Many carrier companies are in operation across the United States today, and most of them skew on the smaller side. Larger companies offer trains or planes for shipper clients, while smaller businesses offer modest but hardworking fleets of semi trucks to get the job done. After all, semi trucks can travel to many places that larger vehicles cannot, and they are much more affordable than a ship or a jumbo jet. All the same, a carrier company’s manager must be careful about commercial truck financing, and bad credit may make it difficult to secure bank loans. Fortunately, semi truck financing companies are there to help, and a carrier manager may find them by looking up a phrase such as “credit score needed to buy semi truck”. Truck loans operate somewhat differently than conventional vehicle loans, though, and searching “credit score needed to buy semi truck” requires some knowledge of how this all works. When you look up “credit score needed to buy semi truck”, what comes next?
Carrier Companies
Most carrier companies today are on the smaller side, and small businesses are defined as those with 500 or fewer employees. In fact, they make up 99.7% of all business conducted in the United States. This is a total of 28.8 million small businesses. The managers for these companies are responsible for loans and finances, and they do not always handle these matters correctly. In fact, some 30% of businesses fail because the owner ran out of money, or perhaps declared bankruptcy. Nearly half of all business owners, 45% of them, don’t even know that their business has its own credit score, which is different from a personal credit score. Finally, around 60% of smaller business owners say that they aren’t knowledgeable enough about accounting or finances. Fortunately, the owner of a carrier company can turn to online sources to find out more, such as “credit score needed to buy semi truck” queries online.
Getting a Loan
Securing a truck loan is not quite the same as getting a loan from a regular bank. In many cases, a bank loan will not even be a viable option, since banks are rather strict about how they lend money. A carrier owner with poor personal or business credit may face many loan application rejections, and big banks only approve around 26% of small business loans. Instead, that carrier company owner may turn to specialized truck loan companies, who have more generous terms. There are still some requirements for the borrower to meet, but overall, this option may be much easier to pursue.
It may be noted that a regular vehicle’s loan interest rate is close to 5%, bu truck loans may be as high as 30% in some cases. Bank don’t like the high failure rate of carrier companies and thus refuse many loan applications, but truck financing companies know the risks and offer secured loans so everyone can get something out of the deal. These lenders may help a borrower finance or lease a truck, or even lend them money for vehicle repairs.
The truck itself will serve as collateral for the loan, making it a secure loan and therefore more attractive to the lender. A borrower, if they have good credit and solid profits in their company, may get the truck financed 100% at a low interest rate, while borrowers with poor credit or minimal profits will face higher interest rates.
The truck itself may impact the loan. A newer truck in good condition is better than an old one that may break down, while a borrower may face higher interest rates if the truck is a semi that will travel a lot (and thus suffer wear and tear). When getting a loan based on a truck’s value, the borrower must note details to the lender such as the truck’s current mileage, age, model and make, intended use, recent repairs, and several clear photographs of the vehicle. What is more, the lender will assess the borrower’s recent activity, and look for red flags such as bankruptcy, delinquency in paying off previous loans, or getting vehicles repossessed in the past. Newer companies have minimal credit or business histories and thus may face somewhat steeper obstacles to securing a truck loan.