Making the decision to purchase a semi-truck is a big deal. You’ll likely engage in a long process of discovery to determine which truck you will buy. Once you’ve made a choice, the next big question will present itself: how will you pay for it? Most buyers won’t have the cash upfront to buy a tractor-trailer…not even a used one. There’s a good chance you’re going to require financing, and the process can be more complex than applying for a car loan if you don’t do your homework in advance.
Here are some things to consider when approaching financing for a new or used tractor-trailer.
Good credit helps. Just as with an auto loan, a good credit score is critical to get the best possible loan. Check your credit through the free tools available to do so. If your score is less-than-great, there are some things you can do to improve your credit, though this might take a while. For loans on semi-trucks, lenders will typically want to see a credit score of at least 600, and some may require credit scores of 660 or higher. If you don’t have good credit, there are specialized programs available for bigger credit risks, but be prepared to pay a higher interest rate on your payments.
Prepare for a large down payment. As previously mentioned, the process of financing a tractor-trailer isn’t like the process for a personal automobile. A tractor-trailer is a business purchase, so lenders are going to be more stringent in their requirements. This will typically mean financers will want at least 20 percent down on your purchase. While there are some lenders who will offer no money down, this option may cost you more in the long run, since you’ll be financing the entire purchase.
Budget for higher interest rates. When purchasing a new or used tractor-trailer, don’t imagine you’ll be able to get the same type of deals on interest rates that are sometimes available for personal vehicles. Interest rates of six to 10 percent are not unusual.
Know your budget. Before you sign anything, make sure the lender outlines the amount and terms of the payment clearly so you can be sure you can make the payments each month.
Find the right lender. Look for a lender that is familiar with the process of purchasing semi-truck and understands the needs of buyers. These lenders will also have contacts with banks that finance many truck loans. Some of the largest semi-truck lenders include CAG Truck Capital, Commercial Fleet Financing and Truck Lenders USA.
Get your paperwork in order. Lenders who specialize in commercial trucks will have different application processes and requirements. Be prepared for all lender demands by having quick access to details about your company (annual revenue, type of business), the type of vehicle you want to finance and your personal details (credit score, whether you have a commercial driver’s license, or CDL, and for how long). Be sure to shop around and compare rates and details.
At Status Transportation, we assign each owner operator a dedicated freight coordinator to help them develop a business strategy to ensure their profitability. Owner operator loads are carefully chosen to align with your strategy. We strive to build profitable partnerships by delivering the highest quality services through continuous education of employees, development of systems, and best practices. We are here to give you support and resources you need, such as a dedicated dispatcher, fuel cards, advances, etc. Status Transportation works with most common types of equipment such as dry vans and flatbeds. To learn more, visit our website or call us at 407-574-7990.