row of parked trucks

Define Your Needs

It’s important to realize that the needs of each driver or business will be different. You should first figure out what you need or want before doing too much research on which financing options are available and the terms of those options. Ask yourself questions like these:

  • What kind(s) of trucks do you need or want for your business?
  • Are you looking for a single truck or more than one?
  • Do you need to buy new, or can you lease?
  • What are the market prices for new and used versions of what you need?
  • If you’re deciding whether to lease or buy, would having assets on your books help with other business needs?

Assess Your Position

Borrowing money to finance a truck is normal for drivers, owner-operators, and fleets with varying degrees of creditworthiness. The rates you’ll pay will depend on your credit, the age of your business and the condition of the truck you’re seeking to finance. As with personal credit, you’ll likely find it easier to borrow if your business has a good financial track record to show lenders. Keep in mind that a less-than-perfect credit score doesn’t exclude you from financing.

Depending on how long you’ve been in business, you may only have a personal credit score available to share with lenders. If this is the case, consider whether you have a regular record of on-time commercial debt payments. A history of timely and full payment in your records will go a long way to securing the financing you need on agreeable terms.

Another thing to consider is whether you have time to improve your record before financing a truck purchase. Would it make more sense to lease in the short term, while you build up your credit? How much might you be able to set aside for a down payment to show lenders that you’ll be a model borrower?

Know Where to Look, and What to Expect

Unlike other forms of financing, equipment financing for trucks and truckers will largely only be available from specialty lenders familiar with the industry. The good thing about this is that you’ll be applying for and receiving financing from an entity that understands the risks and rewards associated with your specific business. Keep in mind though, with niche lenders, rates could vary across companies and there is likely to be less tolerance of missed payments or difficult circumstances. Be sure to shop around to find a lender that’s right for your business.

Weigh Your Options, Make an Informed Decision

Ultimately, drivers or business owners looking to secure equipment financing will want to balance all of the above in deciding what truck(s) to finance, at what cost and rates, and for how long. The pros and cons of different options will depend, on your present and future needs, your assets and projections (including the state of the market), and your creditworthiness as a borrower. Just know that there are several financing options available that are specific to equipment/truck financing. Do you research to make sure you find the right lender for your needs.

Looking for ways to increase your cash flow? Reach out to RTS today.

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