Commercial Financing

 

Now is a great time to enter the commercial trucking industry. With the demand for drivers higher than ever, you can expect job security, great pay, and plenty of stories to tell from your time on the open road. While trucking is an excellent and prevalent career choice, being the most common career in 29 states across the U.S., it often requires upfront investment to get started. Just like owning a business, truckers have to pay their overhead. This can include purchasing the truck, replacing parts, and taking care of costly repairs.

If finances are holding you back from your new career as a trucker, or if the truck you currently own is in need of updates, financing may be the solution for you. Luckily, companies like Mission Financial are here to help you get the financing you need. Here is what you need to know about financing through Mission Financial.

Commercial Financing Options

Mission Financial offers financing for dealerships as well as owner operators. While we provide loans for new and used trucks, we also offer financing options for other trucking necessities including:

• Tire Replacements
• Operating Capital
• Lease Purchase Buy-Outs
• Loan Refinancing
• Truck Repairs
• Licensing and Permits

Commercial Vehicle and Business Auto Loans  

When applying for commercial vehicle financing, it is important to understand that a business auto loan is much different than an auto loan one would normally get for personal use. Due to the stricter rules surrounding commercial loans, it is more important to make payments on time. The interest rates for business auto loans can also be much higher than other loans. While a personal loan typically has an interest rate of 5 percent or less, interest rates on commercial trucking loans can range between 5-30 percent. These differences will be important to understand and recognize when applying for financing.

How to Apply for a Semi-Truck Loan

Before applying for financing, there are a few things you will need to have ready. Follow these steps to make sure your application process is as smooth as possible.

 1. Determine Eligibility

Before applying, it is important to check to see if you qualify. Qualifying factors include your credit score, how long you have had your CDL, your down payment, and the age of the truck. If you are a first-time owner operator or have a low credit score, you can still qualify for a loan through Mission Financial. In fact, our company specializes in low credit loans. While you may still choose to apply for a loan, it is important to understand your financial state before taking this step.  

2. Gather Needed Info

Even before shopping around for a truck, you will want to get all of your paperwork in order for your financing. This is an important step because when you find the perfect truck, you will need to act fast. If another buyer comes in while you are trying to gather information, you may miss out on the vehicle. Before applying for financing, have the following information on hand:

• Cell phone contact
• Current Commercial Driver’s License (CDL)
• Proof of insurance with at least a $1,000 deductible
• 6 references or 10 references without active phone bill
• Bank statements and/or tax returns

Depending on your financial situation or employer, you may also need the following information

• Co-signer Statement
• LLC Agreement & Operating Agreement
• Articles of Incorporation & Corporate Resolution

3. Find Your Truck

Once you have determined eligibility and gathered the necessary information, it is time to find your truck. It will be important to find a truck that meets the hauling requirements of your business.

After you have found the right vehicle, be sure to negotiate the price and get a written quote on the purchase of the truck. Along with the price, the written quote will need to contain the following information:

• Title and Vehicle Registration
• Pictures of the truck you wish to finance
• Original signed credit application
• Guarantee of Title

4. Get the Right Insurance

It is possible to get pre-approved without insurance. However, providing proof of insurance is highly recommended when applying for a commercial loan. Your insurance needs will be based on the type of business, but most truckers need the following types of insurance:

• Primary liability coverage
• Cargo coverage
• Bobtail coverage for non-trucking use
• Physical damage coverage

5. Submit Your Documents to Mission Financial

Once you have completed the above steps, it is time to apply for financing through Mission Financial. Having everything you need ready in advance will make the application process go smoothly for all involved parties.

Applying for commercial truck financing can seem like a daunting task. However, with companies like Mission Financial that specialize in semi-truck and business auto loans, we are ready to work with you to get you on the road in no time.

 

Bad credit can leave people feeling stuck. Without a good credit score, buying a house, a car, or paying for school can feel difficult or even impossible. Additionally, making a big purchase with bad credit can mean you pay more in the long run. In fact, when applying for an auto loan, those with bad credit can end up paying 311 percent more in interest than someone with “very good” credit. And starting a business or buying a freight truck can feel just as intimidating and impossible when your credit is less than perfect. However, this does not have to be the case.

Having bad credit doesn’t mean you cannot jumpstart your career as a truck driver or finance a new truck. With the trucker shortage causing the demand for qualified and capable truck drivers to skyrocket, there are large incentives to get truckers out on the road with or without excellent credit. Here is what you need to know about financing a semi-truck with bad credit.

Use Your Assets as Collateral

Those with good credit can often use their positive history as a way to get a loan. For those without good credit, finding another way to secure the loan may be necessary. One great way to do so is to put up some collateral.

Collateral is anything you own that can be pledged to the loan provider until it is paid in full. These are often an option for people with bad credit, because if the loan is not repaid, the lender knows they can seize the collateral and use the money from it to repay what is owed to them. There are two forms of collateral to keep in mind: Hard and paper collateral. Hard collateral consists of homes, businesses, cars, and anything else that would have to be liquidated to cash in the event that it was seized by the lender.

Paper collateral includes stocks, bonds, and other items that would be easier to convert to cash. It is important to understand the difference between these two types of collateral before applying for a loan. Paper loans are often much easier to liquidate, making them more appealing to a potential lender. If offering some sort of collateral seems like the best course of action for you, consider making a list of your assets that could be used as collateral.

Use Your Commercial Truck as Collateral

Sometimes, you can even use your semi-truck as collateral when applying for a truck loan. You will still have to make monthly payments on the truck, but the financing company will know they can seize the truck and sell it if you are unable to pay. When securing a loan for a commercial truck, it is also important to remember that you will be receiving a business loan. Business loans are different than standard loans, and with that comes unique rules for both you and the loan provider. These rules make it easier for the lender to seize property if they are not receiving payments. This means that while it may be easier to secure a loan with bad credit, there will be faster and harsher consequences if you are unable to abide by the terms.

You May be Eligible for a Grant

Grants can be another great way to secure funding for your new semi-truck. Luckily, there are a variety of grants for truckers to apply for. Depending on your experience level in the field, you may be qualified for different grant options.

Mission Financial Specializes in Bad Credit Financing

Bad credit does not have to stop you from your career goals. When applying for a loan, it is especially helpful to work with a lender that specializes in low credit financing like Mission Financial. Mission Financial Services has been providing commercial auto loans and refinancing options for over 19 years. As a direct lender, we offer loans through dealers as well as direct lending in 48 states.

Mission Financial is proud to be a common-sense lender. This means we analyze more than just your credit score. We examine each applicant’s overall credit, instead of only the number on your credit report. If you are willing to put up collateral and have a history of on-time payments, you are likely to be approved for a loan with Mission Financial.

 

“Commercial vehicles” is an umbrella term that includes any large vehicle used for vocational transport or a service. This means dump trucks, box trucks and vans, semi trucks, tractors and even fire trucks. What makes a commercial truck loan unique? Banks commonly offer auto loans for a normal car, and small business apply for loans at banks all the time. But banks usually don’t finance commercial vehicles to small businesses or owner-operators with less than perfect credit.

This means that your first step toward financing your truck or fleet of trucks is to find an agency that specializes in lending for commercial vehicles. Often, these agencies work directly with dealerships to provide financing options.  

What’s the Cost?

If your goal involves putting your Commercial Driver’s License (CDL) to use as an independent driver (owner-operator), you’ll want to finance a semi-truck. New semi-trucks start at about $80,000 and run up to $150,000 dollars. However, the range in cost of semi-trucks is wide. Factors like horsepower, cargo capacity, fuel efficiency and custom features could push the price up to $200,000. However, pre-owned vehicles are commonly financed as well and are much more affordable.

Commercial vehicle financing refers to either an equipment lease or loan. When you finance a loan, this means that once your debt is paid off you own the vehicle. When you take on a lease, you make payments on the use of the vehicle for the span of your lease term instead of towards ownership. At the end of a lease, you are usually given different options between walking away from the vehicle or buying out the remaining value. Most people prefer loans so that ownership is guaranteed at the end of the term.

What vehicle you choose will depend on the routes you’ll take as a driver, fuel costs, maintenance costs and the cost of insurance. However, many lenders will finance pre-owned highway trucks up to 15 years old, so it’s not necessarily required to invest in a brand new truck. For example, a 7 year old preowned semi truck could run as little as $30,000 to $40,000 dollars. Since most people won’t have the finances to buy a truck up front, the most important questions are:

• How much your monthly payments will be as part of a financing plan
• How much your down payment will be

Your downpayment and monthly payment will generally depend on how good your credit is, how much equity you have, the truck you choose, and/or your payment history with an already established commercial vehicle loan (if you’re looking to refinance it or add another vehicle to a fleet). If you’re applying as a brand new owner-operator, this will affect your rates but is certainly not an issue.

When you’ve decided that you want to apply for a loan, there are a few main steps you’ll go through.

1) Consider Your Eligibility  

You’ll be able to determine your eligibility for financing depending on a few major factors. The better your credit is, the lower your downpayment and monthly payments will likely be. Many financing servicers will work with you to find a solution even when your credit isn’t good. If you’re a new owner-operator, your down payment may be a little higher (18-27%). The age of the condition of the truck you choose will also be a factor. Additionally, outstanding serious issues with child support payments, a history of repossessed vehicles, or current bankruptcy proceedings could prevent you from qualifying for the loan as well. Outside of these exceptions, most issues involving credit and history can be worked out with your lender. There are lenders that specialize in loans for people who would have trouble attaining a commercial vehicle loan from a big bank.

Owner Operator Loan Types:

• First time owner/operator financing
• Drivers with limited experience
• Owner Operator with bad credit, bankruptcies, child support or tax liens
• Small fleets

So when you’re planning your purchase and loan, consider where you stand. Your semi truck dealer may even supply you with financing options via lenders that they work with. Keep in mind that lenders want to work with you to come to an agreement. So what’s the next move?

2) What Documents Will I Need?

Whether your working through a dealership with your lender, or the lender directly, you’re going to need a few documents to get the ball rolling. These will likely include:

• Documents proving your registered business
• Current and past bank statements (up to 1 year)
• Business tax returns (up to 3 years)
• Current year P&L for your business
• Current business balance sheet
• Any business licenses or required certifications
• Your CDL (commercial drivers license)
• US Department of Transportation Number (USDOT)
• Motor Carrier Number

3) Select Your Commercial Vehicle

Decide if you want to finance a new or preowned semi truck. You’ll probably want to select a truck under ten years old to avoid excessive maintenance costs and higher payments. However, many agencies will still finance older trucks up to 15 years old. If you’re looking for a loan for a slightly different reason, some lenders also provide loans for:

 

• Truck Repairs
• Operating Capital
• Loan Refinance
• Licensing and Permits
• Tire Replacements
• Lease Purchase Buy-Outs

When you’re choosing your vehicle, remember that maintenance is going to be a part of your career. Older trucks may require more frequent or more expensive repairs, and newer trucks are going to have higher price tags initially. Refinancing is also an option if you choose a pre-owned vehicle and later need cash flow for repairs.

4) Select Insurance

Make sure you plan for your insurance coverage as you work out your purchasing options for your semi truck or commercial vehicle. Commercial vehicles need different insurance than regular cars, because they endure much more wear and tear than regular cars. However, the parameters of commercial vehicle insurance are very similar. This kind of insurance still includes liability for property damage and bodily injury, collision coverage and uninsured motorist coverage. However, commercial vehicle insurance includes some features different than regular car insurance, such as coverage for loading and unloading liability. Your insurance plan may even include substitution transportation when your commercial vehicle is being repaired and you need a loaner from the repair shop. One benefit of commercial vehicle insurance coverage is that it’s actually tax deductible.

5) Submit Your Documents and Application

Submitting your application for your loan is the final step. You’ve made it through the process and are one step closer to hitting the road! Your lender will walk you through the process from there and help you set up your payments. Happy driving!

 

A semi truck is a worthwhile investment that has the potential to bring in lots of income. But how can one even think of purchasing a semi truck when they have bad credit?

One thing we must first acknowledge is that the credit climate in the semi truck financing world has gotten very tight. It’s a totally different ball game from what it was before 2009. But there are still four options that truck drivers can use to help lenders look past their credit history and allow them to purchase a truck.

Here’s how to finance your semi truck when you have bad credit.

1. Put more money down on the truck you’re buying when you apply for a Commercial Truck Loan. Every dollar you can pay up front brings you that much closer to getting approval from a lender. Besides good credit, lenders like to see equity. More money down means more equity on the truck.
2. Find a co-signer with impeccable credit and a Commercial Driver’s License (CDL). The reason for the CDL is that lenders will no longer accept borrowers to use just anyone as a co-signer. For instance, a grandmother who lives in an assisted living home is not a suitable co-signer. The good news is that a co-signer with a CDL and good credit almost guarantees acceptance from most lenders.
3. Buy from a dealer who carries their own papers. That is, you pay as much of a down payment as you can and then make monthly payments to the dealer in a sort of lease-to-own agreement. Yes, this means that you will have to buy from their inventory, which means limited options. The upside is that this financing option is open to just about anyone regardless of their credit history.
4. Put up additional collateral. Some lenders who specialize in semi truck loans will accept additional collateral in lieu of equity. This is the most flexible option and will show you which lenders are will work with you to devise a custom solution to your bad credit problem.

Don’t get caught unawares just because you had to take an alternative route to financing your semi truck. Make your purchase smooth and legal with these tips from semi truck financing pros.

1. Put at least 10% down before you’re able to drive the semi truck off the lot. This is true whether you are getting a loan or buying direct from the dealer.
2. Read the fine print when it comes to exactly who is holding the title to the semi truck while you are paying it off. Don’t leave any stone unturned or you could end up with a nasty surprise when it’s discovered that you never really owned the truck in the first place.
3. Work with a dealer who has a dealer’s license. A registered dealer is accountable for their sales and financing deals, don’t settle for anything less.

Bad credit – it’s the iron bars on your gateway for freedom. Bad credit prevents you from opening credit cards, getting a good deal on your mortgage, and more importantly – bad credit prevents you from securing the loans necessary to fund your business. Whether you’re operating an entire fleet or just have your own semi truck that needs substantial repairs, a bad credit rating can completely derail your plans – and your business. Fortunately, there are financing options for owner operators with bad credit.

Take Stock of Your Assets

If you have bad credit, there’s a chance you may need to put up some collateral in order to secure a loan. That means your first step should be to take stock of any assets you have. Make a list of any property, vehicles, or businesses you own. After you’ve made a list, determine how much money you can pull from each. This will give you a rough idea of how valuable those assets are as collateral in the eyes of a lender.

Use Collateral to Secure a Loan

Next, you’ll want to meet with someone that specializes in lending to those with bad credit. They’ll know how severe your situation is, and what options are available to help you secure financing for your semi truck or business. They will want to know what sort of collateral you have – as it can be used to secure a more favorable loan. Ideally, you should strive to work with someone who’s familiar with your business, as they’ll have a better understanding of what type of financing you will need in order to thrive.

Consider Grants

Of course, loans aren’t the only way to secure financing for those with bad credit – you can also look for state or federal government grants. Different grants are targeted at different types of businesses – if you’re just starting out, you’ll want to look at start-up grants, for example.

Bad Credit Financing

While bad credit may seem to block you from developing your business, remember that there’s always a way to figure things out – and there’s always a way for people to help you through. Don’t let bad credit stop you from building your business. Many commercial lenders have financing options available for owner operators with bad credit and can help you navigate the process to secure the money you need for repairs and upgrades.