Commercial trucks are an essential part of many Canadian businesses and ensuring that your commercial fleet has up to date and well-maintained vehicles is key to remaining competitive. Whether your company owns its trucks or leases them, at some point you are likely to require a commercial truck loan.
USES FOR COMMERCIAL TRUCK LOANS
Commercial vehicles are an expensive asset. Depending on the make, size, and features of your vehicles, trucks can cost $80,000 or more. When businesses are looking to upgrade or expand their fleets, many of them will apply for financing from an institution that allows them to pay for their vehicles outright and then make payments back to the lending institution. These means that these businesses can get their new vehicles out on the road right away so that they can start generating revenues to help pay off the truck loan.
Another purpose for a commercial truck loan is to fund repairs and maintenance to existing vehicles in the fleet. For some businesses, being able to extend the life of their current vehicles may be their most cost-effective option. These truck loans can be offered to the company in a lump sum once repairs and upgrades are complete, and the loan can then be paid back in installments
HOW A COMMERCIAL TRUCK LOAN WORKS
A commercial truck finance or loan is a secured loan. This means that the loan is backed up because the truck is collateral for the loan and can be sold to pay the lender back in the event that the borrower is unable or unwilling to pay back the loan. In this sense, it is similar to an auto loan.
The interest rates on a truck finance however do tend to be higher because volatility within the industry makes these loans riskier for the lender. Another major difference between a commercial truck loan and an auto loan is that where with an auto loan you can simply get approved for the maximum amount and select a car afterward, with a truck loan, the approval is specific to the type of truck – so you must know ahead of time the type of truck(s) you would like to purchase or lease.
HOW IS ELIGIBILITY DETETMIND?
There are several factors that lenders will look at when determining eligibility for a truck loan. These include:
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The value of the truck – because the loan will be secured by the vehicle, lenders will place great importance on the truck’s resale value when reviewing the loan application.
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Type of truck – vocational commercial vehicles that will work within a restricted geographical location will tend to get more favourable terms than long-haul trucks which will likely experience more wear and tear.
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Vendor – lenders prefer when the vehicles are being purchased from reputable dealers than from private parties.
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Owner’s personal credit – the better your credit score, the more favourable your rates and terms are likely to be.
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Financial history of the business – lenders will prefer to lend to businesses with a good financial track record and that do not have tax liens or delinquencies.
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Cash position – when a company has a good amount of cash in reservices, lenders will feel more secure in issuing a truck loan.
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Condition of the truck – if purchasing a used truck, the lender will require photos of the truck in order to help assess its condition.
WHY CHOOSE STELLAR LEASING?
If you are looking for a commercial truck loan, working with Stellar Leasing offers many benefits including:
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Fast and flexible truck finance options including lease to own, sale and leaseback, and fleet financing.
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Expert advice on the type of loan most suitable for your business as well as on potential tax benefits.
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Friendly and professional support.
If it is time for your to expand your fleet or replace your existing commercial vehicles, contact us today.