Financing a new semi truck can be very stressful and difficult especially if it’s your first truck. Here are some tips and things to expect when trying to finance your new semi truck.
Determine Your Eligibility
In a financer’s eyes funding a semi truck is a high risk investment. Be prepared for the up coming challenges. Understand your eligibility for taking out a loan. Below are general requirements. To check your credit score for free and NOT hurt your score check out Experian. It’s fast and easy and will come with credit monitoring and alerts.
- Credit Score: 600 or higher (some will require 660)
- Down payment 5% or greater (10% tp 20% for new owner-operators)
- Time with CDL license: Minimum five years
- Age of truck: less than 10 years
- Truck mileage: fewer than 700,000
Information you will need to gather
Be prepared and professional. Gathering all of the required documents before meeting with your financer will make both of your lives easier. Each financer will require different documents but here is a general list that most financing companies share in common.
- Documents showing proof of your registered business
- Up to 12 months of current and past bank statements
- Up to 3 years of business tax returns
- Current year profit and loss of your business
- Current balance sheet
- Your CDL
- USDOT number
- Motor carrier number
Finding the right truck
Now for the actual truck. The truck you’re looking to purchase needs to be reliable and worth an investment. It can’t be on the verge of breaking down or old enough to have seen dinosaurs walk the earth. Be mindful to find a reliable dealer as well.
- Fewer than 700,000 miles
- Less than 10 years old
- Sold by a dealer (not required)
Find Insurance
You won’t be funded until the loan provider receives documentation that the vehicle is being insured. Below we note what coverage is highly recommended/required.
- Primary liability coverage
- Physical damage courage
- Bobtail coverage for non trucking use
- Cargo coverage
Financing Companies
Picking a company to finance your semi truck can be overwhelming. After going through the web here are some great choices for different needs. There are many other companies out there that are worthy competitors, these are just our top choices.
- Smarter Finance USA– New semi-truck owners with trucking experience. Offers financing up to 100,00 with as little as 5% down payment and a minimum of 600 credit score
- Commercial fleet financing– Established businesses looking for competitive rates. Loans ranging from 6% to 16% interest. For qualified business owners with at least two years in operations. Min 640 credit score
- Balboa Capital– Business owners with fair to poor credit. Min 600 credit score
- Well Fargo– Borrowers with good credit who want to work with a traditional bank
- BlueVine– Owners seeking access to flexible types of financing
Tips for a new business
New business owners in the CDL are a huge financial risk and will have a more difficult time acquiring financing for a semi truck. Be ready to prove your worth to these financing companies. Here are some tips on increasing your chances to getting the financing you need.
- The bigger the down payment is the higher the chances of getting approved
- Good credit score
Poor credit
Approximately 16% of Americans have a very poor credit score and 18% have fair credit. So for those of you suffering from poor credit, you are not alone. Luckily there is a lot you can do to improve your credit score and improve your chances of getting approved for a loan.
- Work on improving it or have a cosigner with a strong credit profile or provide large down payment.
- Ways to improve your credit score: Pay your bills on time, even better schedule recurring payments
- Get credit of making utility and cell phone payments on time factor them in with a free product called Experian boost
- Pay off any debt and keep balances low on credit cards
- Apply for and open new credit cards only when needed
- Don’t close unused credit cards
Low Cash Reserves
According to Statista 70% of Americans have less than $1,000 stashed for savings. With that being said there is a good chance most people looking for financing won’t have $100,000 sitting around for a down payment. It’s important to show your future bank that you can hold cash. This will make you look like a more reliable investment. You can also impress them with a well detail business plan showing how you plan to bump up that cash flow.
- Find ways to tighten your budget to show more cash in the bank
- Put together a detailed business plan showing how the new truck will improve your cash flow
Conclusion
Financing a semi truck can be very stressful. It’s important to be organized and know what is expected of you. We hope this quick and simple guide will help you tackle your approach to buying your new semi more confidently. Be sure to know your credit score and get your documents ready, find insurance, and look to purchase a truck that is in good condition.
