If you’re looking for a second-hand commercial vehicle loan, you’ve come to the right place.
This article explains everything you need to know about second-hand commercial vehicle loans. You’ll learn what they are, and their advantages and disadvantages.
We’ll also show you how to obtain a second-hand commercial vehicle loan step-by-step from one of the best lenders in the market today.
You should be able to get a commercial vehicle loan that works well for you once you finish reading this article!
Second-Hand Comercial Vehicle Loan Explained
Second-hand commercial vehicle loans are a commercial vehicle financing option for purchasing pre-owned commercial vehicles for business purposes.
They are also known as used car loans or old commercial vehicle loans and cover almost all models of commercial vehicles.
Some vehicles that qualify for these loans include light trucks, utility vehicles, heavy commercial trucks, or other specialty vehicles regarded as commercial vehicles.
How Second-Hand Commercial Vehicle Loans Work
Used vehicle business loans work the same way as regular car loans for new vehicles. They make a commercial vehicle purchase more affordable by splitting the cost of the vehicle into monthly payments.
You receive the money you need to purchase a second-hand commercial vehicle in a lump sum. Then repay the amount in regular monthly payments over a specific time.
The lender becomes a lienholder on your commercial vehicle throughout the loan repayment period. They may repossess the vehicle if you fail to pay back the loan.
Generally, the lending rates and loan terms can vary based on your eligibility, vehicle value, and any discounts offered by various dealers or manufacturers.
You can get almost 90% funding on a used vehicle’s value at an interest rate of 5% and 30%. Also, the repayment terms are flexible and manageable. The entire amount you’ll pay back on your loan and your monthly payments depends on three major factors:
- The loan amount: The funds you’ll get as a loan.
- The annual percentage rates (APR): The effective interest rates various financial institutions offer.
- The loan term: The duration you have to repay the loan. It varies from lender to lender and could last up to 60 months.
These types of business loans are popular within the trucking industry. They are the go-to commercial vehicle financing option most owner-operators use to purchase commercial trucks and expand their companies.
Commercial auto loans are also one of the best vehicle financing options for truckers ready to start their commercial trucking companies. You can purchase almost-new or used vehicles to begin your business without breaking the bank.
Other customer segments that can get commercial car loans include:
- First-time users and buyers.
- Public limited and private limited companies.
- Partnership and proprietorship firms.
- Trusts and societies.
Eligibility Criteria For Second Hand Commercial Vehicle Loan
The minimum eligibility criteria for a commercial auto loan focus on four main factors:
- Your overall credit: Good credit will help you get a high commercial auto loan amount at better rates and more flexible loan terms. However, you can still get a business auto loan if you have bad credit. Often, you’ll have to use alternative lenders for commercial vehicle financing arrangements tailored to your situation. You’ll get a better deal this way compared to using a regular bank. Many lenders, like Mission Financial Services, have loan vehicle financing solutions for people with bad credit scores.
- Age of truck: The age of the used business vehicle will determine the loan amount you can get.
- Down payment: Some lenders require you to make a down payment based on the current purchase price of the used business vehicle you wish to get.
- The time you’ve had your CDL: Your time with your Commercial Driver’s License (CDL) determines your eligibility for a commercial auto loan.
You must provide several documents to prove that you meet all the minimum qualifications for getting a business auto loan. Different vehicle and equipment financing companies may request different papers from their customers.
Some second-hand commercial vehicle loan documentation you must provide include:
- Know Your Customer (KYC) documents: These include government-issued photo identity cards and utility bills to show proof of identity and residence.
- Proof of experience: This can be your current CDL or valid evidence to show relevant experience in the trucking industry if you’re a first-time buyer.
- Proof of income: You may need to provide your salary slips or bank statements and tax returns as evidence of your income and personal credit situation.
- Proof of insurance.
Once you confirm your eligibility and have all the documentation ready, you can start the application process for a business auto loan online.
How to Get A Second-Hand Commercial Vehicle Loan
There are a few steps you need to follow to get a used car loan. Let’s discuss these.
Step 1: Find Your Truck
Perform extensive research to find the truck that’ll meet all your business needs.
Ensure it can haul all the goods of your business. Also, consider its condition relative to its age. You don’t want to get a vehicle in bad condition because you may have to deal with truck problems and repairs. It might be costly for you in the long run.
Very old vehicles might lack the latest technology for maximum comfort and safety. Another factor to consider is the vehicle’s depreciation value. Remember, the vehicle will continue to depreciate throughout the loan period.
You don’t want to end up with a completely outdated vehicle after you finish repaying the loan. This is often the main drawback of getting a car loan for commercial purposes.
Step 2: Select The Seller
You can get second-hand commercial vehicles from franchised pre-owned dealers, small-scale used car brokers, and individuals. Be careful to select a legit seller who’ll provide valid documentation you use to verify the vehicle’s details for your loan application.
Step 3: Inspect The Car
Once you’ve found the truck you’d like to purchase and a seller, inspect the car thoroughly to ensure it’s in good condition. Specifically, check to confirm that the engine works properly as engine-related issues are costly.
Confirm the mileage, as some auto loan lenders have mileage restrictions and mileage limits for the vehicles they finance.
After you are sure that the vehicle is in good condition and works well, negotiate the price. Ask the seller for a written quote on your truck’s purchase.
Ensure the quote includes the vehicle’s price of purchase and the following information:
- Title and vehicle registration
- Guarantee of title
- Photos of the vehicle
Step 4: Choose Your Lender
You want to find a lender with the best interest rates and flexible terms for your new investment. In this case, you might benefit more from financing options like Mission Financials Services instead of regular banks.
This is because they consider your situation and will offer you better rates.
Many auto lenders also allow customers to make monthly payments through various online channels. This makes the process more accessible.
Step 5: Gather All The Documents You Need and Apply
Once you’ve identified your preferred lender, check the documents they require and apply for the truck loan.
The application process is straightforward for most lenders. With Mission Financial Services, all you have to do is visit the credit application page. Click the get pre-approved button, complete the form by following the instructions, and submit your application.
How Long Will It Take To Get A Loan?
The standard loan approval process for a second-hand commercial vehicle loan is quick. For most lenders, it takes about two to five working days after the relevant documentation has been submitted. This is why customers prefer commercial vehicle loans to other vehicle financing options.
Other benefits of these loans include:
- Multiple vehicle financing: You can get loans for various types of vehicles like commercial passenger cars and vans.
- Flexible repayment tenure
- No minimum credit requirement
- Excellent customer care and support
Getting an auto loan for your business is a good investment. You’ll have the funds to grow your business without the pressure of repaying the loan fast.
All the information we’ve shared in this article should help you get the perfect second-hand vehicle loan. If you have any questions, contact us today. We’ll help you understand your loan options and find the best loan to meet your needs!