Purchasing a federal commercial vehicle can often be an intimidating process. There’s a lot of paperwork involved, and you need to make sure you choose a financing option that makes the most sense for your business.
The good news is that commercial vehicle financing can also be a really smooth process if you work with the right company. This makes it easy to access the business vehicle loan you need, to purchase your ideal truck.
This guide will break down what a federal bank commercial vehicle loan is, and what is required to take out one of these loans.
Federal Vehicle Commercial Vehicle Loans
If you want to purchase a commercial vehicle, like a semi-truck, then you’ll likely need to take out a commercial vehicle loan.
Various business vehicle loan options are available for purchasing federal vehicles. Let’s break down how this works.
What is a Federal Commercial Vehicle Loan?
The Federal Vehicle Standards are a system that classifies all commercially available vehicles, governed by the Federal Motor Vehicle Safety Standards. These regulations specify things like the design, construction, performance, and durability requirements of commercial vehicles.
If you want to purchase commercial vehicles that fall under these federal standards, then you’ll likely need to take out a business vehicle loan.
When you take out a commercial vehicle loan, the loan will need to be administered based on the vehicle you have chosen. Of course, any new commercial vehicles in the US need to abide by the Federal Vehicle Standards.
So, a federal vehicle commercial loan is really just a form of vehicle financing that applies to classified commercial vehicles.
Best Way To Finance Your Semi Truck
There are a couple of different options you face when taking out a commercial vehicle loan for your semi-truck. These include taking out a loan amount to purchase the new vehicle, entering into a hire-purchase scheme, or even leasing the commercial vehicle (if you don’t purchase it).
While different options have their advantages for different people and types of semi-truck businesses, the best way to finance your semi-truck is generally to take out a term loan with competitive interest rates.
Let’s break down the different steps you’d need to go through to take out a commercial vehicle loan.
Establish Your Credibility
The first step to taking out any kind of commercial vehicle loan is to determine your credibility for the loan. Various checks are made to establish this, which include:
- Looking into your credit history and credit score: Ideally, you’ll work with a financing provider that considers your entire credit profile, and not only your credit score. This helps people with bad credit access loans for their business needs.
- Establishing how much of a down patent you can make: Often, a larger down payment can result in better interest rates. While a down payment is not always necessary, first-time customers generally pay a down payment of around 20% to 30% of the vehicle’s price.
- Your time with a commercial driver’s license (CDL): The longer you’ve held a CDL, the easier it will be to vehicle financing loan schemes with competitive rates.
- Considering the vehicle type and age: Of course, lenders provide customized solutions based on the type of vehicle you plan to purchase. Some vehicle financing providers accommodate buyers who are interested in older vehicles. However, it’s important to consider the cost of repairs and maintenance when purchasing an older truck.
These factors will help you determine how eligible you are for taking out a business loan. These elements also determine the maximum loan amount you can take out, and whether you can access flexible terms on the working capital.
Gather Your Information
Once you have established your financing credibility, the next step is to gather all of the documentation you need to apply for an existing commercial vehicle loan.
Vehicle loans require buyers to produce the following documents:
- Bank statements
- Your CDL
- Contact details
- Proof of insurance
- Business incorporation documents or operating agreements (depending on the business loan)
By having all of these documents ready, applying for vehicle loans becomes a much faster process. This will help you get the funding you need as soon as you find the right vehicle.
Find the Vehicle
Now you need to find the semi-truck that matches your business requirements. Having very specific requirements in place will make it a lot easier to find the right truck for your needs. Of course, you will also have a very clear budget available for your business vehicle.
Once you have found the right truck, you’ll need to establish an exact price for the vehicle and get a written quote on the purchase of the truck. This is necessary for your business loan.
Get Your Insurance
It’s possible to get vehicle loans pre-approved without insurance, but having an insurance policy in place will make the process a lot easier. This is essential for finalizing your truck financing.
There are many different types of insurance policies available, each with its own pros and cons. Make sure that you choose a policy that makes sense for your vehicle and business.
Apply for the Loan
Now you just need to submit all of your documents to your vehicle financing company to access the business loan.
Mission Financial makes applying for vehicle loans an easy process. Anyone, regardless of credit history, can access loans with a great interest rate. This makes it simple to purchase the semi-truck of your dreams.
There can be quite a lot involved in taking out a commercial vehicle loan. The most important thing is being well-prepared, and having a good understanding of your requirements. This will help you find a loan and vehicle that makes the most sense for your situation.
At Mission Financial Services, we help truck drivers and businesses of all sizes access the best possible commercial loans for their needs. Get in touch today to see how we can help you purchase the ideal federal commercial vehicle for your requirements.