Understanding Commercial Truck Financing
Commercial trucks are not your typical low-budget investments. They require you to save up tens of thousands of dollars to make your purchase, but they are truly a money-making machine for your business. Let’s face it, not everyone has a significant amount of money to afford to buy them up-front. Many business owners find the solution through financing, and you may want to consider this option too.
Utility Trailer of Washington has gathered up everything you need to know about commercial truck financing. With this guide, you’ll expand your fleet of machines quicker and smarter. We are your premier truck dealer throughout Washington, also serving Anchorage, AK.
Types Of Loans
A commercial truck can be financed through two types of loans, generally. Each one has its benefits and requirements. It is important that you understand and analyze them according to your company’s financial situation to make the best decision possible.
Secured loans use the purchased commercial truck as collateral, which means it can be repossessed to make up for missing payments on the loan. These types of loans see lower interest rates and higher borrow rates. On the other hand, unsecured loans usually have higher rates, but the purchased truck is not considered collateral if you miss payments.
The Rates
Most financial institutions usually charge annual interest rates ranging between 5% and 30%, which depends on the borrower’s credit rating, the financial state of the business, and the type and condition of the truck. These interest rates are usually fixed, so you’ll have to pay a fixed monthly amount over anywhere between two to fifteen years based on your loan’s tenure.
Factor In Your Costs
Make some calculations to figure out the interest that will build up over time to have a clear idea if you’ll be able to meet your payments. Don’t forget to factor in other costs, like the application fee, credit check charges, and the appraisal fee to evaluate the fair market price of the truck.
These can significantly impact the cost of your loan, so you’ll want to ask the lender about the annual percentage rate of the loan to find the actual cost, which includes all fees. Check your loan terms carefully and make sure that you understand your obligations before you sign on the dotted line.
Your Options
If for whatever reason you don’t qualify for a loan in your local or national bank, don’t be discouraged. There are plenty of other doors you can knock on, such as specialized truck financing companies and online lenders, who are more flexible.
These are other good options you’ll want to consider. Though they charge higher rates as compared to banks and tend to provide shorter terms, the advantage here is that there will be fewer qualification requirements, a simpler application process, and you’ll probably get your funds quickly.
We hope this guide helps you navigate through your financing process for a high-quality commercial truck. If you still have questions or want assistance, contact us, or stop by Utility Trailer of Washington. We are proud to serve Washington and Anchorage, AK.