Trucks are the ultimate cargo vehicles. When businesses need to move goods across long distances, they typically rely on large trucks to get the job done. A growing business may need more of these to keep up with the demand. However, acquisition can be a challenge given the high cost of each. Most businesses rely on truck financing to get these vehicles, just like how ordinary car buyers get financing to get their new rides. The service is available for both new and used commercial vehicles.
The Benefits of Truck Financing
1. Smaller Upfront Expense
The price of a new semi-truck can go up to hundreds of thousands of dollars. That is a massive upfront cost for any business. Few can take this hit on the balance sheet all at once. For most, it is far better to get financing so that they can pay for the vehicle in smaller amounts per month across several years. They might have to shell out for a down payment, but it would be a manageable fraction of the full price. Businesses can compare the offerings of different lending institutions to find the best one.
2. Immediate Vehicle Use
If a business were to purchase in cash, then they might have to save up for a long time. Meanwhile, their competitors are getting their trucks through financing and beating them in their industry. It would be far better to take the second route, as well. Time is money. The sooner that they can purchase the vehicles, the sooner that they can use these in actual business operations. They can grow as fast as they need to as dictate by the demands of their customers. They can retain their competitiveness instead of being left in the dust.
3. Low Maintenance Costs
A new truck will provide optimum performance. It won’t require a lot of maintenance and drivers can be confident of its ability to tackle high mileage. If the business has an aging fleet, then maintenance work is probably one of the biggest challenges for the operation. Parts will degrade naturally over time due to wear and tear. Something might require replacement or other tweaks every so often. These may reduce their time on the road and increase maintenance cost. Although new trucks cost a lot of money, businesses may end up saving much more by avoiding excessive maintenance and repair works.
4. Less Risk of Breakdown
Trucks run on a tight schedule. They must make it to certain places by a specific time, especially if dealing with perishable goods. Any delays can result in customer dissatisfaction and loss of confidence. That’s why it is such a headache to have a truck that keeps on breaking down. This can have a negative domino effect on the operations because resources may have to be diverted during emergencies. If a business has old trucks that are breaking down frequently, then perhaps it would be a good idea to replace them one by one. Financing makes this possible.
5. Longer Road Time
New trucks can serve the business day and night. Unlike old trucks, drivers will not need to be too careful with them. They can take on a high workload without any complaints. After all, they have new components that are functioning at their best. They also have modern features that make them easier to deal with. They could be on the roads for longer and go on more trips than the aging members of fleet. That gives the business the ability to fulfill orders with greater efficiency. One new truck may be able to do the work of two old trucks.
6. Higher Profits
Of course, businesses should perform their calculations before embarking on such a costly acquisition. Many push through with it after finding out that they can make up for the cost with higher profits. The increased efficiency, lower maintenance cost, and fewer breakdowns are all highly positive consequences of getting a new truck. Financing might result in interest payments but if the profits can exceed this, then it would still be worthwhile to pursue this path. Previous equipment upgrades should give them realistic expectations. It would be up to them to maximize the new vehicle.
General Truck Financing Requirements
A commercial vehicle loan will usually require a deposit that is equivalent to 20% of the purchase price. Some lending institutions may allow various assets as collateral if the value meets the target. Businesses will need to present their financial records for the last two years or so, depending on the lender. They will check the financial health and assess its ability to pay back the loan. The business owner may also have to submit documents regarding their assets and liabilities. It would also be helpful to provide business references and information about credit score.
As for the truck, the lender will need its details including the make and model. Tell them whether you are purchasing a used or new vehicle. Indicate the amount of money needed to make the purchase, and whether it is necessary to have a balloon payment. Think of how long you will need to pay the loan back. Many opt for 24 to 60 months, but there are plenty of lenders that will extend this up to 84 months. They will need to know whether the vehicle will come from a dealer or from a private owner. Interest rates are often lower for trucks that are less than five years old.
Applying for a loan is easier than you might think. Just make sure that the necessary information is complete. You will get a quote shortly after, allowing you to have concrete numbers for a deeper evaluation. If everything is in order, you can expect a streamlined process that can will allow you to get the vehicle quickly.