Getting finance for a commercial truck involves a different application process than a personal or traditional company loan. Even if they are comparable, a traditional small business loan lender would usually base their decision about whether to fund you based on your personal credit history, the source of income for your company, and how long you’ve been in business.
However, a commercial trucking loan reduces the lender’s risk by using the vehicle you buy as collateral, which naturally increases your chances of approval. For the same reason, commercial truck and trailer financing in Abbotsford have more flexible terms, which is also advantageous to you.
Therefore, a lot will depend on the particular truck you want to buy as well as the different policies and guidelines of the lending businesses you contact when it comes to qualifying for a truck loan.
- Good Credit Score
Generally speaking, the larger the down payment you’ll need to obtain, the lower your credit score. Your credit score is the most important aspect that will determine how easily you can get financing for a commercial vehicle, especially if you’re just starting out as an owner-operator.
A good credit score will not only make it easier for you to get a loan for your trucking company, but it will also allow you to bargain for better terms for repayment, which might end up saving you a significant sum of money in the long run.
- Make Down Payment
While it is possible to obtain a commercial loan with no money down and receive up to 100% of the value of your commercial vehicle, most lenders will need a predetermined amount of money upfront.
Your down payment could be between 10% and 30% of the total. For instance, a $12,000 down payment is required if you take out a $80,000 loan for commercial dump truck finance with a 15% down payment.
Additional Aspects That Affect Financing Rates
Although having a high credit score is important, lenders consider other factors as well, so your objective should be to reduce the amount of risk that appears to them when applying for commercial truck loans. These are some recommendations.
- The more truck driving experience you can provide, the better; even more so, if that experience can be shown to generate a steady income stream.
- The longer a lender may review your credit history, ideally over seven years, the better it should be for your case.
- Usually advantageous is a credit history of making scheduled payments on time, like you would with a mortgage or auto loan.
- Look for a reliable co-signer. Lenders will evaluate your application considerably if you have a friend or relative with high credit who is willing to take over the loan in case you don’t repay it.
Bottom Line
In the end, it’s a rather simple process as long as you fulfill the requirements set by the lenders. If you don’t currently have the necessary credit score to be granted a commercial truck loan, don’t worry, there are plenty of ways you may raise your score in the future, making it easier to finance your trucking business.
If you are looking for equipment financing in Abbotsford, Sandhu & Sran Leasing & Financing is the name to trust. We assist eligible business owners in securing a low-interest financing options to save big in the long run. Whether you are looking to lease or finance, discuss your truck and equipment financing goals to get started.
