Steps to Financing a Commercial Truck
Semi Truck Financing Requirements
Trucking is a vital part of the American economy. Every city across the U.S. depends on truckers for food, medicine, clothing, and other essentials for life. And with the recent shortage of drivers, helping new truckers, along with seasoned veterans of the trade, get started with quality financing is more important than ever. Here is what you need to know about getting commercial truck financing through Mission Financial.
Business Auto Loan vs. Personal Auto Loan
If you are new to the trucking industry, you may think financing a truck will be similar to a getting a loan for a standard vehicle. However, financing a commercial truck is very different. Interest rates for personal auto loans are typically below 5%, while a business auto loan necessary for commercial trucking is between 5-30%. And while you would typically go to a bank to get a loan for a car, most banks will not offer financing for commercial trucks. Thankfully, there are alternative lenders, like Mission Financial, who are experts in the industry and focus solely on semi-truck financing.
Applying for Semi Truck Financing
You may consider applying for semi-truck financing for a number of reasons. You may need to buy a new truck, lease a truck or make repairs to your existing truck. When you are ready to begin the process, you will need to determine your eligibility, gather the necessary information, find the right truck, acquire insurance, and submit all of your documents to Mission Financial.
1. Determine Eligibility
Before you spend time applying for any type of financing, you will want to make sure you qualify. The most important qualifications for semi-truck financing include overall credit, down payment, time with CDL license, and the age of the truck.
- Overall Credit
Having good credit will certainly help you qualify for a loan and get the best loan possible, especially as a first time buyer, however, even those with a bad credit history may qualify for a loan with Mission Financial. Mission Financial is proud to be a common-sense lender, which means we value more than just your credit score. When considering your financing options, we will review your overall credit.
The ideal candidate has minimal tax liens and child support, has not filed for bankruptcy or had any repossessions in the last year. You are not required to have any prior truck credit or be a homeowner to qualify, and foreclosures are reviewed on a case by case basis. We will look at the positive aspects of your credit history such as on-time car payments or a solid history of mortgage payments.
- Down Payment
Your down payment will be determined by the cost of the truck you are hoping to purchase. At Mission Financial, we offer financing on 2000-model trucks and later, so purchasing a new truck is not necessary. First time buyers usually make a 20-30% down payment, which is typically between $25,000-30,000.
- Time with CDL
The amount of time you have had your Commercial Driver’s License(CDL) is also a factor. Drivers with at least three years of verified driving experience will qualify for financing. However, drivers with less experience who are able to provide a larger down payment will be evaluated on a case by case basis.
- Age of Truck
While most commercial financing companies will only finance trucks produced in the last 5-10 years, we are happy to offer financing on trucks as far back as 2000. However, even if you are able to get a good deal on an older truck, you will want to factor in the repairs and maintenance necessary for an older truck. Older trucks are more likely to break down or need regular maintenance. They are also not going to be equipped with the latest technology for safety and comfort. You will be spending a lot of time in your truck, so be sure you choose one that suits your needs and isn’t going to cost you more in the long run.
2. Gather Needed Info
Before you start looking for the perfect truck, it is important to have all of your documentation ready. That way, when you do find the right truck, your financing will be in order and you can secure it quickly. Before beginning the process with Mission Financial, be sure you have the following documents ready to go to make the process quick and seamless:
- Bank statements and/or tax returns
- Current Commercial Driver’s License (CDL)
- 6 references or 10 references without active phone bill
- Cell Phone contact
- Proof of insurance with at least a $1,000 deductible
Depending on your situation with your employer, you may also need to provide the following:
- Co-signer Statement
- Articles of Incorporation & Corporate Resolution
- LLC Agreement & Operating Agreement
3. Find Your Truck
Finding a truck that meets the needs of your business and the qualifications of your lender can be a challenge. However, if you keep your standards in mind while searching, you will be able to find the right truck in no time. Be sure you are choosing a truck that will be able to haul the specific goods of your business.
Once you have found the right truck for your needs, you will need to negotiate the price and get a written quote on the purchase of the truck. This quote needs to include the price you will be paying along with the following information:
- Title and Vehicle Registration
- Guarantee of Title
- Pictures of the vehicle you wish to finance
- Original signed credit application
4. Get the Right Insurance
While you can get pre-approved without insurance, providing proof of insurance for your truck is an important step to finalizing your financing. The type of insurance you need will be determined by the type of business you have. If your truck is the only asset of your business, you will most likely need the following insurance:
- Primary liability coverage
- Physical damage coverage
- Bobtail coverage for non-trucking use
- Cargo coverage
5. Submit Your Documents to Mission Financial
Finally, it is time to apply and get approved for your semi-truck financing. Having all of the required information ready to go in advance will help the financing process go smoothly, and you will be behind the wheel of your commercial vehicle in no time.