Many drivers that start working at a trucking company, eventually wish to become owner-operators. Smaller companies also look to solve their transportation issues by purchasing commercial trucks. These businesses and commercial truckers wonder then – what commercial truck financing first time buyer options are available out there?
You will first have to see which loans you qualify for. After that, you look at the rates to see if you can afford this investment. Without the proper knowledge, looking at finance options can be daunting.
That is why we have created this guide. This in-depth guide will help you understand how commercial truck financing works. We will also take a look at what commercial truck financing first time buyer options will be available to you.
How Does Commercial Truck Financing Work?
Commercial truck financing is offered for three purposes:
- Buying a commercial truck
- Leasing a commercial truck
- Upgrading or repairing an old truck
A commercial truck loan is different from a personal or business loan. Since the purpose of these commercial loans is to buy the trucks, the truck also serves as your collateral. It reduces any risk for lenders and therefore improves the chances of getting the loan.
While personal vehicle loans are given at an interest rate below 5%, commercial truck loans range anywhere from 5% to 30%. This high-interest rate does not show banks an appealing option.
Your business itself may be a great venture, but banks view commercial auto loans as risky investments. Fortunately, you have several other options in lenders.
These alternative lenders understand the plight of truckers and small businesses. That is why they provide special commercial truck financing first time buyer programs. The lenders aim to get a complete overlook of your financial picture instead of an automatic turndown.
How Do You Qualify For Commercial Truck Financing?
Now that you know how commercial truck financing works, let’s take a look at their terms for qualification.
The lender looks at your credit history, revenue flow, and commercial driver’s license to ensure the legitimacy of the request. It is a standard procedure to determine what rate will work best for both parties involved.
To qualify for commercial truck financing first time buyer programs, there are certain papers you must prepare.
Business Plan
Alternative lenders and bankers alike take look at your basic business information. So, be prepared with reference documents like tax returns, purchase orders, and profit-loss statements.
Good Cash Flow
As a small business, you may have taken some loans to keep up with operations. This can put you in a bad credit position. Lenders are willing to overlook this if you show that you have enough cash saved for their timely payments.
Details Of The Truck
Lenders will also ask for the truck model information. The purpose of this inspection is to determine if the truck has long-term value. That is why first-time buyers are recommended to buy trucks from trusted dealerships. It helps mitigate the risks involved.
What Are The Options For Commercial Truck Loans?
Now that you are well-informed of the qualifications needed, let’s take a look at some of the loan options.
As mentioned before, bankers typically do not loan to first time buyers. The commercial truck financing first time buyer programs are available with lenders online. That being said, you can look at all the options at your disposal before making a decision.
Banks
Due to the high-interest rate and application process, many small businesses wish to avoid the hassle of a bank loan. However, you would be interested to know that they do offer some relief.
These relief offers can be low down payments, interest rates, or leases instead of loans.
Here are some banks that you can consider.
U.S. Bank
If approved, a loan with this bank will not require you to put a down payment. They allow you to customize a payment schedule according to your cash flow. The terms of payment can range anywhere from 24 to 60 months.
CIT Bank
For small business owners that need commercial trucks urgently but do not have enough cash, CIT can help you out. CIT lets you lease trucks based on your monthly budget and purchase needs. They offer a buyout option at the end of the lease. So once you have operations running, you can buy out the trucks.
Wells Fargo Bank
As a larger bank, Wells Fargo offers a variety of commercial truck loans. They offer finances for both new and used trucks. You can get terms that range from 12 to 84 months. If you have accumulated enough time in business and good cash flow, you will be eligible for their loans.
Commercial Trucking Finance Companies
When compared with general lenders and banks, commercial truck financing companies are more lenient. They have a lower interest rate and provide relief for bad creditors. As long as you show that your business is legit, they can finance up to 100% value of the trucks.
So if you cannot qualify for a bank loan, this will be your best bet. Here are some companies that offer commercial truck financing first buyerprograms.
CAG Truck Capital
The company offers truck finances online to businesses and owner-operators. CAG specifically caters to bad creditors. With low-interest rates, CAG strengthens your credit profile by reporting your payments to credit agencies.
Truck Lenders USA
Truck Lenders USA offers huge finances ranging between 15,000 dollars to 250,000 dollars. They come with experts that will understand your needs and suggest trucks accordingly.
10-4 Financing
This company offers semi-truck finances for first-time truckers. They have an easy online process to check if you qualify for their loans. The company has also struck deals with dealerships to directly provide you with semi-truck options.
Final Thoughts
Small businesses and drivers alike need to complete their deliverables on time. Commercial truck financing first buyer programs help with this goal. They allow small businesses to focus on expanding their operations.
By learning about the different lenders, you can be in a position to start applying for loans. You must take a stock of your business and learn up on any tax deductions that can help you with loans.
With the wide variety of options, first-time buyers will have no issue finding a truck financing solution.
