Commercial Truck Finance and Lease Options

Are you interested in starting your own business but do not have the cash up front to purchase the commercial trucks necessary to do this? If so, you will be happy to learn about commercial truck financing that may be available to help get you started.

How to Obtain Financing for Commercial Vehicle Purchases

Many people shy away from trying to obtain a loan for their commercial vehicle needs. This is due mainly to the tight restrictions associated with loans that are available for personal automobiles. Lenders are more lenient when lending for commercial vehicles because of the high collateral value that these vehicles possess. In most cases this makes it much easier to find a lender who will give you great priced semi truck loans.

However, there are some requirements that you must meet in order to qualify for the semi truck loans that are available when purchasing a new and used semi truck or other commercial vehicle. Some of these requirements include: Proof that you possess a CDL license. A good credit score and FICO rating. Verification that you have a way to pay your loan payments.

There are some loans that may be available which will require that the purchaser be able to prove that they have at least two years of experience. Some lenders also require that the vehicle be five years old or newer in order to be considered for the loan. These requirements help provide the lender with the peace of mind in knowing that there is very little loss to them in the event that you are unable to satisfy your loan balance.

In most cases lenders may require that you have a down payment on your new or used commercial vehicle purchase. The average amount suggested for a down payment is approximately twenty percent of the selling price. Even when this is not required, it is a good idea to have some type of a down payment on your purchase to help keep your monthly loan payments to a minimum.

First Time Truck Buyers

Many first time commercial truck buyers are happy to purchase a used vehicle. This allows them to save additional money that can be used towards the purchase of a new vehicle later on, or to choose to invest the money into growing their new business venture.

Step 1. Instead of assuming that it is best to purchase new commercial vehicles you should look at the used vehicle selections that may be available to you. Often times the only difference is the price tag which can reflect a difference of tens of thousands of dollars. The average cost of a new commercial truck can range from $30,000 up to as much as $250,000 depending on the extra options that are selected for the vehicle. The used vehicle options that are available in the line of commercial trucks are at an all-time high. This is mainly due to the increase of fuel costs as well as a poorer economy.

Step 2. Make sure that you have any commercial vehicle you are considering to purchase inspected by a professional mechanic that you can trust prior to purchasing it. This can save you a great deal of money and time later. When you experience mechanical problems with your commercial vehicle this means that the vehicle will be unable to be used for the work you intend to perform. This results in high repair costs while you are losing money.

Step 3. Negotiate the price with the seller. Most commercial truck sellers start with a high asking price with the intentions of knowing the purchaser will want to negotiate. Many purchasers who are seeking financing for their commercial vehicle purchase often think that they are jeopardizing the financing if they ask the seller for a lower price. The fact is that the financer usually likes financing a lower amount. This means less chance of losing their investment.

Step 4. Make sure that you have all of the items in order so that your request for financing will go smoothly. Typically in most cases this means that:

  • You should have a down payment ready. For most financing companies, this will require twenty percent of the purchase price.
  • Proof of your CDL license will be required.
  • You may need to provide proof of contracts you may have or other proof of income that will be used for satisfying the loan.
  • You are able to provide a good credit report and FICO score.

Opting to Lease Instead of Purchasing

When considering the option of leasing a commercial truck, many people shy away from this option due to the stigma associated with leasing personal vehicles. However, a commercial truck lease is different than a personal vehicle lease in many ways. Most personal vehicle leases are close-ended which puts limitations on the things such as the miles the vehicle can be drive, the uses for the vehicle and wear that the vehicle may sustain. Most commercial leases, on the other hand, are open-ended which allows the business the ability to use the vehicle however and whenever it is necessary without penalties at the end of the leasing period.

Here are some other benefits that a commercial vehicle purchaser should consider when weighing the options to purchase or lease:

  • Most lease options do not require that you have a down payment when obtaining the lease.
  • Most lease payments are less than the majority of loan payments that may be available.
  • You have a clearer understanding and predictable costs when the leasing plan includes the monthly payment and any maintenance or service that is needed on the commercial vehicle.

When leasing a commercial vehicle for business purposes, the leasing expenses do not affect the company’s financial ratios. This allows you to keep a higher credit balance so that your credit can be used in other areas that are necessary for purchasing or business expenses.

Lease payments for commercial vehicles are tax deductible and will help to reduce your Alternative Minimum Tax (AMT) liability.

Overall the decision to purchase or lease is best decided by each purchaser to determine which option will provide you with the most beneficial choice.

Additional Reading

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