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Commercial Truck Financing Rates

If your business is looking for the best rates and terms on a commercial truck loan, follow this checklist to uncover the best financing options.

Tamara Cohen
Tamara Cohen
September 22, 2020

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Do you want to include a well-functioning truck to your inventory? Are you looking for a sturdy vehicle for efficient delivery or perhaps, you want to expand your trucking business? In either case, if you don’t have hefty amounts of cash in your hand, you might want to look somewhere else to secure finances. 

Securing finances for a commercial truck is quite different than your orthodox methods of securing loans for cars and other personal vehicles. The application process, rates offered, and payback payments are different. 

Even if you are looking to obtain loans or leasing your truck, you must realize that the payments may last for several years. And the interest rate you agree to pay can make a considerable difference in the payments you make over the years to come. And I want you to think wisely when it comes to spending your hard-earned money. 

No one wants to worry about the profits they will earn and make hefty expenditures based on them. But by securing a loan on which a high-interest rate is charged, you are binding yourself to spend a large percentage of your future profits on your loan payments. 

Where should I secure a loan from?

If you have done your homework before browsing sites to look for the best commercial truck financing rates, then you must have come across a plethora of companies from where you can secure a loan. But the question arises: which company shall you trust?

I will not bore you by evaluating each mode of financing; instead, I will tell you which direction you must follow. I know how hard it is to earn money and launch a business. And if you invest in that business by securing a loan, you must be worried throughout the loan period until you have paid it all back. So, do you invest wisely. Look for the following traits in the company: 

You may not find all these traits in just one company but set these criteria that must abide by and follow. This will help you reach the ideal company to secure a loan or lease for your commercial truck. 

The Determining Factors

These are the factors that will decide which interest rate will be set for you. Let us review them: 

Knowledge of Trucking Industry

This is very important in determining what kind of interest you will be paying. This is an internal factor that solely depends on your understanding of the market. Nowadays, people are looking for ways to make easy money. And if you are unaware of the market trends of the situation, you will likely become the prey of the money-making scheme.

Make sure you have lucid know-how of what if going on in the trucking industry and the current prevailing interest rates so that you know that you are not being over-charged or being taken advantage of. Or if someone is offering a very low-interest rate, there may be something fishy going on. 

Buying or Leasing

Either you decide to buy or lease your commercial truck will significantly impact your loan or commercial truck financing. 

The leasing payments can extend up to 3-5 years and usually have lower payments. The primary reason is that you are leasing the truck, and you won’t own it at the end of the period. This means that it will still be the owner’s possession. However, you can buy out the lease to gain possession of the truck. 

But if you intend to buy the commercial truck and want to secure a loan for that purpose, then the payments will be hefted and divided over a long period. 

How is Your Credit Profile?

Commercial truck financing rates can prevail from 5% to 30%. The interest rate you will secure will be based on your financial history, credit score, and where you lend the money or the truck. But the deciding factor in this is your credit profile.

If you have ever not paid back a loan from the past or have ended on bad terms with a bank, it will show on your record. If you have fallen behind on making payments or have violated any of the bank’s rules, you might be on the hit list, and your credit score will be in the south.  

The Risk Assessment

The lender or the bank that is offering you a loan or lease will conduct a risk analysis and review if your business is profitable or not. No one would want to invest in a hollow scheme. Neither would anyone offer to give you a loan if they know that the prospect of your business is dull. 

Purchasing or leasing a commercial truck is a huge investment and requires a lot of back studies. Until you prove that including a car in your vehicle inventory will boost your business activities and kick start the cash flow, your financing application will not be compelling enough. 

The Down Payment

Most lenders will expect you to pay a small amount of money upfront as a down payment to make sure that you are in a legitimate agreement, and you have money to pay for the loan payments. It is like security for lenders. 

The rates for a down payment can vary between 10% to 30%. This can also affect your interest rates. A larger down payment can bring down high-interest rates. 

You must be an excellent negotiator to secure a loan at low-interest rates. Though in the end, all these determining factors will collectively decide on an interest rate for you. Commercial Truck Financing Rates may be overwhelming for you, but just remember this is the initial step. Once you secure the loan and get your truck, your business will boom from that point forward!

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