Commercial Truck Financing For People With Bad Credit
The current economy has thrown more obstacles into an already complicated process. Financing a commercial truck in the past has required the person to have previous experience, previous pay history, good if not great credit, home ownership, etc. With credit drying up this criteria has gotten even more stringent. So what do you do? Here is some ideas for people looking to finance a commercial truck that may have bad credit or are a first time buyer.
Purchase from a smaller truck dealer. Often these dealers will have there own in house financing program where they will carry the paper. You give them a small down payment and than make the subsequent monthly payments directly to the vendor. They cater to the customer that can't get financing elsewhere. The problem is you have to buy from their inventory.
Use a straw buyer. This is where you have a cosigner with good credit. They purchase the truck for you and obtain the financing. You make the payments under their name. Problem with this approach is that you wont improve your credit; something you will eventually have to do.
Enter a lease purchase arrangement. This strikes fear into many truckers. We get several calls a day from people having balloon payments they didn't know existed. Often the person ends up giving the truck back and all their payments are for nothing. Obviously this is the bad side of this approach. To get the benefit of a lease purchase go with an individual leasing company, not a carrier. Stay away if the leasing company is also the one selling the truck. A true independent leasing company simply provides the funding for the transaction. You should be able to purchase the truck from anywhere.
Buy a truck from a private party. You can make monthly payments to the seller in lieu of cashing him out. Caution! make sure the truck is free and clear. Too often I have heard stories where the buyer makes his payments to the seller who in turn does NOT make the payments to the underlying lien holder resulting in a repossession. If there is a lien holder arrange to make you payments directly to them and any balance owed to the seller. Be careful with this.
Lastly you can find a financing company that specializes in people with bad credit. They will usually ask for additional collateral to compensate for the credit situation. This way you get the best of both worlds. You can purchase from what ever seller or dealer you want and you improve your credit.
As you can see there are problems in financing a semi truck, dump truck or other commercial vehicle but with the right planning you can grow your business.
