Buying Bigger Better Academy

How Does Commercial Truck Financing Work? (Updated for 2023-2024)

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Source: https://www.mylittlesalesman.com/news/commercial-truck-financing-guide

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Introduction:

  • Overview of commercial truck financing as a viable solution for businesses and owner-operator truck drivers.
  • The guide covers the entire financing process, focusing on semi trucks, dump trucks, tow trucks, and other commercial vehicles.

    • Key Topics Discussed:

    1. Understanding Commercial Truck Financing:

      • Explanation of commercial truck financing as an alternative to paying upfront cash for commercial vehicles.
      • Breakdown of the three main components affecting monthly truck payments: down payment, interest rate, and loan terms.

      • Down Payment Options and Benefits:

        • Insights into how financing companies determine down payment options.
        • Discussion on the benefits of higher vs. lower down payments and what constitutes an ideal down payment amount.
        • Example using semi truck financing rates to illustrate the impact of different down payment options.

        • Interest Rates and Loan Terms:

          • Detailed explanation of how loan terms affect monthly payments and total interest paid.
          • Example comparing 3-year and 5-year loan terms for a semi truck, highlighting the trade-offs between monthly payments and total interest costs.

          • Criteria for Commercial Truck Financing:

            • Factors considered by financing companies, including the age and condition of the truck, and its total appraised value.
            • Importance of the borrower's business history, revenue, credit, insurance, and cash reserves.
            • Methods to verify a trucking business for financing purposes.

            • Financing for Different Credit Situations:

              • Options for obtaining commercial truck financing with bad credit or no credit.
              • Strategies like in-house financing, higher down payments, and using collateral.
              • Discussion on the risks and benefits of obtaining a co-signer for financing.

              • Owner-Operator Financing Rates vs. Business Financing Rates:

                • Differences in financing terms for owner-operators compared to larger businesses.
                • Scenarios where owner-operators can secure favorable financing agreements.

                • Specific Vehicle Financing (Dump Trucks, Tow Trucks):

                  • Financing considerations for different types of trucks, including examples of financing terms based on credit scores and business age.

                  • Comparison Between Banks and Truck Financing Companies:

                    • The hesitation of many banks to offer semi truck financing and the reasons behind it.
                    • Advantages of working with specialized truck financing companies, including faster approval processes, lower down payments, and reduced collateral requirements.
                      • ...more
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                      Buying Bigger Better AcademyBy My Little Salesman, Inc.