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What truck financing are you looking for?
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Obtaining Financing for Semi Trucks, Big Rigs and Over
the Road Trucks
There are many alternatives in obtaining semi truck financing.
Whether you are a start up or a seasoned business, the first
logical place to investigate your financing is at your local bank.
This may be a pleasurable experience if you have many
contacts at your bank but most people usually don't have these
types of connections. The seasoned or fleet operator must have
at least mid 600s on their credit scores and be prepared to go
through a long paper process. Prior year tax returns are
required, current personal financial statements needed, interim
financial statements and other banking information pertaining to
your business and personal bank balances are required. The
start up business must have a credit score properly 680 or
higher and will have a much smaller success rate in obtaining
bank financing. The business start up is a much higher risk
factor and must adhere to tougher lending standards than the
seasoned or fleet operator. Additionally, the lender may require
that the prospect borrower be incorporated prior to document
submission.
Most banks offer loan and/or lease programs. The difference is
that the loan program transfers title at the end of the payment
obligation, whereas the leasing component offers a rent type
environment during the course of the lease with a buy out option
at the end of the lease period to take title. Usually, the monies
required upfront to acquire a loan are higher and eliminates
many candidates. The Leasing arena requires anywhere from
usually first and last payment to approximately 30% down of the
acquisition cost depending on the applicant and the risk factors
determined by the lender. As the economy has become weaker
and the risk factors have become higher, it isn't uncommon to
see up to a 30% down payment required on a start up situation.
Additionally, some lenders will not finance an over the road truck
that is over five years old as well. The standard for others may
be ten years. Other niche lenders may require lower credit
scores, such as 550-650 but their interest rates may range
between 20-40% depending upon the application's time in
business and personal credit scores..Once again, the front
money can vary from lender to lender.
On the loan and lease programs for a semi truck applicant, the
borrower must investigate whether the bank and/or financial
institution considers this a qualified asset which they will lend on.
Most lenders don't like this type of asset, they consider it high
risk and would prefer to lend on more traditional type assets like
bulldozers, dump trucks, excavators etc. Other niche lenders
specialize in other industries such as transportation only which
may include limos, limo buses, ambulances and over the road
trucks as described here. Loans and leases usually run
anywhere between 36 -60 months based upon the age of the
semi truck.
The semi truck applicant is seeking a relationship with the
lender no matter whether it is a start up or seasoned business.
The front money to commence the lending vehicle, the monthly
payments and the buyout clauses at the end of the lending
instrument, if there is one, is paramount in making a prudent
business decision. The amount of paperwork and hoops to jump
through to get to end of the financing process must be
considered in the total evaluation process.
As we discussed above, there can be a long drawn out
paperwork process to obtain your financing. Recently, some of
the lenders have changed their computer qualification models
and require application only programs This means that there
are no income tax returns required, time consuming personal
financial statements needed, and other key documents either
prepared and /or requested. This program is usually geared for
the seasoned or fleet operator business but there are also start
ups programs available from some lenders. These application
only lending programs run as high as $250,000 for available
financing. It is important for the semi truck applicant to check out
all the lending programs available. The collateral on a financing
deal is usually the over the road truck acquisition, additional
collateral isn't required but may be looked at for weaker
applicants. The minimum credit score required for all semi truck
applicants may run as low as 575 if there are off lease and
repos available.
The last thing you should be aware of is dealer/financing
inventory programs. What this means, the lender has repos
and/of a off lease inventories that they want to move for cash
flow purposes. This financing arrangement is geared to the start
up as well as seasoned business and may offer the over the
truck applicant an excellent buying and financing opportunity.
Some programs offer as little as first payment only to get the
owner operator into the deal. Check around and see what is
available. It could save you thousands..
When you are shopping for an over the road truck financing,
consider the following, the front money, the monthly payments,
what collateral is required, the insurance coverage, and what
the buyout clauses mean. Also, make sure you have a good
source of income coming from a contract and/or other methods
to support your debt financing and gasoline costs.
Happy hunting for your over the road truck and its related
financing.....
About the Author: J.M Luna has over thirty years in the financial
field. This includes accounting and taxes, leasing and
commerical and hard asset money loans. U.S Corporate Capital
assists the start up as well as the seasoned business.
http://www.cclgequipmentleasing.com/trader.htm
Big Truck financing
TRUCK FINANCING BLOG
