Truck Financing For New & Established Businesses

Buying a big truck is not cheap. In fact, most of the time people will have to look into truck financing options because the cost of the equipment is out of their reach. If you find yourself in this situation, it’s a good idea to learn what lending criteria is required to get a reasonable deal and what pitfalls could halt your purchase.

Semi Truck Financing

When it comes to buying a big rig, financing is often what people have to consider because of the high ticket price. However, what they need to realize is their loan terms such as length of the loan, amount of down payment, and interest rates rely heavily on a few key factors: years in business, established truck credit (ex. previously financed a truck), credit score, and good haul references.

Years in Business

If you’ve been in the business of hauling for a good length of time that will show the truck financing company that you know what you’re doing. A track record of 3 to 5 years in business is all it takes to increase your chances of getting good loan terms. But what if I’m just starting? Most companies will still approve financing if you have a minimum of 2 years driving experience under your belt. If you’re right out of school, your best option would be to work for a company for a couple years to gain some experience.

Established Truck Credit

By having an established truck credit history you’ll eliminate some risk the lenders have when issuing loans. They can already see you are going to pay on time and won’t default. If you’re new to the game and never have financed a truck, they will look to see if you have any other credit, like a house, car, etc. They will also require proof of income and/or tax returns.

Credit Score

Having a high credit score is critical. It’s the most sought after criteria for any lending in general. Most semi truck financing companies look for scores above 675. If you’re under that you may still be able to secure financing, but your interest rate will be higher.

References

Some financing companies will require references to show your character and as additional proof. You can’t really blame them for being extra cautious when handing over that kind a cash.

Even if you pass most criteria we can’t guarantee that every applicant will be able to obtain financing because there are a variety of reasons why lenders might choose to decline an applicant. These include:

  • Credit score below 600
  • Recent Bankruptcy
  • Past due Tax liens
  • Past due child support
  • Repossessions/Foreclosure
  • Equipment is over 10 years old

Commercial Truck Financing

When you think commercial truck, you may be thinking semi, but it actually covers a wide range of vehicles including flat beds, lift trucks, dump trucks, concrete mixers, moving trucks, and a long list of others. Does your business need to upgrade or purchase another commercial work truck?

If so, coming up with the money for these trucks in full can be difficult. Small and large businesses alike, have this problem. You may even have the cash upfront or an existing line of credit, but if you use it all to pay for a new truck you might be leaving yourself a little dry when it comes to emergencies. It’s always good to have some cash on hand. If you’re thinking about starting a business, or want to add to your fleet, you should consider commercial truck financing.

Once you have found the perfect truck or van for your needs, you simply need the right financing. The best option, if possible, is paying in cash, if you have a surplus of business funds, but if not we recommend financing. Lending criteria varies between companies, but here are some general guidelines:

  • 2 years in business will be helpful
  • no set rules regarding credit scores as it varies by lender, but 620+ is ideal
  • to complete a standard credit application
  • provide bank statements
  • show complete tax returns
  • bank and supplier references
  • almost all lenders will require most small businesses to personally guarantee the loan, especially those with poor credit

Expanding your assets to keep up with a growing business is a good problem to have. Use financing as a tool to increase your business profitability and keep some cash for emergencies. In order to qualify for financing, you’ll have to show the lender how the vehicles will be used, and how you expect to repay the loan.

Eventually you’ll need to replace or add a vehicle to meet rising demand for your product or service. Not adding or replacing worn out vehicles will lead to losing your competitive edge while your competition meets the needs of your customers.

Semi Trucks For Sale

 

Red Semi TruckNow here is the “fun” part! Notice how I put fun in quotations?  Buying a new truck can be exciting, especially if it’s your first truck, but it can also be a huge pain in the ass. Choose the wrong truck and you could be filing bankruptcy when it decides to die on you.

When you start looking at the wide selection of semi trucks for sale, you’ll first need to consider if you are going to purchase a new or used truck. We recommend you get a used truck, but if you plan to do hauling in California, you’ll need to get a newer truck that fits their trucking regulations. Or you could avoid the Golden State altogether while hauling, it’ll save you money when buying a truck.

What to Look For When Buying:

1. Pulling power of the truck is the first thing to consider when looking for a truck. Select a truck tractor that has the right amount of horsepower for the type of loads and trips you’ll be doing. Ask yourself how much horsepower you’ll need and what you’ll be pulling: flat bed, reefer, dry van, etc.

2. Engine troubles will kill your return on investment. Make sure to check wiring, hoses, and belts for cracks, loose connection and signs of corrosion. If you are into the mechanical side of the business, bring along a mechanic with diesel truck experience. If the engine has been steamed it could be to cover up heavy oil leak. If the odometer reads in the range of 400-500K, take an even closer look at the engine. It might be time for an out-of-frame or less expensive in-frame overhaul to ensure the truck tractor continues to run for many more years. Is that something you would consider?

3. The cab is your home away from home. Hop in and check out the interior and living quarters. Also consider the cab’s positioning. While most of the cabs on the big rig now sit back from the front axle, others will be the cab over design and this is going to put the cab and driver right over the front axle. With the cab over design the truck will have a shorter turning radius and get into tighter spots, but the motor is behind the drivers seat and under it. Which in most cases, means any type of mechanical issues is going to require the driver to jack up the cab and service the engine.

4. Mileage is a Huge Factor to Consider. I’d recommend shying away from trucks with 450,000-600,000+ miles. Everything that can go wring with it, will. It will cost you an insane amount of money to maintain.

5. Check the truck’s maintenance logs. Look for any engine work that may have already been done and for other major repairs. The maintenance record should give you a good idea of how well the truck was looked after, in addition to letting you know if the oil was changed on a regular basis. Most mechanics and/or operators will mark the last mileage date of an oil change on the air filter. Check to see if this date coincides with the maintenance records.

6. Avoid Used Fleet Trucks. A lot of these companies hire new drivers right out of school. I’m not saying they don’t know what they’re doing, but they still aren’t world class drivers. There’s a good chance the truck you’re looking at buying had its gears grind more than a few times, not to mention being miss shifted, dropped rpms really low on the wrong gear, maybe drove up a hill with their foot all the way down buried in the wrong gear. And who knows, it may have been overheated.

7. Can you afford to buy it? If not, do you have what’s necessary to finance? Getting preapproved by a lender is a good idea so you know how much money you have to play with. Nothing worse than finding the perfect rig, only to be told you can’t get approved for financing.

Commercial Trucks For Sale

For many businesses having a good reliable commercial truck is a vital part in running their business. Is it time to invest in a mid-sized truck for your business?

Whether you’re a florist or plumber, a lawn care specialist or an electrician, hauling your product and supplies with ease and safety is an important part of doing business. The type of truck that will be most suited to the needs of a business can depend on a range of factors, and now that you have discovered a need for a commercial truck let’s look at a few details to make sure you get to the perfect truck to assist your growing business. When you are ready to upgrade or replace an existing truck, ask yourself these questions:

1. What’s the main purpose of the truck going to be used for?

It seems like common sense, but make sure you have a good idea of what you’re looking for before you step on a lot or browse online classifieds. Every business is unique and you’ll want to play your cards right to find a truck that fits what your business is about. Some businesses find that a standard cutaway box truck is the perfect vehicle for their needs. They are practical, robust, and versatile. This makes them ideal for many different types of businesses. Could a box truck work for you? If not, maybe a truck with a utility body or flat bed, or something with hydraulic capabilities. It’s all comes down to your business needs and preferences.

2. How much space do you need for hauling these goods?

It’s impossible to know exactly what you’ll be hauling every trip, so it’s important to think a little bigger when considering truck space…and don’t forget to consider height in the equation. If you’re a plumber or electrician you probably have a good idea of what you need to bring along, but if your business has to do with delivering various goods you could be hauling perishable goods one day and a car the next, so keep that into consideration.

3. How heavy is the load you’ll be hauling?

Just like determining an ideal trucks space, figuring out what kind of weight your truck needs to be able to withstand can be a guessing game. Unless you’re looking to replace a truck that you already have. Think about products you may deliver, tools and equipment, job material, etc. when estimating weight.

4. Will you need climate & humidity control?

Art dealers and those transporting perishable goods often need temperature and humidity control. You may not need climate control every time, but it is likely down the road it may become necessary.

5. What is your budget?

If you’re on a budget, you may want to consider buying a used vehicle. There are many reliable used mid-sized trucks you can choose from. Just inpsect the truck carefully to decrease you chances of having to spend money on repairs in the future.

6. What kind of fees and payments can you expect to pay

If you decide to finance your truck, it’s a important to ask what payments you’re looking at. Make sure your business is profitable so you can good a good return on investment.

7. Does the truck come with a warranty

Don’t assume your truck comes with a warranty. Every dealer is different. Some may have their own in house warranty, so read the fine print and understand the pros and cons before you buy.

Knowing the answers to these questions will put you ahead of the game when you step onto the dealers lot. A good dealer can help talk you threw these questions and help you find a new truck that fits your budget.

Equipment Financing

Equipment financing involves more of the heavy construction equipment, but also farming equipment as well. When people are looking at financing this they need to consider a couple of different factors to ensure they are not going to be taken advantage of by the finance company. Without this, people could have problems in getting to enjoy the equipment because they are trying to figure out how to pay for it.

Farm equipment is something which is some of the most expensive equipment people are going to buy. The equipment typically cost a farmer over a quarter of a million dollars. Since this is the case, they need to make sure they have the proper items in place when applying for financing. This includes how they are going to use the equipment and how they plan on paying it off.

Construction equipment is another type of expensive equipment that has to be financed. With this type of equipment, people generally are going to get the equipment and have it financed for several years. However, before the company goes out and spends hundreds of thousands of dollars on the equipment, they need to make sure it is going to be used for more than a single job. If the business is going to use the equipment only on one job, then it may not pay for them to buy the equipment.

As many people have found out, financing trucks and heavy equipment is a challenge. However, if people have the right information they will quickly find out that it is rather easy for them to buy the equipment they need to have and finance it properly. Without this information, people could end up biting off more than what they can chew and this could easily lead to the business losing quite a bit of money, if not the entire business. However, to help the businesses out even more, they need to know what to consider when looking at the equipment to guarantee they are getting the right piece for their money.

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