How to Secure a Semi-Truck Loan

One of the most important financial decisions you will ever make is whether to buy a new or used semi-truck for your company. The procedure might be long and difficult.

This tutorial will take the worry out of finding out how to secure a semi-truck loan. General instructions on the prerequisites required for financing are included, as well as ideas for lenders that can finance your new vehicle and red flags that lenders will look for throughout the process. This tutorial will teach you how to finance your semi-truck in the quickest and most straightforward way imaginable.

1. Check for Eligibility

When it comes to semi-truck finance, each lender will have somewhat different criteria for applicants. Confirm the particular conditions with the lender you’ve selected.

When it comes to truck finance, here are some fundamental qualifying rules to keep in mind:

• 600 is the minimum credit score (credit scores below 600 will be considered, but likely at a higher interest rate and down payment)
• Expect a down payment of at least 5%, while some lenders provide zero-down loans to well-qualified customers.
• Having a commercial driver’s license (CDL) for a long time: Although it varies, a business owner without a CDL will be deemed a high-risk borrower.
• Truck age: less than ten years
• Less than 700,000 kilometers on the truck

2. Gather the necessary documents

Each lender will have its own set of paperwork. Having all of these papers ready to submit to the lender, on the other hand, can speed up the borrowing process:

• Documents proving your company’s registration
• Bank statements from the present and the past (up to 12 months)
• Returns on business taxes (up to three years)
• Profit and loss statement for the current fiscal year for your company
• A balance sheet of the current business
• Any necessary business licenses or certificates
• A commercial driver’s license.
• The number assigned by the United States Department of Transportation (USDOT).
• Number of a motor carrier

3. Locate the Ideal Vehicle

Finding the correct automobile is important not just for your requirements, but also for the lender. Lenders are attempting to reduce the risk associated with possible automobile loans. The larger the danger, the older the car or the more kilometers it has driven. To reduce your chances of being scammed, restrict your search to vehicles that fit the following criteria:

• Approximately 700,000 miles
• If you’re under the age of ten, this is the category for you.
• A dealer is the one who sells it to you (ideally, but not required)

Furthermore, unless you are obtaining a company line of credit to acquire automobiles, the highest a lender would lend is the vehicle’s value. Lenders seldom finance the whole purchase price, thus the borrower will need to put down at least 5% of the buying price. When looking for a vehicle, particularly a used one, acquire an estimated value so you know the price is one the lender will approve.

Once you’ve found a car, you’ll also need the following information to send to the lender:

• Year, make, and model
• Mileage
• Images of the automobile
• Number of occurrences

4. Locate the Correct Insurance

Insurance is essential regardless of the kind of car you are financing. Financing firms will want to check that you have adequate and sufficient insurance coverage when purchasing a semi-truck, which can cost up to $200,000 new.

In the case of an accident, improper or inadequate insurance might ruin your firm. Most lenders will not approve your loan unless you provide evidence of insurance.

The cost of your insurance will be determined by your driving record and previous business claims. The value of the vehicle and the cargo being moved are additional factors in insurance premiums.

5. Select the Most Appropriate Lender

While there are numerous internet lenders that can finance a semi-truck, we’ve chosen the top five. Each has somewhat different lending requirements, so evaluate them and choose the one that makes the most sense for your company.

Smarter Finance USA is the best option for new business owners.

Smarter Finance USA is a great option for first-time buyers, owing to its cheap down payment and low credit score requirements. Owners may finance a new car for up to $100,000 with a credit score of at least 600 and a down payment of at least 5%. While Smarter Finance USA will work with new owners, those with prior driving experience and a current CDL are preferred.

Balboa Capital is the best option for quick approval.

Balboa Capital offers a simple online application process and claims speedy approval. It has a variety of term lengths and set monthly payments. Borrowers must have been in business for at least one year and have at least $100,000 in yearly income to qualify for a Balboa loan. It also calls for a good FICO score, although it doesn’t explain what that number is.

Wells Fargo is the best for terms that are flexible.

Wells Fargo provides new and used vehicle financing and refinancing with loan durations ranging from 12 to 84 months. Flexible loan terms, such as fixed or variable interest rates, seasonal payment plans, term loans, operational leases, and even equipment lines of credit, are some of Wells Fargo’s advantages.

Commercial Fleet Financing:

Borrowers may usually obtain authorization by Commercial Fleet Financing by completing a one-page application. Credit approval may take as little as two hours, and funds can be received in as little as 24 hours. Commercial Fleet Financing provides loans with no money down, flexible terms, and incentives. Loans might be 36 to 60 months in duration or up to nine years in length (108 months). Borrowers with credit scores of less than 640 are routed to the company’s Fresh Start equipment finance section for possible financing. Commercial Fleet Financing will also inspect the vehicle to verify it is in excellent functioning condition and has a clear title.

BlueVine is the best option for further funding

BlueVine may offer cash that isn’t limited to traditional auto financing. It provides credit lines and invoice factoring services to help you fund your whole company. BlueVine’s lines of credit are available to company owners with credit scores as low as 530, allowing them to pay for car maintenance and keep their cash flow stable while financing a significant purchase.

Financing Issues for Semi-Trucks

There are various elements that might create complications for company owners when starting the process of financing a semi-truck. Any situations that put the prospective lender at risk will almost certainly result in a higher interest rate and a greater down payment. It’s possible that the lender may reject your application. Here are some of the obstacles a borrower could encounter while financing a semi-truck:

• Being a new company: Lenders are less inclined to fund a major investment like a truck loan if you have only been in business for a short time. To develop their company credit, new business owners may wish to explore leasing a lower-risk, lower-cost choice.
• Poor credit: A lender will see you as a high-risk borrower if you have bad credit. If you’re accepted for a loan, it’ll almost certainly come with a higher interest rate and a larger down payment than a well-qualified applicant.
• Purchasing your truck from a private party: Because cars acquired from a dealer will undergo at least a basic examination, lenders will consider a truck purchased from a dealer to be a lesser risk than one purchased from a private party or at an auction. In a private transaction, the lender will have a tougher time verifying the vehicle’s condition, increasing the risk.
• Low cash reserves indicate there is less money available for a down payment, increasing the lender’s risk. Even if you have a sluggish week or two, solid cash reserves show the lender that you will make your payments on schedule. Borrowers with low reserves are more likely to make late payments or default on their loans. It’s also crucial to have a cash reserve for vehicle maintenance and repairs.
• Buying an old vehicle: Before a lender would lend on a used truck, it must first identify a similar value. For vehicles that are more than ten years old, this is problematic. If a lender does decide to lend on an older car, a greater down payment will almost certainly be required to mitigate the risk. The lender will almost certainly demand a substantially higher interest rate, maybe approaching unsecured loan rates.
• Lacking a CDL: Lenders consider non-CDL borrowers to be high-risk. It’s likely that someone who has no vested interest in the vehicle’s security will be at the wheel.

Conclusion

A new or used vehicle is a substantial financial investment for your company. This article will assist you in preparing for all of the stages involved in obtaining semi-truck finance. When shopping for a car, a loan, or an insurance provider, it is critical to shop around. In less than 24 hours, you’re financing a piece of equipment that costs as much as a new house. When it comes to financing your next vehicle, do your research and you’ll receive the greatest price for your company.