Purchasing a used semi truck is a different than purchasing an automobile. When you purchase an automobile, you take out a personal auto loan. However, when you purchase a used semi truck, you are likely going to take out a commercial truck loan. If you have never done this before, you may have many questions. Getting answers to your questions will help you to better understand how the process works and what to expect when it is time to make your purchase. Here are a few frequently asked questions related to financing a used semi truck.
What Factors Affect Whether a Commercial Truck Loan is Approved or Denied?
There are many factors that lenders look for when deciding to approve or deny a loan. And different lenders specialize in different types of loans. As such, there is no definitive list as to what will help you get approved for a loan or what will cause you to get denied. However, here are some factors that lenders look at when deciding whether or not to approve or deny a loan and how each factor may impact your loan.
- Your Company's Credit Score
Just like with a personal loan, the credit score of your company plays a huge role in whether your loan will be approved or denied. Ideally, you want a high score and a low debt-to-income ratio. However, some lenders do specialize in bad credit commercial truck loans. If you qualify for one of these loans, you can expect to pay a higher interest rate and may be required to put a larger down payment down.
- The Age and Condition of the Semi Truck
A semi truck can be costly to maintain and repair. And unfortunately, the older the truck is, the more likely it is that you may have to make one of these costly repairs to it. A lender has to protect their best interests when deciding whether to approve or deny a loan. If you are unable to make the payment, they will have to repossess the vehicle and sell it to recover their money. If the vehicle has a major problem, they may be unable to do so. As such, some lenders will only finance semi trucks that are 10 years or newer and in good or fair condition.
- Where the Truck Will Be Driven
One of the last factors a lender will look at when deciding whether or not to approve a loan is where the truck will be driven. Smaller lenders, or those who only have in-state branches, may not approve loans for semi trucks that are going to be driven out of state or across the country. It can be challenging to recover the car if you fail to pay. As such, always ask a lender if they offer commercial truck loans on cars driven nationally if that is what you intending on doing with the vehicle.
Are There Different Financial Options for Obtaining a Used Semi Truck?
There are different ways you can obtain a used semi truck without paying cash. A traditional commercial truck loan is the most common. With this option, you take out a commercial truck loan for the vehicle and make payments. Once you are done making payments, you own the truck. Another option is to lease the vehicle. Leasing is basically a way of renting the vehicle. However, at the end of the lease, you have the option of purchasing the vehicle outright with some of the payments you made reducing the price. But you will likely still owe thousands of dollars and have to come up with that money right away. The last option is a lease-purchase program. With this type of arrangement, you are technically leasing the vehicle, but the payments are higher than a traditional lease option. Because your payments are higher, you will likely owe next to nothing when the lease is up, allowing you to own the vehicle. This is similar to rent-to-own furniture or home programs and are typically offered by private owners, rather than large lending companies.
How Much Does the Average Business Have to Put Down When Purchasing a Used Semi Truck?
If you are looking to purchase a used semi truck, you can expect to need a down payment of anywhere from 10 to 20 percent. However, the amount you will need to put down varies from lender-to-lender and can be affected by your credit situation. If your company has great credit, you may be able to put down less money and if your business has poor credit, you may need a higher down payment.
If you are in the market to purchase your first used semi truck for your business, you want to take the time to learn about commercial truck loans. These loans differ from the personal auto loans you may be accustomed to. Educating yourself about these loans can help you be prepared when you are ready to go in and make a purchase.
For more information, visit websites like http://www.arrowtruck.com/.
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