Whether you operate a fleet of commercial vehicles, or a driver interested in purchasing a truck to improve job profits, buying a commercial truck is a big decision.
Often, when making this purchase, you might not have the amount of capital necessary to purchase the commercial truck outright. In this case, looking into financing options is the next step.
If you are interested in financing a commercial truck, learn more about how financing works and what tactics can help you ensure that you receive the best deal possible on your new or used commercial truck. If you still have questions, contact the expert team at Trans Lease to learn more.
Common Questions about Commercial Truck Financing
To get started, check out these commonly asked questions about the basics of commercial truck financing.
How Does Commercial Truck Financing Work?
Commercial truck financing is very similar to equipment financing. When you finance the purchase of a commercial truck, the truck itself is the collateral for the loan.
In most cases, to secure the loan you will be required to make a down payment. How much the down payment depends on the lender, but you can expect to pay anywhere from 5% to 25%.
When issuing a loan, the lender will determine the length of the loan based on the useful life of the truck.
Who Offers Commercial Truck Financing?
In some cases, securing commercial truck financing can be more difficult than securing standard vehicle loans. Credit unions and banks will not always provide commercial truck financing. It’s ideal to look for a business that specializes in this lending type.
Trans Lease offers a variety of financing options, all specifically tailored to the unique needs of the transportation industry.
What Determines Your Eligibility for Commercial Truck Financing?
When applying for a loan to purchase a commercial truck, it will be important to know whether or not you are qualified.
Commercial truck lenders will look into a few key variables when determining whether or not to extend financing to you:
- The make, model, and year of the commercial truck
- The truck’s condition, mileage, and any repairs it has undergone
- The commercial truck’s value
- How the truck will be used
- The amount of money you have for a down payment
- Your business and personal credit history such as any judgments, bankruptcies, or liens against you or your business.
- Your credit score
These factors are used to determine whether or not you are eligible for financing, the interest rate you pay on your loan, as well as the terms of the loan.
Remember, even if you have poor credit or marks against your credit history, you can often still find a viable financing option, but the key is to shop around.
Tips When Applying for Financing for a Commercial Truck
Not all financing options are equal when it comes to purchasing a commercial truck. Making smart choices can help save you from paying higher interest rates than necessary and can help you secure the best financing terms possible.
Tip 1: Always Compare Rates and Terms
Remember, not all lenders will offer you the same loan terms and rates. For this reason, it is important to pull a few quotes and compare your options.
There are a few key components to compare between lending options:
- The interest rate: Interest rates can vary dramatically. You might pay as low as 5% or as high as 25% on a commercial truck loan. Be sure to ask for rates from a few lenders before making your final choice. The rate you’ll receive depends a lot on your business’ credit history, your personal credit score, and what your debt to income ratio is currently.
- The down payment required: Often, the amount of a down payment will depend on your credit and finances. The better your credit and finances, the lower the down payment required. Keep in mind that even if a lender requires a lower down payment, you may still want to consider putting more money down to lower your monthly payment or to change the length of repayment.
- The length of the loan: While your loan terms will be determined in part based on the perceived life of the commercial truck’s use, it will also depend on the monthly payments plus your down payment. Take time to consider what combination is best for your business.
Tip 2: Gather All the Documents You’ll Need
When applying for financing for a commercial truck, you will need to have some paperwork handy. Getting all of these documents in line prior to visiting a dealership or lender can help make the process smoother and more efficient.
Common paperwork needed includes the following:
- Your commercial driver’s license
- Your business documents proving registration
- Current and past bank statements
- Business tax returns
- Your business’ current year P&L (Profit & Loss)
- USDOT number
- Motor carrier number
Tip 3: Work with a Trusted Team
Unfortunately, not all lenders are trustworthy. The last thing you want to do is to sign on the dotted line and find out that the lender you are working with is not transparent and upfront.
Make sure to vet any lender before you agree to their finance terms. Take the time to read any of their online reviews and spend some time talking with their team. If they seem less than helpful or pressure you, consider shopping elsewhere for help.
Visit the Team at Transwest to Finance Your Commercial Truck
If you are ready to purchase a commercial truck for your fleet, come talk to our team at Transwest. We carry a quality inventory of commercial trucks, and our team will be happy to discuss available financing options with you. Our expert partners at Trans Lease will help you through the process without hassle.
At Transwest, we believe that applying for financing for a commercial vehicle for your fleet should be an easy, stress-free experience. That is why we are dedicated to providing our customers with quality financing options. Come visit us today to learn more.
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