Commercial truck financing can be both challenging and confusing. Whether you are an established trucking company or an individual hoping to secure a new machine for your own use, finding the best financing deal is crucial. With several companies branding themselves as the best lenders, it can be hard to differentiate between different types of deals and choose the one which suits your needs best.
A lot of the time, though, you will be able to secure some fascinating deals if you research well. At times, these deals might even have rates that are a lot lower than what one might expect to get for small businesses. But to get the best deal, you need to understand the ins and outs of financing terms and rates.
It is important to note that the terms and rates of financing deals vary a lot. This is because both the terms and the rates depend on a large variety of factors such as your qualifications, creditworthiness, the type of lender you are working with, and especially what you aim to get out of the deal. Apart from the things that vary from case to case, there are a few things that can be generally expected.
One of these things is the interest rate. Making regular monthly payments is an integral part of any commercial truck financing deal. These monthly payments include what is called an "interest." The rate of this interest can range anywhere from 5% to 30% per annum. This interest rate is determined on the basis of a few things. The most important of the things in the creditworthiness of the borrower. Creditworthiness refers to how reliable the borrower is. In other words, your creditworthiness tells the lender how likely you are to make the regular payments. This can be determined through your history of making payments for other things, including but not limited to your bills.
One other thing that your creditworthiness determines is how much financing you can get. If you have an excellent credit score, you can be considered an “ideal” borrower. What this means is that you will then be eligible to get up to 100% of financing. Keep in mind, though, that even in this case, you might have to make a down payment. But the baseline is that if you have a good credit score, you will get good financing deals. So, to secure the best that commercial truck financing has to offer, you really need to work on bringing your score up and building an accurate portfolio.
The interest rates of financing deals are often set and do not change. This means that once you have secured a deal, you will have to make the same amount of payment every month. This makes interest rates very important to consider when getting a truck financing deal because this is what might make a deal good or bad for you.
Apart from interest rates, there are some other additional fees and financing payments that you should know about. These include the fee for application, appraisal, and even evaluation of your credit. All of these add up to make the final cost that you will end up paying. Therefore, it is essential to ask what the total cost of getting a truck financed would be after including every possible payment that you will have to make.
Now that you know a bit about what a commercial truck financing deal includes, let’s take a look at places where you can get your hands on these deals. The following are two types of lenders who offer commercial truck financing deals.
- National Banks
Banks are the first and foremost lenders when it comes to commercial truck financing. However, you can only get financing deals from a large national bank. So it would be best if you were focusing on those instead of smaller, regional banks.
National banks often offer the lowest interest rates on most extended terms. This makes them an attractive avenue to secure a good deal from. But here's the catch – only individuals or trucking companies with the best profile are able to get deals from national banks. This is because while the terms are long and interests low, national banks often have strict criteria that you must meet before getting a deal. This makes it a lot more challenging for a below-average profile to get the best deal.
Some national banks in the USA, which provide the best commercial truck financing deals, include Bank of America and Santander Bank. Both have a comprehensive program and offer interest rates as low as 3.20%. There are other banks that offer similarly good financing deals. Once you have your good credit score in place, you can explore all these options and more.
- Commercial Truck Financing Companies
Those who might not qualify for financing deals from banks don't fret. There are individual companies that specialize in commercial truck financing. These companies are different from those who generally finance the equipment. Therefore, they have a good knowledge of the market and can make the process easy and straightforward for you.
The good thing about approaching commercial truck financing companies rather than national banks is that there are fewer requirements that you will have to meet. If you do not have a great credit score, these companies will be your best bet. You will have to settle for higher interest rates and shorter terms in exchange for more straightforward requirements. These rates can be as high as 30%, and the terms are often lower than seven years.
Some examples of commercial truck financing companies include Truck Lenders USA, Financial Pacific Leasing, Bryn Mawr Trust and CAG Truck Capital.
If you want to secure the best commercial truck financing deal at the end of the day, you should know all about terms, rates, and requirements. As a borrower, you can look into both banks and specialized financing companies to get the best deal you want. As long as you have a good portfolio and an excellent credit score, getting a deal shouldn't be a problem.