One of the available options for logistic and trucking company owners to secure vehicles and trucks for their business is through commercial loans. Ideally, to be able to qualify for a semi-truck loan, lenders will require at least a credit score requirement of 600. What happens if your credit score is below this number?
It can be quite challenging to get a semi-truck loan with poor or a bad credit. Interestingly, it is still possible. You can still secure that semi truck sleeper you have been eyeing on as an additional vehicle for your fleet, through a commercial truck financing.
Here are top ways on how you can secure semi-truck financing, even with a bad credit.
Save for a higher deposit
Most truck financing options require a certain percentage of deposit. The buyer provides a certain amount of deposit while the rest of the balance is then loaned by a bank, company or a seller to the buyer, which earns a certain percentage of interest. This amount is then divided into a number of terms, mostly in 3, 5 or 10 years payment terms, depending on the vehicle and the lending company.
With a bad credit score, it would be hard to get a finance company that is willing to finance for your vehicle. However, with a bigger deposit, the amount of money to be lent also decreases, giving you better chances of getting your loan approved, despite a bad or low credit score.
You can still have your truck financed even with a low credit score. You can opt for a seller financing. Instead of getting a loan from a bank or a financial institution that requires a good credit score, you can seek financing with a seller instead. Most truck selling companies offer in-house financing options to people and businesses seeking to secure a truck loan. However, in such cases, the interest rates may be quite higher compared to the interest rates that banks and lending companies offer to their clients.
Finance company loans
There are a number of finance companies that are willing to offer truck loans and financing to companies and individuals despite their bad credit scores. However, getting a loan from these companies usually offers a high interest rate, compared to a bank loan.
A commercial loan from a bank for a client with a credit score of at least 600 has an interest rate of 5% to 6% on average. Meanwhile, getting a loan from a lending company is more expensive. Interest rates can start anywhere from 4% to 30%, depending on your credit score, your deposit and other financial circumstances.
In such cases, failure to make payments may lead the finance company to repossess your vehicle or levy liens and other penalties against you. If your credit score is around 500 or lower, this is the best option available for you.
Lease purchases is one of the low-cost ways on how a business can acquire a new truck for their business. In this acquisition option, a carrier becomes an owner operator of a truck by making monthly lease payments to a truck owner or seller. Lease payments can start anywhere from $300 to $1,200 a week, depending on the type of truck and the company that offers the lease. After an agreed period of regular payments or as agreed between the lessor and the lessee, the truck’s ownership is officially given to the lessor.
These are the options available for a trucking company looking to increase his fleet. Even with a bad or low credit score, acquiring a new truck for your business is possible.