Truck Finance 101
For Owner Operators & First Time Buyers
So you’ve got a good contract or haul source. The problem is that you can’t get financing. What to do?
The four main criteria for truck financing are as follows:
· Experience: How long have you been driving a truck? Do you have over the road experience?
· Haul Source: Do you have an established company ready to hire you as an owner operator when you get a truck? If you think you can get financing on a first time buyer program AND do so on your own authority then you are mistaken. Finance companies want to see you going with an established fleet. If you mention that you have any ambition to get your own authority then you’ve just wasted your time.
· Your credit history: If you have child support issues or if you have tax liens then you will absolutely NOT be able to get a truck loan.
· Your down payment: The more you bring as a down payment the more credit you will qualify for. Also the more you bring the lower your interest rate.
I want to address a concern about interest rate for everyone. Obviously we all want to pay the least amount of interest. The thing to think about with regard to interest is the risk involved for the lender, the higher the risk the higher the rate and conversely the lower the risk the lower the rate. Do you know what the highest risk loan in our society is? You guessed it: VENTURE CAPITAL. Do you know what type of a loan is used for a truck purchase? If you said VENTURE CAPITAL you get a gold star.
You or I can go out and get 4% on a home loan, 3% on a car, 15% on a credit card, but when it comes to trucks it is a whole new ball game. The reason is that trucks are an entity unto themselves. Truck credit is in a division all by itself. With a home the lender can be relatively sure that he’ll at least be able to get some of his investment back if you default; With a truck…well it all depends on how well you’ve kept it up and how many miles have clicked over and what the market is doing today versus yesterday. A truck, as opposed to a home, is a DEPRECIATING ASSET. What that means is that “the milk isn’t getting any sweeter”. There is a definite shelf life when it comes to trucks and the older it is the shorter the life remaining with regard to the lender. It doesn’t matter to the lender that the owner just spent twenty thousand on a new engine or that the tires are new or that the overhead was just done. They look at the age, the miles, and the book value and if it doesn’t meet their criteria then they won’t lend on it. The newer the truck is the longer the term and the lower the interest rate. The older the truck is the shorter the term and the higher the interest rate.
Now an experienced owner operator that has good credit and a solid pay history on trucks in the past can certainly get a truck loan with a great interest rate.
What about the rest of us?
The good news is that you can be weak on any one of the four main items shown above and still get a loan if you are sufficiently strong on the other three.
Even if you have challenged credit (bankruptcy, late pays, garnishments, repossessions, and other nasty items on your bureau) it is still possible to get truck financing. As I stated before if you have child support or tax liens then you can hang up getting any truck loan until those have been paid for or brought current.
There are lenders out there with trucks that have been returned either by repossession or lease expiration that they need to move. These trucks are available to the right people on an assumption basis. Even if you have little down ($3,000.00 or even less in some cases) you can still have a very strong chance to get into a truck.
I have credit sources for all levels of credit from the solid gold plated A+++ to the E- credits. If you have a need for a truck but can’t get financed give me a call. I don’t care how many people have turned you down before I want to hear from you.
My name is Doug Shields and I can be reached at 480-238-3873 or 800-273-8309 if you’d like to talk. You can listen to my four minute FREE recorded message anytime day or night which reveals how you can get into a big truck even with bad credit.
To listen to that FREE recorded message simply dial toll free 1-888-562-4447.
My trucks as well as my client testimonials can be viewed online at www.aztrucksource.com
Thanks for your time!