If you need a truck loan to pay for your vehicle(s) in order to kickstart a business or a side project, you’ve come to the right place. In this article, I break down all the details that have to do with truck loans, how to get them, how to pay them back, and whether you should take one out in the first place. Let’s delve into it!
What Is a Truck Loan?
A truck loan is a payment made to facilitate your purchase of a commercial vehicle for business purposes, which includes water trucks, refuse trucks, catering trucks, hauliers, flatbeds, utility trucks, vans, heavy-duty trailers, walking floor trailers, and dump trucks.
These loans are excellent for purchasing or refinancing the purchase of commercial trucks, which can require a considerable budget, especially with overhead expenses. So, how can these loans be handy?
When Is a Truck Loan Beneficial?
In our modern economy, trucking is essential, especially with the ever-increasing consumerism and need to deliver products and goods from place to place all the time. This means that handling and mastering the trucking industry could be a potential goldmine.
However, the business is quite hard to manage, and a huge part of it depends on the trucks and truck-financing aspect, which is why a lot of business owners opt for truck loans to get on top of their expenses and payrolls.
Bear in mind though, that like any loans for breast implants, truck loans are only as beneficial as your credit score is. Naturally, with higher credit scores, you get less interest, and so more flexibility with your regular payments and loan term.
Also, some wedding loans Australia can be quite appealing, with 72-month or 84-month terms. But you have to ask yourself whether the extra interest you’ll be paying is worth the extension. For example, for each $20,000 motorcycle loan you take out, you’ll have to pay around $2,372 in interest if the rate is 4.5% and the term is 60 months. On the other hand, the interest you have to pay will be $3,352 if you take the bad credit medical loan for 84 months. So, is that extra $1,000 really worth it?
Not to mention, the accumulation of interest gets even worse with credit scores that aren’t up to par, which would be around 660 if your interest is below 6%, according to Experian.
What Truck Financing Issues Should I Plan?
When it comes to truck financing, there are plenty of aspects that you have to pay attention to, and with which a truck loan would be incredibly helpful, including the following:
Each truck in your fleet would require regular maintenance if you want to keep it performing well and efficiently, which is the best practice if you actually want to be making a good profit. This includes changing tires, oil changes, and providing the engine with the maintenance it needs with a set schedule.
Sometimes, against all our hopes, a truck (even if well-maintained) might require replacement parts. For this, and for plenty of other pieces of equipment, a truck loan would be a lifesaver.
To keep the employees loyal and enthusiastic for work, you have to be paying them well, which is another large and important portion of the expenses of a trucking business. A truck loan can provide you with that extra funding you need to make the payrolls on time as well as hire additional employees to maximise the efficiency of work.
Unfactored Routine Expenses
In the everyday trucking business routine, there are some expenses that a business owner might overlook, including fueling the vehicles and toll payments during long trips. Secured pool loans can help secure this area in order for you not to feel like you’ve encountered a hiccup.
Licensing Fees and Taxes
Of course, you can’t forget about the cost of getting a trucking licence and the associated taxes. Running your business illegally puts you at the risk of having your business shut down, having huge fines imposed on you, or even getting arrested.
So, make sure that each one of your truckers has a commercial driver’s license (CDL) and that your business is registered and complying with the rules of the application process.
What Are the Ways That I Can Finance a Truck Loan?
You can finance and expand your trucking business in plenty of ways, including the following:
Factoring of Invoices
If you borrow using invoice factoring, you can sell your unpaid invoices to a factoring company for cash. This company would then reduce the fees (a percentage of the original amount of the invoice) and give you upfront cash. With all the account receivables responsibility transferred to you, you’ll have to collect from the customers directly, so bear that in mind.
If you finance your trucking business using your working capital, you agree to give a portion of your revenue to your lender to pay back the debt, and thus, the loan amount would depend on the amount of revenue you’re expected to generate, which gives you more room to take out larger solar panel loans. However, not all businesses qualify for approval for these types of mortgage loans.
Conventional Bank Loans
Opting for the old-school bank loan method means that you’ll get a lump-sum amount of money and then pay a portion (interest) after. However, with the risky nature of a blooming business, it might not be very easy for a trucking business to land weekend loans bad credit from a bank in the traditional sense, except if the owner has an appealingly high credit score.
Luckily, there’s a whole sector of financing companies, online and offline, dedicated to financing secured phone loans. These are incredibly helpful and effective when it comes to getting the money you need to start your trucking business, but they have plenty of regulations and higher risks than other funding methods.
That’s why they’re a good solution if you have an eye for detail and can take care of all the fine print attached with the contract.
Tip: Make sure that the lending company is concerned with your credit score and your ability to pay the money back; otherwise, it might be a scam or a loan shark on the hunt.
Pros of Truck Loans
When it comes to taking out a truck loan to finance your business, you’ll highly appreciate the fact that these loans:
- Give you flexibility and cover any expenses you may have overlooked, therefore making you ready to take on more battles.
- Give you ownership of your means of production, so they’re a better alternative than leasing or renting.
- Allow you to grow your business exponentially faster. With more capital, you’ll definitely be able to generate more revenue and profits over a shorter period of time.
Cons of Truck Loans
On the downside, there are some aspects you have to take into consideration when opting for a truck loan, including:
- The fact that you have to provide collateral, so, this means that you would already need to have ownership of a high-value item, like real estate, a personal car, stocks, etc.
- Having high-interest rates, which could accumulate to a crippling extent, especially if you don’t make all your payments on time.
- The requirement of solid credit history as well as a credit history check. While it’s true that this shows that the company has integrity and is, indeed, looking to help, it could make the process of actually getting the loan for engagement ring a little more challenging. And let’s be real, no one likes credit history checks.
To qualify for truck loans, you’ll have to prove to the lender that you have been or will be earning worthy revenues and present a solid credit score. Invariably, the longer you’ve been running your business, the more trustworthy it will be, and the more likely that you’ll be getting that loan.