COMMERCIAL TRUCK FINANCING: TOP TIPS TO SECURE YOUR LOAN
Commercial drivers are bringing home bigger paychecks than they have in years. The figures don’t lie. In 2024, the average truck driver salary per annum is $92,255 in the U.S. So, if you are considering breaking into the transport business, commercial truck business is an attractive option.
However, starting out doesn’t seem easy. And unless you have a lot of money stashed away already, you will need commercial truck financing. Getting this loan comes with a few requirements like a good credit score and high down payment when being accepted. But with the right guide, getting through the process becomes much simpler.
In this article, we will cover everything you need to know about commercial truck financing.
WHAT IS COMMERCIAL TRUCK FINANCING?
Commercial truck financing is the type of loan you get when you want to purchase a truck or any heavy vehicle for commercial purposes. It is unlike standard auto loans that cater to personal vehicles. It is designed for larger and more expensive trucks, from semi-trucks and dump trucks to other types used for business. Comparatively, the loan structure of commercial trucks is different from conventional auto loans.
Before you getting a loan, here are a couple of facts you should know about commercial truck financing:
- lenders look at your creditworthiness and revenue. Financiers would prefer a credit score of about 600 or more
- the truck serves as collateral
- there are multiple financing options ranging from banks, truck dealer financing along others
In a nutshell, you need strong financials and a higher credit score to get favorable loan terms.
FINANCING VS. LEASING
You can either choose to finance a commercial truck or go for leasing. The one you go for primarily depends on your business needs. If you are looking at upgrading your trucks to new models later, then you should consider getting a lease on your truck. However, note that leasing comes with usage limits and you will not be able to customize the truck as you would if you were financing it.
With financing, you get full ownership once you pay off your loans. This is a great option if you plan to use the truck long-term.
CHALLENGES IN SECURING COMMERCIAL TRUCK FINANCING
A couple of factors can also pose barriers when securing your commercial truck financing. These factors can slow down the loan approval process, or result in a loan structure that does not favor the borrower. Some of these include:
POOR CREDIT HISTORY
Limited credit history can make securing financing tough. The outcomes are either higher interest rates or even outright denial because it sends a risk signal to the lender.
Solution? Try raising your credit score before applying. Pay off old debts and avoid getting new ones. Another option is to consider bad credit truck financing although the terms might be stricter.
HIGH DOWN PAYMENT
To reduce their risks, lenders often ask for a large upfront payment. This can help lower the overall loan and increase the chances of approval. It may be overwhelming for small businesses or startups. The best strategy? Look for low down payment truck financing options to ease the initial financial burden.
STRICT LOAN TERMS FOR NEW BUSINESSES
Lenders tend to propose stricter loan terms for borrowers that are just starting the business with no financial history or proven revenue. You can make this less of a hurdle by having additional sources of income.
UNDERSTANDING THE DIFFERENCES BETWEEN LOAN OPTIONS
A general piece of advice for those just starting is to familiarize yourself with the range of loan types available. Choose the best loan type by doing your research or consulting a financial advisor.
HOW TO GET THE BEST COMMERCIAL TRUCK LOAN
Getting a favorable commercial truck loan is easy when you follow the right step. The following can help you improve your chances of finding financing that meets your business needs:
ASSESS YOUR BUSINESS FINANCES
Start by reviewing your finances before seeking financing. This will help you identify the best loan option. It also gives you an opportunity to make necessary adjustments before approaching your lender.
RESEARCH LOAN OPTIONS
Once you have a grasp of your financial health, start researching various loan options. Research commercial truck financing companies, banks, and truck dealer financing. Ensure you keep an eye out for the best commercial truck loans that offer competitive rates and favorable conditions.
PREPARE REQUIRED DOCUMENTATION
Common documents include business plans, tax returns, and profit and loss statements. Having these documents ready can streamline the application process and boost your chances of approval.
EXPLORE FLEXIBLE FINANCING OPTIONS
There are different financing structures out there, so take the time to explore which one best aligns with your business needs Common options include leasing versus buying, bad credit financing, and low down payment alternatives.
NEGOTIATE TERMS
What’s a good loan agreement without proper negotiation? Rely on knowledge from earlier points to secure a loan that works in your favor. When you negotiate, focus on key areas like down payment, interest rates, and loan duration.
CONCLUSION
Commercial truck financing is vital if you are looking to scale your operations and remain competitive. With financing, you can expand your fleet by adding more trucks without going bankrupt.
As we have covered in this article, ensure you explore alternatives that align with your business needs and avoid jumping at every available offer.
Scaling your business is important, and so is getting the right financing that allows you run commercial truck businesses without the worry of unfavorable loan conditions or accumulating bad debts.
WHY CHOOSE INSPIRED FUNDING FOR YOUR COMMERCIAL TRUCK FINANCING NEEDS
Inspired Funding offers customized commercial truck financing solutions to businesses of any size, from first-time buyers seeking one unit, to fleet upgrades for growing enterprises. Inspired Funding makes the financing process an easy one for business owners; we offer flexible terms, quick approvals and have programs designed around credit issues.
Schedule a call today to explore your financing options with a truck financing expert at Inspired Funding!
