When it is time to apply for commercial truck finance, you must consider the best options for you. Unless you have the capital to purchase, you will need to look for alternative financing options.
Some of the financing options available to you are:
A loan is asking a lender or a broker for funds and agreeing to payment terms. The truck is bought outright and the loan responsibility is between you and the lender.
- Quickly attain loans from financial institutions providing your credit score is good.
- Financial institutions like a bank will finance your truck but keep as collateral for the loan.
- Most lenders require a minimum six-month-old account before they can offer you any financial aid.
- The offer is only for the money to purchase the truck; maintenance and other costs are on you.
Bootstrapping is when you grow a business to pay for the asset. To purchase a truck is an expensive venture, but if you have been in the trucking business for some time, you can probably afford the high cost.
- You have full ownership of the truck
- There is no need for a truck loan
- No extra interest rates
- Can disrupt cash flow
- It is expensive and a major investment
Hire purchase is a situation where you buy the truck by having a small down payment, then pay the rest of the money in instalment over time.
You only get ownership of the truck once you have paid all the instalments.
Hire purchase can be made at the dealer shop or even with a finance broker, where they allow you the use of the truck while you clear the balance.
You sign a contract indicating that full ownership will take place once you have cleared all the instalments plus the accumulated interest.
Most lenders charge higher interest if you fail to make your monthly instalments on time.
What is the Best Option for Commercial Truck Finance?
The best choice when it comes to commercial truck financing is hire purchase. This option gives you the freedom to start earning immediately.
It does require a lot of self-discipline since you have to make timely payments. However, it helps allocate your budget as there is no significant investment made.
Where to get the Hire Purchase?
Finance brokers, banks or even lenders, can buy your truck for you then retain ownership until you clear the payment.
Once they have identified your credit score and agree to finance your truck, they will accompany you to purchase the truck but keep ownership documents.
Keep a copy of the signed contract with you in a safe and secure place. Ensure all your payments are done on time, and this will improve your credit score massively.
Dealers also offer services like hire purchase to their customers. Similarly to banks, you sign a contract indicating all the terms involved. However, you have to make a down payment towards buying your truck.
Once you have cleared all the payments, you can take ownership of the truck, or you can ask them to sell that truck. Then you can top up the amount your truck has fetched, and buy a brand new one.
Dealers have an added advantage of understanding the market, and therefore, their terms reflect market trends. The cost of the purchase can be tailored to fit your needs such as; insurances, repair, and maintenance, and also assist in getting you the initial customers for your business.
To sum up, there are many different ways you can purchase a truck. Every truck driver in the transport industry would love to own their truck one day. There are different ways you can achieve this goal, but the best option would be to hire purchase. Try to find a good finance brokerage, and let the truck you drive make the money in your pocket.