Purchasing a used semi truck can be the beginning of a lucrative and successful career in the trucking industry. Many individuals aspire to owning their own truck and running their own business. But how do you start to make this dream a reality if you have credit issues or a lack of capital? It is possible. It just takes some thought, planning and action to make it a reality. Here are some ideas on steps you can take to obtain approval for used truck financing.
Get Your Credit in Order Before Applying for a Loan
Check your credit score. If you know it isn’t good, start to take actions now to improve it. Make the effort to become current on all of your credit obligations. Bringing your accounts back in good standing has a very positive effect when applying to a lender for a used semi truck loan. They can see you’re making an effort to get back on track, and that gives them a good sense of your commitment.
What is Your Credit History?
If you have a low credit score because of some past credit issues, you may still be able to obtain used truck financing, but you will probably have a higher down payment and higher interest rate. The good news is that as you start to make your monthly used truck payments in a timely fashion, your credit score will improve. When it comes time for a loan for your next used semi truck, your interest rate may be lowered because of your improved credit history.
No Credit History?
What if you don’t have a credit history yet? Start to get one. One good way is to start using a credit card for purchases. The payments you make on a credit card are tracked by the credit bureaus so you can eventually build a good history of timely payments. Another great way to begin building a credit history is through the financing of a used semi truck. In many cases, used truck leasing with a trucking company may not be building a credit history, even if you are making the payments. Obtain a loan from a lender that reports your payments to a credit bureau, so when you pay off that loan, your credit is improved.
Purchase a Used Semi Truck You Can Afford
You need to be able to show a potential lender that your monthly truck payments will be within a range where you can profitably operate your business. If your truck payment is too high, a lender may not be willing to give you a loan. They want you to be successful so you can make your payments on the money they are lending you. Remember, once you show a successful payment history and success in your business, you can repair your credit history, and your next used semi truck can be one much closer to the one you think you “want” now. For example, consider a cost-friendly, used , Kenworth T660, Peterbilt 386, Freightliner Cascadia or Volvo VNL670 that is three to five years old. Many customers find these trucks to be a great investment.
Look for Special Programs from Used Truck Dealers and Lenders
Some companies and lenders offer special programs to help first time used commercial truck buyers, or those with credit issues, to purchase and finance a used truck. These programs can sometimes be a great help to get someone over the hurdle and be approved. For example, most dealers offer a number of programs to help used semi truck buyers through special truck purchases, first time buyer programs, programs for veterans, down payment match programs, and more. You should ask about these kinds of programs where you are considering a used truck purchase. They can often make the difference in getting someone into a used semi truck or not.
And don’t forget a used truck warranty. A good warranty will protect your purchase, save you from costly expenses and give you peace of mind moving forward.
Want Loan Approval? Be Creative
Individuals with poor credit or very little down payment often need to structure a “creative” finance package before lenders will approve it. Can you pledge other collateral in addition to the used semi truck itself? If you have other assets, like another used truck, a trailer or other titled vehicle, these assets can sometimes be pledged against the loan. Or, an individual with poor credit or low down payment can use an additional co-signer with good credit to get a used semi truck loan approved. Most lenders can often help you be creative when structuring a loan using the additional resources you may have.
Don’t Despair - Talk to an Expert
Pelagic Capital works with thousands of first-time buyers or buyers with challenging credit or little down payment. The finance professionals at Pelagic Capital have over 20 years of experience working with customers who have less than perfect credit. If you are in the market for a used semi truck, you don’t have to go it alone. The finance professionals at Pelagic can provide the expertise and understanding to help.
"It's always satisfying helping someone purchase a used semi truck and start a business. And what I have found is that many of our customers with initial personal credit issues have turned out to be some of the best paying and most successful customers I know."
Greg Minsky, Managing Director, Pelagic Capital