be done in a variety of ways. While some may want to lease or finance the truck through a private party or auction for a better price, this may be more difficult. The safest option is to go through a financing company that has an established history and is willing to work with truck owners. One of the top companies available today is Prudential Leasing. They are a nationwide company that is well-established and works with their customer base to provide affordable rates. They do not have an age restriction on trucks and also offer special programs for new owner operators and drivers, so this company comes highly recommended by their customer base.
Next Steps:
This guide provides an overview of what it takes for drivers to qualify for financing a commercial truck. In most cases, there are ways to get a truck financed for a reasonable rate. Use this guide to understand how to best approach financing and some of the factors that may change financing rates or options. A well-established commercial truck financing company provides excellent customer service and will be able to work with drivers to get them on the road and keep their business running.
Finally, make sure to shop around and check to see if another company can provide you a better rate or longer terms. Buying a commercial truck, new or used, is a serious investment and you need to make sure that you are taking all of the proper actions in order to give your business the best chance for success.
