Commercial Truck Financing
Go beyond bank loans to finance major fleet purchases
The cost of acquiring a commercial truck is a significant investment that can strain a small business's budget. The good news is that there are financing options available beyond traditional bank loans.Your best options include:
- Specialized leasing companies and vehicle manufacturers
- Small-business loans
- Factoring
Leasing is the most common form of commercial truck loan, and the simplest. After your application has been submitted, a proposal is usually returned to you within two business days.
If your credit is approved and the terms are agreeable, you complete the necessary documentation and provide any required up-front cash. Then you make arrangements to take delivery of your truck.
Many vehicle financiers provide flexible terms, including loan programs tailored to the needs of their business clients. Some will defer payments for the first six months. Others allow your payments to grow as your business does. Some even allow you to skip payments without penalty if your business is slow or seasonal. The best part: Commercial truck financing via leasing is often tax deductible.
Regional financing companies also abound, while big names such as Penske and Ryder provide financing to businesses nationwide. Truck manufacturers such as Mack provide specialty truck financing options directly.
Building on your small-business loan
If you already have a small-business loan, your bank may look favorably on a request for truck financing. The durability of large trucks makes them a worthwhile investment for many businesses. Their long life span also makes them a safe bet for banks.
Trucks maintain a high resale value for years, which mitigates the risk for lenders. If a business goes under, repossessing the truck will salvage most of the loan's value. Not a happy prospect, to be sure, but one that motivates banks to lend.
Consider factoring
If you have healthy income but not enough cash on hand to finance a truck purchase or loan, factoring might be your best option.
Factoring companies recognize the value of a solid revenue stream, even if your big paydays are on the horizon. By leveraging your accounts receivable, you can structure a deal that enables you to cover your transportation costs now.
Most factoring contracts run between six and 12 months.The longer the term you agree to, the better your rate. But don't overdo it. A long contract can lock you in and limit your flexibility, especially during lean times.
Buy a truck with a few miles on it
If your budget doesn't allow for anything shiny and new, you can save by purchasing a used vehicle. Once again, the durability of a solidly built truck plays to your advantage on both the pricing and financing levels.
Jason Agard is a senior associate editor at Business.com, the web's largest business-to-business searchable directory and home to more than 35,000 business how-to guides.
Find commercial truck financing services and providers on Business.com, the Internet's largest business-to-business website. Business.com reaches 40+ million users monthly online and is home to more than 35,000 how-to guides that help small business owners solve problems and find opportunities.
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Copyright © 2011 Business.com, Inc. All Rights Reserved.