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.....
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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
