Commercial Truck Financing - Five Ways To Finance That Commercial Vehicle

Commercial Truck Financing - Five Ways To Finance That Commercial Vehicle

While commercial truck financing is not as easy to obtain as it was before the credit crunch and rise in fuel prices, it is possible for owner-operators and small trucking companies to finance first or additional truck purchases. Depending on their track record, credit rating and the size of the purchase, five major ways of financing are available for buying new or used trucks:

+ Dealer Financing

Commercial truck dealers do offer financing for purchase of new trucks, and they are often backed by the truck manufacturers which they represent. Dealer financing is usually available only for the most established trucking companies, and requires a top credit score. It also requires a 20% down payment and documents proving contracts or other ability to pay the loan on time and in full.

+ Financing Using a Co-Signer

Banks and finance companies, as well as some dealers, will accept a co-signer to guarantee a commercial truck financing loan. Be aware that in the case of default, both signers to the loan documents will be liable. This is usually only recommended when a borrower is certain that reliable payments can be made, but is unable to obtain financing alone due to credit record issues or an insufficient amount of time in business.

+ Purchasing From a Private Party Seller

Especially in the case of used trucks that are sitting idle because of high fuel prices or because they have been replaced by new ones, a private seller is often willing to accept monthly payments rather than a lump sum payment for a commercial truck. However, because the seller needs to be paid as soon as possible, monthly payments may be higher than those offered by traditional lenders.

+ Large Down Payment Financing

Finance companies which handle sub-prime loans for truck purchase sometimes request a large down payment. Owner-operators and companies which do not have sufficient cash for such a down payment are then either rejected or forced to take out a separate loan for the down payment. This is usually only feasible if the borrower has access to a personal line of credit, such as a home equity loan or credit cards.

+ Financing With Additional Collateral

Commercial truck financing which relies on additional collateral, such as existing trucks or real estate, is available for purchasing new or used trucks. It is one of the more widely recommended and reliable methods for obtaining commercial truck financing in cases of poor credit, including even bankruptcy or default, as well as for first time truck purchasers. Finding a reputable firm which offers this type of financing is usually the best option for new owner-operators as well as small firms which need to purchase additional trucks.

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