When you’re looking for a new truck for your business, you might not have the cash required to purchase a vehicle outright. This is understandable since trucks can cost tens, even hundreds, of thousands of dollars with plenty of fees and charges. Not many business owners (large or small) can afford that sort of upfront expense, which is why truck finance is a viable option for securing new vehicle finance.
As with other types of business loans, the lender will have criteria and requirements to check against before they approve your application for financing. Here are the main factors that lenders will consider before financing commercial trucks.
How long you’ve been in business
While this isn’t as important to every lender as it used to be, they will all look to ensure you have an active ABN at the very least. The longer your business has been operating the better, as this will help your application appeal to more lenders. Your credit rating and history
Your credit history affects your credit score, which in turn has a hand in the interest rates and monthly repayments you’ll be offered for your business finance. Of course, a good credit score will help your approval chances, as will your credit history if it shows regular monthly payments with none missed.
Bad credit doesn’t immediately disqualify you from finance, either. It just means you will have fewer options to suit and may need a larger deposit or to pay a higher interest rate.
Your business’s cash flow, finances and assets
Lenders look at your business’s cash reserves, cash flow, assets and other financials to determine whether your business is too risky to lend to. As one example, you’ll be asked to produce profit and loss statements to prove your income and the loan amount is given.
There are some types of loans, however, such as low doc loans, that you can apply for if you don’t have this sort of documentation according to your financial situation. There are financing options available for almost every situation with finance specialists.
The age of the truck you want financing for
Unlike when applying for a car loan, the age of the heavy vehicle matters in truck finance. Almost every lender will decline an application for commercial truck financing for a vehicle that is more than 5 years old. The truck is the asset used as collateral against the loan, so it needs to be worth enough of the loan’s value. The type of truck also affects the chance of obtaining finance, such as whether you’re applying for a semi-truck, a flatbed truck or another type.
If you’re an owner-operator
Owner-operators are sometimes viewed as risky to lend to because if they can’t work for any reason, it means they’re much less likely to meet their payment obligations for the loan. It’s not impossible to find a lender to approve your financing if you’re an owner-operator, but it can take time.
We know what commercial truck loan lenders are looking for
Here at Asset Finance Shop, our expert brokers specialise in long term truck finance. We’ll liaise with the variety of lenders in our network to find the right loan or lease solution for you, and help you prepare your commercial hire purchase application for the best chance of success.
The friendly broker assisting you through the finance application will discuss loan terms and other important details so that you fully understand your new truck finance agreement and it suits your business.
Get in touch with us today for your commercial truck financing needs. We also handle equipment financing for added convenience.