Financing a Truck with Bad Credit and Good Credit in 2020

By: Harnam Singh

Financing a truck for business is one of the best decisions in life that a Truck Driver or Owner Operator can make.

Trucking is a tough business and before getting into the business most of our fellow brothers soon leave the idea of purchasing the first big truck because of the fear of big investments.

The idea of financing or leasing a truck is great but most of them are not aware of how to finance a truck either new or old and how to make it happen because most of the newcomers are not aware of how truck financing works.

So you need a dollar 15000 truck or dollar 30000 truck for your business or even higher than a dollar 50000 truck for your business.

It isn’t a big deal, but the question here is how to get it to finance and who will lend you the money to buy your first truck?

The 2020 period has already brought a considerable amount of human suffering and loss to all businesses including ours due to the coronavirus breakout.

But do not worry, we at Singh Lending Solutions are here to guide you through various truck financing programs to land your own trucking business.

So whether you have got good credit or bad credit score we can help you to land your first rig or truck and get started with your trucking business.

However, before that let us consider the fact whether you are truly ready for the trucking business.


Financing a Truck: Should you be in the Trucking Business?

As I have earlier mentioned that trucking is a tough business because you need to stay away from your family for days and nights.

So you need to understand the pain areas before you put your hands in the trucking business and the trucking industry.

Unlike trucking jobs, the trucking business is very different because at the end of the day you need to figure out your accounting and cash, profit, and loss to maintain your business and to see if you have the real cash on hand for your livelihood and survival.

Therefore you have to do your homework guys before you come into the trucking business and also understand the need for real accrual cash that you need per month for financing a truck.

So if you are comfortable with it, you can legitimately undertake the business in your hand and move forward.

But here is the thing, you need to have a good income source to release the amount of cash/cheque as your monthly payments.

You may need to pay at least 1000 to 2000 dollars monthly installments for getting the truck you need for your business.

If you can’t afford to pay at least 1000 dollars a month than you probably shouldn’t be in the trucking business.

The ability to pay all your debts on time in case you are financing a truck shall determine your ability to be in business and hold a grasp of the trucking industry.

So if you are not sure about your income source don’t take the chance, it will simply destroy you and your credit.


The Reality About Financing a Truck for Owner Operators

At Singh Lending Solution we are here to help our fellow brother who wants to start a new trucking business. Owner Operators usually need a single truck, so we take care of them who have to start from somewhere at least.

We understand better how truck drivers and owner-operators feel like landing up their own truck and understand how important it is for them to get started with the trucking.

It is not easy to start a business so we love to help those truck drivers who are new to trucking and want to purchase a truck looking for the best interest rates.

The reality about truck financing is that banks don’t want to finance assets that depreciate fast nor they want to finance a single truck.

Banks are usually looking for big fish and major transport companies who have a large number of trucks in their fleet or so and where they could get the bulk and heavy interest rates.

So it is not about competing, we don’t compete with banks, there are big banks like Wells Fargo, Bank of America, and other US banks, etc. but they don’t care about financing a truck to an owner-operator.

Therefore guys if you have any questions you can ask us. We are a team of business consultants who have established a strong relationship with a few private banks and lenders to help you guys in situations when you really need the help.

We understand better the pain areas of an owner-operator rather than banks because banks are likely to dictate with a lot of information that doesn’t really have to do anything with financing a truck.


What does it take to get a Truck Loan and to Finance a Truck?

As an owner-operator, if you think you want to finance a truck and you will get the finance done by a bank.

Probably you will never get it financed because big banks usually have big demands. Some banks may prefer to hear, what is your turnover.

As a truck driver or an owner-operator, you may never ever thought of turnover, so these questions might put you down because you are trying to start a business and an income.

There are also banks that do Zero down, but they would expect an A+ or B+ credit. In our funding scenario, there are several other banks that demand that you have been in business for at least 3 years.

So this is barely possible for those who are just starting out to be an owner-operator or fresh in the word of the trucking business.

If you really want to know the guidelines for what it takes to get a truck. Let me tell you, these are the thing that mostly a finance company is mostly looking for.

  • Collateral for the truck
  • Likelihood of default
  • How are you going to liquidate the asset

So exactly you know what it means? You have to be prepared to get your first rig.

You may also come across advertisements where you can get a $10000 or a $15000 truck with 40% to 50% down but that would rather be a big initial investment.

If you are looking for the best rates we as business consultants can help you to get the lowest rates from our credible sources with whom we have been for many years.

So for the first time buyers, we can actually help you guys to get the truck financing you really need.


Financing a truck with Good Credit

Whether you want to finance a truck or lease a truck, if you have good credit, it is obviously easier than the bad credit guys.

Most commercial truck and trailer financing companies offer loans up to 60 months and lease to own up to 90 days.

While some lenders may even offer longer terms for payment. So if you have good credit, it is important to remember that you would usually pay more in the long term.

Therefore if you have good credit you should try for short terms loans as you can afford even though your monthly installment may seem a little bit higher.

You can also put 20% down and make use of your cash for other expenses such as insurance fees and taxes etc.

Understand your credit score before you think about financing a truck. A good credit score does not necessarily mean that you should spend more.

However, if your credit isn’t perfect, get financing quotes from dealers before financing a truck.

Everybody loves good credit, good credit provide financing very easily and quickly and it is always a plus point that you will be preferred more over someone who doesn’t have it.

Having said that if you have good credit you would definitely like to purchase a good truck that is profitable for you and your business and also have a good resell value.

But for most truck drivers and owner-operators, this may not be the case who is looking for a used truck.

For example, you can get a Cascade truck with a 5000 km running track for as low as 35000 dollars and your down payment may be higher but your chances of getting approved would be higher.


The Truth About Financing a Truck With Bad Credit

The truth about financing a truck with poor credit is obvious that most banks don’t take anybody with bad credit.

So as an owner-operator if you are in a situation where you have not enough credit score you would wonder that your chance of financing a truck is beyond the scope.

However, that is not the case with all banks, mostly big banks don’t accept guys with poor credit. But still, there are some banks available for fiancing who specialize with bad credit and even with bankruptcy.

Singh Lending Solutions can help you in such a situation, we often come across owner-operators and truck drivers who really need help to get a truck and be in the business.

So no matter what your credit history, Singh Lending Solutions is able to help you when other finance companies aren’t ready to help you.

We’ve been in truck financing for over a decade and we exactly know what are the real challenges that our fellow brothers and owner-operators face.

We are actually in the trucking industry to learn more about your business and educate you before you are ready to finance a truck and guide you if you can really finance or when can you finance.

Mostly we help our fellow brother to get their desired trucks even in critical credit history through our rigorous consultation with small banks as we are in the trucking industry as consultants for a very long period of time.

Guys with not the best situation should also have to keep in mind that your down payment will be much heavier than usual down payment.

However, if you have additional collateral like a second truck your down payment may become a little lesser.


Do the truck’s brand matters?

The brand of the truck often matters to your business, because a good brand often has good resell value.

So if you are likely to sell your truck in the future you can come out of your debt easily, you can remarket that truck sell and get out of the business.

Some brands like PeterbiltKenworth, and PACCAR fall under the same company and ownership, and together, make up a big proportion of active semi-trucks in the US markets.

These trucks usually have a good resell value because they don’t depreciate fast and have limited manufacturing.

However, these trucks are expensive as opposed to Cascade or Volvo which is 40 to 50 percent of the entire market with a good LTV.

They are mostly found everywhere and you can also find any replacement parts easily if a breakdown of truck occurs in any corner of the country.

So if you have good credit you can go for a truck with a good brand value.

Having said that good brands come at a higher cost, the higher the price of the truck the more comfortable the bank is because who doesn’t love money, you need a bigger down payment to pick your truck.


The important pillars of financing a truck

Truck financing is a very different approach from a commercial vehicle financing.

Before you approach a truck financing company you need to consider some crucial aspects of financing a truck.

So either you have bad credit or good credit, all you need is to have a strong game plan and a perfect blueprint else you would fail.

Why? Because trucking is expensive, trucks break down, trucks have other expenses, so if you are unable to handle such a situation you will burden the amount of the loan for your upcoming installments.

At the end of the day, being in trucking means more cash flow because you want to generate a good income and a good cash flow.

When you are financing a truck it means you are financing an asset for your business that ultimately is there to make money and save your money unless your asset is not at rest.

Having said that you must be in a position to manage your business and your truck and see that your truck is not idle.

It does not matter whether you are doing new business or you have an existing business, there are 3 pillars to truck financing

  1. Initial downpayment
  2. Cash Flow
  3. Credit Score


The minimum requirement for startups

We have seen, mostly truck drivers and owner-operators don’t want to be a part of the company, rather than want to work as individual owner-operators.

We value and understand your vision that you want to have your own asset and a piece of equipment, you want to have your own truck and have full control of your life.

But in most of the case, the bad credit is going to cost you 40% of the value of the truck as a down payment.

You are actually buying a truck to make money, so at the end of the week what matters is how much money your make.

If you make 10000 dollars at the end of the month driving, you are not making the 10000 dollars without the truck.

So you can finance a truck easily at a rate of dollar 2500 to dollar 3000 for repayment of your loans.

The profits that you make using a truck is more valuable to you rather than the rate at which you finalized your loans.

For most lenders, the minimum requirement for financing a truck would require you to be in

  • Business for 2 to 3 years as a CDL Driver
  • 10 to 20 percent down payment
  • A minimum credit score of 6.25


The trucking conclusion

Trucking is a unique business.

In the game of trucking, there are various other things that can destroy your business instead of making it.

So you have to be cautious while taking a plunge inside the trucking industry.

The most important things in trucking are maintenance of your truck, monthly truck payments, and insurance.

So you must have a strong plan to liquidate your asset and in case something goes wrong you must have a backup plan to reinstate abnormal situation that is going to destroy you and your business.

There are cases where many big business owners have gone out of business because they didn’t have insurance.

So we would suggest you save your money, fix your credit and we are gonna help you in financing a truck.

Do not buy any equipment with bad credit.

If you do so, you are overstepping yourself and you are likely to be at high risk.

For more information on trucking leave us a message today or get a free consultation.

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