Commercial Truck Financing-Everything You Need To Know

Published September 19, 2020 by WC Team

Have you been thinking of adding another truck to your transport business? Whether you want to purchase one such vehicle or several of them, truck financing is a good idea. However, you must note that this would not include in personal loans. So, what is commercial truck financing?

Any automobile used for commercial purposes falls under the commercial vehicle category. Financial institutions provide special rates and offer for such loans. Commercial truck financing is a service to help truck buyers get financial support for making their purchase. 

For clearing all your doubts, this article explains the features, benefits, and the process of procuring a commercial truck loan.

What is Commercial Truck Financing and How Does it Work?

Are you still wonderingwhat commercial truck financing is? Here is a detailed answer. You may procure commercial truck financing from the seller of a truck or a financial institution. When you opt for a transport loan, the vehicle itself will act as collateral. How does a truck become collateral?

If you fail to pay the periodical payment for several months, the lending institution will seize your truck. It is done to cover the money you owed to them. However, the advantage here is that you do not need to put any other property or asset at stake.

Finding commercial truck financing

You can get your commercial truck financed through various traditional banks or non-banking financial companies (NBFCs). Both these institutions offer specialized rates for commercial vehicle financing.

How does it work

Once you submit a loan application, the lender will check your eligibility and documentation. If you meet all the requirements, you can sign the financing agreement and get your truck's funding. You will have to pay periodical installations as agreed in the contract.

Features

The features section will further explain what is commercial truck financing and what does it include.

  • Every lender requires documentation such as ID proof, vehicle documents, etc.

  • Once you meet the lenders' requirements and eligibility criteria, the loan process is fast and hassle-free.

  • The interest rates of a truck loan depend on the credibility of a borrower.

  • Commercial truck financing can be availed by small businesses, individuals, firms, etc.

  • A borrower will need to provide a financial statement of the past credits to guarantee their paying abilities.

Benefits

Whether you run a small business or a large organization, getting your commercial truck semi-financed is a profitable option. You will get a repayment tenure of 1 to 5 years, making it easy for you to purchase expensive trucks.

You can procure the finance money within 5-6 business days of signing the loan agreement. It is that easy. Moreover, the documents required for this process are IDs and other information. You can easily upload them on the finance website and save the time of visiting the institution.

What’s more? You can avail of the funding even if you have a zero-credit score. This means it is easy to procure commercial truck financing even if you are getting the loan for the first time.

Though simple, you must consider certain factors while getting commercial truck financing. Here’s what you should know.

What Should You Consider While Procuring Commercial Truck Financing?

Now that you know what is commercial truck financing, you must go through certain points of consideration.

Rate

First and foremost, you need to consider the interest rate offered by the financial institution. Though most of these services offer similar rates, you can compare and decide what suits you best. The rates may vary from 3% to 15%.

Experience in the Industry

The more experienced, the better. Whether you are considering a bank or an NBFC, go for an institution with enough experience. It will help you complete the process seamlessly. Furthermore, reputable services are usually trustworthy.

Tenure

After the interest rate, this is the second most essential factor. Although most of the financial institutions offer a period of up to 5 years, some may not. Additionally, some services may extend the tenure for up to 7 years. A prolonged period will ease your repayment burden.

Quantum of Loan

The amount or percentage of finance provided by the institution is the quantum of loan. It may vary according to the lenders as well as your credit score. Some financial services may provide 80%-85% of the value, while others may offer a 100% loan.

After getting the information required for selecting the financial institutions, you must check your eligibility.

What are the Requirements of Commercial Truck Financing?

There are certain conditions put forward by every lender that make you eligible for the loan. To completely understand what is commercial truck financing, you must know its requirements.

Credit Score

Having a positive credit history as well as the score is downright crucial for getting a truck loan. Your past finance activities help the lender trust you with the financing. You must note that some services may consider both—your personal and business credit score.

Truck Condition

You may be procuring funding for a used truck or a new one. The lenders will consider things like vehicle quality, mileage, insurance, etc. You can easily get a loan if your vehicle is new or in good working condition.

Vehicle Documentation

Lenders will require papers displaying insurance, invoice, RC copy, and other relevant details. You must be ready with such documents irrespective of whether you are semi-financing a pre-owned or a new truck.

Down Payment

Finally, you must have enough funds to make the down payment of the truck. It is the amount that you need to pay when you purchase the vehicle. Additionally, some lending services may require proofs of your capital to be sure about your repayment abilities.

Final Words

By now, you would have enough knowledge about what is commercial truck financing along with its features and significance. Getting your transport semi-financed will not only let you buy multiple vehicles but also ease your financial burden.

Before you make the financial decision of procuring a loan, conduct a profound study on the financial institution. Getting a commercial truck loan from a trustworthy service is highly significant for you and your business. 

Once you have completed your research and have all the documents ready, you can apply for commercial truck financing. It is simple, quick, and easy!


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