The trucking industry is the backbone of the American economy. As per the United States Trucking Association, over 7 million trucks are employed in the States for commercial use. They are utilized in almost every sector. It is no doubt that without the availability of these vehicles, the American economy will experience a drastic downfall. It will be chaotic and unmanageable to employ the individuals or carry out tasks.
In order to continue growing the industry, owner-operators require more drivers and commercial trucks for their businesses. However, we can't deny that these trucks do not come cheap. The cost of a semi-truck ranges over $165,000, and this doesn't include the working capital you would need to establish your business after purchasing the truck.
Commercial truck financing has been a way to go for many small businesses that can't afford to fund a commercial truck right away. It is also a good option for people who prefer to keep the working capital for other investment areas as financing will get individuals external funds to get their truck.
Commercial truck financing has made it easier for many owner-operators to start and grow their company with limited investment. Various banks and lending companies provide their customers with such opportunities: Bank of America.
About Bank of America (BoA)
Bank of America, also known as Bank of America Corporation, has been in business since 1998. This multinational company is among the top four largest banking and financial service providers in the United States, with its headquarters in Charlotte, North Carolina.
Approximately serving 10.73% of all American deposits, the corporation's primary focus is on commercial banking, wealth management, and investment banking.
Consumer Banking is the largest division in the company summing to 38% of the company's revenue. Under this sector, the bank provides financial services such as banking investments and lending opportunities to eligible individuals.
The main source of income for the Bank of America is through interests, service charges, and other fees. Global Banking provides all its services to various other businesses, resulting in 22% of the bank's revenue.
Bank of America is currently assisting over 66 million consumers and business owners and has been ranked as the top consumer in US' deposit market share. In addition, it is a good option for people who would like to have their bank nearby as they have over 4300 branches throughout the United States with more than 1700 ATMs.
Over the years it has been standing, Bank of America was able to sustain a good name in the market through its services and offerings. As a result, they have millions of consumers satisfied with their dealings and workarounds.
“Bank of America is currently assisting over 66 million consumers and business owners and has been ranked as the top consumer in US' deposit market share”
Services Offered by Bank of America
Apart from their banking services, Bank of America has greatly helped hundreds of companies with small business loans, equipment loans, and commercial truck financing.
Here are the banking services that Bank of America offers:
- Secured and unsecured loans
- Lines of credit
- Credit cards
- Vehicle loan
- Commercial real estate loan
- SBA loans
- Franchise financing
- Payroll services
Bank of America offers a variety of loan choices with different features. The list of options might sound intimidating and confusing in the beginning, but the bank works with you to find you a loan that works the best for your business needs. In addition, there are multiple business loans offered by the bank, which are discussed in detail below for your ease.
- Term Loans: Terms loans are the easiest and simplest loan option available. In such loan types, a certain fixed amount is granted to you with a constant time frame to cover the loan. However, a monthly payment schedule comes along with it, which must be adhered to throughout the term. Term loans are categorized into short-term and long-term, which determines the various time frames you can repay the loan. In short-term plans, you pay less interest with high monthly payments.
- Business Line of Credit: A business line of credit is highly preferred by many businesses as they do not burden the business revenue with a large sum of money. Instead, the financial institution grants a certain amount to your company. This amount can be accessed and used per the need and then returned when possible. Alongside that, you are only required to pay an interest of 7% to 36% for the amount you utilize out of the funds borrowed. Therefore, you only need to stay below the credit limit and make on-time payments in this financing type.
- SBA Loans: These loans are backed up by the Small Business Administration and are approved by SBA lenders. The purpose of the loan determined the amount of the SBA loan. Therefore, the term length, amount, and rate may vary for each loan provided. SBA 7a, SBA 504, SBA Microloans, and SBA Express Loans are the most common SBA Loans. Except for the Express Loans, all the other SBA loans come with an extensive application and approval process. Therefore, do not expect a credit within a few days or even a few weeks.
- Equipment Loans: These loans are available to ease the burden of purchasing heavy machinery, vehicles, manufacturing tools, or other commercial equipment. The rates of these loans vary from 8% to 30%, depending on the credit profile that your business withholds. As the equipment serves as collateral in these loans, you can consider them secure.
- Long-Term Real Estate Loans: These are long-term financing plans as buying real estate requires large amounts. You are mostly needed to put down a large sum of money for the down payment, but the good thing is you can expect low-interest rates in such financing.
Who Should Apply For Commercial Truck Financing?
Bank of America is widely known for providing exceptional services throughout the United States. It has a variety of loan options and all the banking services to cater to the needs of its customers. In addition, they offer secured and unsecured loans and specialized financing, such as commercial vehicle loans.
The employees working at Bank of America are determined to help out the customers to the fullest. Therefore, they help you find the business loan that sits right with your requirements once you contact them.
Along with various financing options, Bank of America tries to make life easier for its customers through its long-term plans and market competitive rates. You can get the lowest rates here, depending on your credit line amount and credit score. The commercial truck loans are available at the lowest rate of 2.75% APR, varying over 48 to 72 months.
Bank of America has a Preferred Rewards for Business program that provides small businesses discounts and other perks if they are eligible for it. To qualify for these rewards, you must have an active checking account with Bank of America and an average balance of $20,000 (three months average) in your deposits or Merrill business account. If you are eligible for these rewards, you can apply through their website without additional fees.
Applying for commercial truck financing through Bank of America requires patience and time. The bank mostly deals with its customers in person after a scheduled appointment. After having a discussion, you are provided with the application that needs to be filled and submitted, taking up a lot of your time.
Unlike online finance lenders, Bank of America requires several documents, financial statements, and several years in business to qualify for most of their funding options. They do not accommodate enterprises with poor credit scores as there is a lot of risk in such dealings.
Bank of America only has an online application available for the business auto loan unless you carry a checking account with the bank. Compared to online lenders, processing commercial truck financing through Bank of America will require a longer time to get your funds.
If you prefer to know the interest rates and process before contacting the Bank of America, unfortunately, that information is not available on the bank's website. Similar to other traditional banks, Bank of America does not have an extensive website with details such as interest rates range, minimum credit score, and average funding time. The bank is not in favor of sharing these underwriting guidelines on public platforms.
“Bank of America is widely known for providing exceptional services throughout the United States”
What Are The Eligibility Criteria For Commercial Truck Financing Through BoA?
The eligibility criteria differ for the business loans offered by the bank. Bank of America does not mention the specific requirement on its website. Therefore, to get a better idea of whether you are eligible for commercial truck financing through this platform, you would need to get in touch with the representatives at the bank.
However, the basic requirement in order to get any business loan from Bank of America are mentioned below:
- Time in Business: Having a business in standing for years increases the credibility and chances of commercial truck financing through Bank of America. The bank requires financial statements and other documents to check your business and its potential thoroughly. Businesses that have been in the market for two years or more are given a fair shot with this financing, and those who do not meet this requirement are not applicable.
- Annual Revenue: The company's yearly revenue ensures that they would be able to pay off the loan within the term easily. This specific factor reduces the risk and makes the process comparatively easier. In order to be eligible for commercial truck financing or any other business auto loan through Bank of America, a minimum of $250,000 annual revenue is required. In the case of unsecured loans and credit lines, the minimum annual revenue requirement is $100,000.
- Credit Score: Bank of America does not accommodate individuals or business owners who have a poor credit score. Even though the credit score requirement is not mentioned on the bank's website, in order to be eligible for commercial truck financing through this platform, a FICO score of 700 and higher are preferred and easily approved.
How To Apply For Commercial Truck Financing?
In order to apply for commercial truck financing through Bank of America, the bank requires its customers to either come in with a scheduled appointment or get in touch over the phone. Unfortunately, there is no easy online application to fill out and submit on this platform.
Once you are in contact with the Bank of America, a financial advisor will help you through your application and process. While applying for commercial truck financing, you will be required to provide the following details:
- Business details (name, address, and phone number)
- Business tax identification number
- Nature of the business, date of establishment, number of employees
- Net profit and sales
- List of outstanding debt obligations (if applicable)
Along with your business details, you will behave to provide your information along with details of a guarantor:
- Personal information (name, address, contact)
- SSN or passport number
- Ownership percentage
- Annual income
- Residential status
- Monthly rent (if on rent)
Once you have provided all the personal data, you will be asked about the vehicle you desire to loan through the bank. It will require the Vehicle type, model, mileage, and more. Therefore, make sure to gather such information beforehand to fasten the procedure.
“Bank of America offers competitive market rates and terms. As compared to online lenders, you will notice a huge difference”
Terms And Rates Offered By Bank Of America
Different business loans come along with varying rates of interest and term plans. It is safe to say that Bank of America offers competitive market rates and terms. As compared to online lenders, you will notice a huge difference.
Bank of America offers commercial truck loans starting from $25,000 and more. The interest rates vary based on your business, credit score, and the truck you wish to finance. However, you can expect them to be as low as 2.95%.
In addition, there is no application fee or advance fee charged by this bank; you are only required to pay an origination fee of 0.5% of the financed amount while financing with Bank of America. The terms can go up to five years when secured by business assets, and they expect monthly repayments to be made for the financed truck.
What Do The Consumers Think?
Bank of America is a great bank when it comes to providing banking services. However, it does not have great reviews in terms of financing, even though it seems to be doing things right. As compared to online lenders who offer similar services, the ratings and reviews of Bank of America are fairly less, 1.1 out of 5 on Trustpilot.
According to the reviews, the customers are not satisfied with the customer service provided by the bank. Moreover, customers claim that they were not provided with the promised perks and instead there were additional charges on the accounts.
Frequently Asked Questions (FAQs)
What is Commercial Truck Financing?
Commercial truck financing refers to financing a vehicle that is relevant to the trucking industry. Depending on your needs and loan type, you can get yourself any truck under this financing type, from semi-truck to dump truck.
Opting for these loans helps the business owners curate a better business plan where they could use their working capital in other investment areas as commercial truck financing will provide them with external funds.
Should I get an equipment lease or an equipment loan?
If you loan a truck, once you clear off your loan, the truck will be yours to keep. However, in the case of a lease, you will have to make monthly payments while using the truck, but by the end of the term, you will have to return the truck. Although, in some cases, you may be offered to purchase the truck at a lower price by the lender.
Both the options have their advantages and disadvantages. If you think you would be using the commercial truck for a long period and it won't get outdated, then loaning it is better and more reasonable.
On the other hand, if you think you would need to invest in a better and updated truck after a certain period, you must lease the truck for your present use. Getting help from a financial expert can help you weigh the pros and cons of loaning or leasing a truck.
Which is better for commercial truck financing; traditional bank or online lender?
Traditional banks offer competitive market rates and lower interest rates, but they come with lengthy application and extensive approval processes. On the contrary, online lenders seem like a convenient option as they provide financing to almost everyone with good or bad credit scores or financial strength.
They do not do a thorough credit pull on your account and make it difficult for you to qualify. Moreover, they offer easy funding with simple application and approval requirements. However, with online lenders, you can expect higher fees and APRs.
Is Bank of America a good pick for commercial truck financing?
Bank of America is a good option if you have a fair credit score with two years of business. As their business auto loans funds start from $10,000, it is a suitable platform for a company that requires small and light trucks for their business.
In addition, they offer great rates and terms compared to the other options in the market. You can expect APRs to be as low as 2.49%, and terms range from 48 to 72 months.
Will I get commercial truck financing with bad credit?
Bank of America follows a strict eligibility criterion. The businesses eligible for commercial truck financing through this platform must be in business for two or more years to have a steady cash flow with good annual revenue and a good credit score.
Plus, Bank of America does not accommodate individuals or owner-operators who have bad credit, bankruptcy, or tax liens.
Is Bank of America trustworthy?
As per the Better Business Bureau, Bank of America has been rated A+ due to its services and dealings. BBB bases its ranking upon the ratings and reviews provided by the consumers. With that, they note how honest the bank had been with their advertisements.
Moreover, as per many reviews, Bank of America has worked hard to build good relations with its customers and provide them with satisfactory services. However, these ratings do not ensure that you will have the same experience as everyone has different encounters with different representatives and in different situations.
What lending fees does Bank of America charge?
The lending fee charged by Bank of America varies based on the loan type you select. The origination fee usually depends on your credit limit and can be between 0.5 to 0.75% of your loan. However, you won't be required to pay any additional application or advance fee while financing with Bank of America.
Does Bank of America offer commercial refinancing?
Yes, Bank of America does offer to refinance on commercial trucks. If you are looking to refinance an already pre-existing loan, you can expect the rates to be as low as 3.69% with a 12-75 months term plan. The bank refinances its auto loans and even from other financial institutions.
Does Bank of America offer early payoffs?
Bank of America does offer early payoffs without any prepayment penalties. Therefore, you can make your early payments at your convenience to shorten the term plan. However, in case of not paying your monthly payment on time can result in a bad credit score and unmanageable interest.
The Bottom Line
Commercial Truck Financing is a great option when it comes to saving your working capital for other investment areas. However, there are a lot of institutions providing such services, and picking the one that works for you can be difficult.
Bank of America is a reputable bank in the United States and has been in business for years. They try to help their customers with all the queries and ensure satisfaction. It is good for companies who have been in the market for more than two years and have pre-existing accounts with the bank. With as low as 3% rates, it can be better than other online lenders providing similar services at relatively higher rates.
The bank offers loans and leases through their gear loans for commercial trucks. These loans have 48-72 months term plans, depending on the loan type with a fixed APR throughout. If your business is well established with good annual revenue, Bank of America can ease your burden with owning a commercial truck. However, you may expect long application and approval procedures with this firm.