Financing a commercial truck for small business is actually fairly simple and has fewer restrictions than most business loans. For example, while most financial institutions require you to pledge a certain amount of collateral for a loan, a commercial truck loan uses the purchased truck itself as collateral. That way, if the loan defaults, the lender can seize and sell the truck to receive minimum financial loss – much like a regular vehicle loan. As opposed to asking for money outright, this type of loan is more secure than others, and lenders are often more willing to work with low credit or very little time in business.
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Three Ways to Finance a Commercial Truck
Depending on your situation, you have three options for financing a commercial truck: 1) traditional lender, 2) alternative lender, or 3) the truck company itself.
1) Traditional Lender: Banks and credit unions offer the best rates on business loans, but their profile requirements are usually quite stringent. For example, they look for businesses who have already been around for 2+ years, make $250K in revenues, and have a credit score of 650+.
2) Alternative Lender: For those that don’t qualify at banks or credit unions, alternative loans are a good option. While interest rates may be higher, they are more willing to work with your individual situation. They care less about credit score and time in business and more about cash flow. As long as you’ve been bringing in decent cash flow for 6 consecutive months, you can easily get an alternative commercial truck loan.
3) The Truck Company: Like many regular auto dealers, the truck company itself may offer financing. The requirements for credit score and time in business will likely fall somewhere in between the traditional lenders and the alternatives.
How to Find Commercial Truck Financing Options
The bank loan process is almost always a long ordeal in which you have to prove your ability to pay off the loan. Unfortunately, many business owners get turned down by bank after bank, wasting lots of time and effort trying to get loans from the wrong places.
The best way to land a loan is to start at the right lender – one who knows your industry and trusts your business. That way, you can know who will finance you from the beginning.
See what commercial truck financing options you have with Lendio’s free loan match tool. Answer a few questions then choose the lenders with the best options.