Getting your truck equipment financed is arguably one of the most important steps for the success of your business. Yet business owners like you are faced with the challenge of needing to raise funds or you’ll limit your financial growth and miss profit opportunities.
You may have run off to your bank and “asked” for a loan… only to be faced with total rejection. Well don’t despair, success may only be a step around the corner. This article will show you where and how to get your truck equipment financed when you have good credit and even when you have bad credit.
1. 1 Find the right financing company. One who will offer a program that suits your needs while keeping your long term goals in mind. Most used commercial trucks cost between $30,000 and $250,000, depending on the year and type of truck. Therefore, finding a reliable company with a good reputation is essential.
2. 2 Match the financing to your needs. Your truck equipment financing program should match: the cash flow needs of your business, the needs of the market you serve and your business history. The Result is financing that Matches your needs offered through the experience and expertise of a reputable truck equipment financing company.
3. 3 Do not tie up cash. A well designed equipment finance program will help you increase your cash flow so you can better grow your business and accelerate your cash flow. This avoids unnecessarily tying up your funds by paying cash for equipment, which is unrealistic and expensive.
4. 4 Decide how much down payment you have. Most lenders will look for at least 20 percent of the purchase price as a down payment. Balance your down payment size with the cash needs of your business.
5. 5 Consider offering additional collateral. If you own additional equipment or real property with equity, some finance companies will gain confidence in offering financing when you offer additional collateral to lessen (mitigate) their risk.
6. 6 Provide financial documentation that is needed. This will include your CDL license, proof of income, agreement with a freight company, banking statements (usually the last 3 months) and a credit report. Don’t despair if your credit is challenged as there are programs for those with poor credit.
7. 7 Settle the payment terms of the loan. This will include the amount of your monthly payment, the length of the loan and how much interest you will pay until the loan is paid off.
8. 8 Provide all of the required information on the dealer you will be purchasing the used commercial truck from. The lender will likely pay the seller directly.
9 Consider an Equipment Finance Agreement (EFA). An Equipment Finance Agreement (EFA) is a version of a standard loan offered by CFIC Funding. This type of contract is our most popular product because it’s familiar and easy to understand. An EFA is in actuality a loan to the customer (debtor) using the equipment asset as collateral. The debtor usually pays for the equipment and takes all the ownership benefits and responsibilities for the term of the agreement. It is an alternative financing option to traditional lease operating agreements. Equipment finance agreements are generally more flexible than lease agreements. With most equipment finance agreements, you have no further obligation to your financier at the end of the agreement (see individual agreements as some may vary). There are no purchase buy options or large down payments. There may be additional tax advantages to this option. Consult your licensed tax advisor as an EFA may allow you to depreciate your equipment over 2-5 years while writing off the interest paid within a given tax year. In addition your licensed tax professional may advise that an EFA may allow you to take advantage of the IRS’s Section 179 depreciation schedule.
Learn more about truck equipment financing programs with bad credit.
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