Have you thought of starting a commercial truck owner-operator business? Are you worried about how to plan everything for this truck business? Or are you an experienced truck driver who wants to expand his business? If your answer is yes to any of these questions, then you must be looking for a commercial truck financing owner-operator.
We are presenting a comprehensive guide for all the owner operator truck drivers who are worried about their financial planning. Go ahead and read. This will give solutions to all your questions.
Introduction To An Owner Operator Truck Business
An Owner-operator is someone, who along with owning the business, also manages the day-to-day operations of his business.
A self-employed motorist who owns a truck and organizes all the operations of his truck business on his own is named as an owner-operator of a truck business. This could be an excellent career path if you know your duties and expectations as an owner-operator. That being said, it demands a lot of your efforts and proper planning for everything to run a successful trucking company.
Financial Planning For Truck Owner Operators
When it is discussed about the planning for running a business, the most crucial aspect is its financial planning. The same goes for a truck owner-operator as well. Whether you are looking to purchase your first truck or you want to make additions to your existing fleet, the best option is to go for a commercial truck financing owner operator.
- Before Approaching Commercial Truck Financer
Though it is not difficult to approach commercial truck financers, still having everything properly lined up will increase your chances of receiving funds. Let us discuss some of the pointers that you should keep in mind before applying to a commercial truck financing owner operator.
The basic criteria that most of the lenders search for in their borrowers are the registered business. If you have registered your trucking business legally and ethically, you don't have to worry about raising funds from commercial truck financers. The primary requirement is an employer identification number issued by the secretary of state. You should also be able to show your business income properly.
Select A Sound Truck To Buy
The financer may have certain specifications regarding the truck in which they will invest. They may not provide funds for a truck older than 8-10 years or the one that is damaged from the start.
So you need to examine different trucks and select the one that satisfies the specified criteria. Also, gather certain information about the truck that may be asked by the lender. This information includes model, mileage, and pictures of the truck. They can also ask for a condition report.
Maintain Your Credit Score
If you have a bad credit score that does not mean that you would not be able to raise funds for your trucks. It will make your work tedious and tiresome. Also, you would not be able to take the benefits of zero or less down payments. Maintaining a good credit score will qualify you for all the loans, as well as the lower interest rate and down payments. So it is always a good idea to work on your personal as well as business credit scores.
Insurance To Cover The Trucks
Lenders will release the money only when the truck will be insured. This is because the commercial truck financing owner operator will keep the same truck as collateral security against the money they will provide you.
Make sure to have an interaction with the insurance company for the sum insured and the policy amount to avoid the last-minute hassle.
- Various Truck Financing Options
Now we have discussed the tips for increasing your chance to qualify for the loan provided by a commercial truck financing owner operator, let us also figure out the options available with these lenders for commercial truck financing.
No Money Down
As the name indicates, this financing option is a loan or lease without making any down payments. This sounds appealing to many, but since you are not putting down any money, you will have to pay instalments at greater rates. It is because the company will be financing 100% of the truck's value. Borrowers with an excellent credit score are an exception to this as they may get a lower down payment along with lower interest rates.
Bad Credit Financing
A lot of truck owner-operators have this question, whether they will be able to raise funds from commercial truck financers if they have a bad credit score. The answer to this is an absolute yes. Only the issue is you most probably will have to look harder for a commercial truck financing owner operator who will be glad to raise funds for you. All you have to do is research on subprime lenders, and you are good to go.
- Fair Credit Financing
Fair credit means having credit scores in the mid-600s and an acceptable operating history. All the truck owner-operators who fall under this category are likely to find decent options for financing their trucks. They will not have to spend their time and efforts on searching financing companies. If you have fair credit, you could either go for truck loans or capital leases.
- Excellent Credit Financing
If you fall under this category, everything will be as smooth as better for you. Commercial truck financing owner operators will be willing to finance trucks for you. The lenders will have the surety that you will repay their principal amount and interest. Owing to this reason, often, they will propose no down payment and low-interest rate benefits to excellent credit score borrowers.
- Fund For Fleet
Truck Financers mostly prefer the borrowers having an existing fleet and who are looking for expansion. So if you already have a fleet, you are at an advantage. The operating lease is more suitable for fleet financing.
To Sum Up
Planning your finances for any business is as important as making a blueprint before constructing a building. Whether you are an experienced truck owner operator or a novice in this field, proper financial planning can take your business to heights.
So always give some time and effort towards adequate research and analysis before considering any financing options. You should honestly do a self-assessment and judge your current position before applying to a commercial truck financing owner operator.
Also, if you are willing to start your career as an owner-operator for a trucking business, reasonable measures and relevant information will undoubtedly make you a successful self-employed business person.