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5 Things You Didn’t Know About Getting a Truck Loan

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The North American economy relies heavily on the business that the trucking industry brings to the table. With over 7 million people currently working in the trucking industry in the United States alone, state-of-the-art trucks are needed to help support them.

5 Things You Didn’t Know About Getting a Truck Loan

However, trucks can be very expensive. There are also drivers in the industry that would like to become truck owners some day. The good news is that there are many companies out there that issue truck loans.

If you are a truck owner/operator, then you may be interested in learning the ins and outs of small business loans and truck financing. Here, we will provide you with some pertinent information about truck loans and financing.

How does it work?

There are some stark differences between a personal vehicle loan and a truck loan. For example, most people will turn to a conventional bank if they want to obtain a normal loan. Most banks, however, will steer clear of truck loans.

Only the biggest banks will take on truck loans, with a current financing approval rate of 26.9%. The good news is there are lenders in the market that specialize in truck loans. As for why you may want to take on a truck loan, the most common reason is the desire to become a truck owner.

You can opt for either a second-hand or a new truck if you wish. Some truck drivers may be interested in leasing a used or new truck instead. Or, you may be interested in simply repairing an existing truck.

What determines eligibility?

The truck will serve as a form of collateral for the loan that you intend to secure. As a result, you must first determine the type of truck that you wish to buy before you approach a financing company.

For example, if you need a vehicle that is designed to perform a specific task, then a vocational truck would be best. However, if you need one that is designed to perform long-haul transportation tasks, then a semi-truck would be the better option. It should also be noted that long-haul trucks tend to suffer from more wear and tear due to the great distances that they are required to travel.

As for semi-trucks, prepare to negotiate terms with your lender, and shop around to find the most favourable terms before you sign anything. This is because a semi-truck can develop mechanical problems over time, which may prevent you from fulfilling your repayment requirements.

Terms and Rates

Commercial lenders will charge anywhere from 5% to 30% in terms of interest rates. The amount that they charge will be determined by your credit history, the condition of the vehicle, and the financial state of your company.

The repayment terms may extend to 10 years in some cases, and some lenders may also provide 100% financing. This means that you will not be required to place a down payment in order to secure the loan.

However, the only way to obtain such a generous offer is to have an impeccable credit score. By the same token, such an offer will also come with higher interest rates, as you will be borrowing more money. In most cases, though, a conventional lender will expect you to finance between 5% to 25% of the truck loan in order to secure it.

What if I have a poor credit score?

It is actually possible to obtain a truck loan even if you have a poor credit score. That having been said, trying to do so will be a tumultuous affair. While your credit score is not the be-all and end-all in terms of qualifying, a poorer score will mean that you will have to pay more in order to offset some of the risk involved.

If you have a poor credit score, then your lender will see you as a high-risk investment. They may only decide to take you on as a client if you are willing to pay higher interest rates in return.

The good news is your truck will serve as collateral in and of itself, so having a subpar credit score will still allow you to obtain the funding that is required. To illustrate, if you secure a loan but are unable to pay it back in its entirety, then your lender can opt to seize your truck and sell it in order to recoup their investment.

In any event, we would recommend that you try and build your credit score up to a respectable level if you have a mediocre score. You will be rewarded for your efforts with a lower interest rate when you qualify for your truck loan. Still, if you urgently need a truck loan and are willing to pay higher interest rates in order to obtain it, then the option is available.

Other Fees to Consider

There are also other fees that you should be aware of that go beyond interest fees. For instance, your lender may charge you credit check, appraisal, application, and other miscellaneous fees. You should take the time to familiarize yourself with all these fees before you sign on.

Truck Loan Center

If you would like to learn more about how to obtain truck loans, then please visit our website. Truck Loan Center specializes in commercial truck loans and financing in North America. We assure honesty and transparency with every one of our clients, as well as fast turnarounds. In fact, we are sometimes able to approve our clients in a few hours.

We also assure the best rates in the business for your current financial and credit situation, and provide unrivalled closing times. Our mission is to get you in your truck quickly, so that you can start making money as soon as possible. To learn more, or to request a free quote, please give us a call at 1-866-230-0094.

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