Financing your truck is not as hard as you think. The hard part is getting an interest rate you are comfortable with. Most used truck dealerships have financing companies that are easy to work with and will get you into a truck. However if it’s easy there will be a price to pay for a long time to come. Their price you’ll pay is some of the highest interest rates lenders will offer. That translates into thousands of dollars more you’ll spend for your truck. There are other options and a way to leverage used truck dealerships to your advantage.
The best solution to financing your truck is to use a bank you have been doing business with for many years. Preferably a small home town bank where you have done business with before and know your loan officer by name. Instead of simply looking at your loan application and saying “yes” or “no,” that loan officer will more often than not take the time to speak with you, review your business plan and listen to your vision. This is important because they are already giving you the benefit of the doubt that you know what you are doing and you know how to succeed. What they want to see and hear from you is the knowledge of the industry, your business plan and most important the ability to repay the loan even during adversity. If you are able to show them a solid business plan and that you are prepared even when times are tough you are all but certain to be awarded the funding you need. A deposit is always a good thing to have but it isn’t always a requirement. Deposits will not only lower the amount you are borrowing and your payments, it can also lower your interest rate. Additionally it shows the lender you are willing to put “skin in the game.” That speaks loudly to the loan officer as it demonstrates you are willing to not only risk the banks money but your own hard earned money as well. In other words the loan officer knows you will dig in your heals to not loose your investment and thus you’ll be fighting to not loose the banks investment either.
If your personal financial situation won’t allow you to use a home town or local bank then the lenders offered by dealerships can offer a respectable alternative to start your trucking business. There are several keys in doing this the correct way. First plan to buy a short term lower up front cost truck. Shopping for a truck with all the chrome, lights, gadgets and niceties will only drive up the price and your payments. Shop for a truck that you believe has a good 12 to 24 months to operate. After which you can go back to your local home town bank and put not only your business plan in front of him to talk about but now you can show him your income, expenses and profit reports. Nothing speaks louder to a loan officer than a solid financial track record (and most important) provable success! So using a finance company from a used truck dealership may not be your end game, but it can be a way to get off the ground with a truck and begin a successful truck owning career.
If you want to learn more about a business plan watch for my upcoming posts in the Business of Trucking category.