Securing dump truck financing can be done by applying to a local bank lender who specializes in loan programs for business vehicle loans. An important aspect of entering a loan or lease agreement with a bank or financial institution is determining if the truck is considered a qualified asset that could be subject to a loan or lease. Lenders specialize in the type of vehicles they will finance; some will finance semi-trucks, heavy duty trucks and dump, while others will only finance ambulances, limo buses, limos and other vehicles. It is important that the truck applicant approach a suitable lender for his particular type of vehicle.
If the business is well-established, the owner’s personal credit scores from the three major credit reporting bureaus must be in the mid-600s to qualify for a loan, and the prior years’ tax returns must be submitted to a bank or financial institution for consideration of the loan.
After completing and submitting the required loan application forms, the applicant will wait on the approval of the lender who will base his approval on the truck type the buyer is seeking financing for, the credit history, the length of time the applicant has been in business, the kind of business he owns, and the existence and the amount of any available collateral.
For the start-up business, the credit score requirement is 680 points and higher for most banks, and since the business start-up is new, it is considered a risky loan and, as a result, the chances of being financed by the typical bank lending institution is much smaller.
In addition to standard loans, many financial institutions and banks, will also offer lease programs for the financing of dump trucks for sale. With loan financing, the dump truck title will transfer to the buyer after all payments have been completed under the loan agreement, but under the lease program, after all lease payments are completed, the buyer will then have the option to purchase the vehicle and assume the title. Up until this point the leasing option only provided the truck applicant with a rental arrangement. If the higher upfront money required for a loan is not an option for a buyer, he may look into the leasing option that may require only two payments upfront, to as much as 20% of the value of the truck, as a down payment.
Loan terms vary among different lenders. Many loan and lease terms range from thirty-six through sixty months depending on the dump truck age and whether the truck is considered a conversion. If the dump truck chassis’ dump box was replaced, then although the dump box is brand new, the chassis will still be eight or ten years old, for example, and many lenders may not be willing to finance converted dump trucks. Here again, the truck applicant will need to contact the lender to be certain of the lending guidelines, before proceeding with the lengthy application process.
This lengthy application process, the initial money needed to start the loan/lease relationship with the bank or financial institution, the terms, buyout clauses and monthly payments must all be considered by the applicant before he can make a wise business decision to go forward with the loan or lease. In recent times, the complex and lengthy application process has been modified by many lenders to a qualification model that is referred to as an application only program. In these programs, a minimum required credit score is just 575, no prior year’s income tax forms or personal financial statements or any other documents are needed. The amount of loans available run between $20,000 and $250,000 and are mainly intended for established businesses, although some applications may consider start-up businesses. The dump trucks are used as collateral for the loans and in most cases no additional collateral is needed.
Apart from commercial banks and other financial institutions, used dump truck financing can also be secured through dealer financing programs. In this type of financing, the dealer seeks to provide loan and lease financing for his repossessed and other inventory items, so as to provide greater cash flow for his business. The target market is often the start-up business, businesses with bad credit history and even the seasoned business owner may also find good finance options available to him.
Whether the truck applicant wants to replace his dump truck or increase his fleet, dealer financing options make available loan and lease options for most credit situations, loans and leases of up to eighty-four months, loan terms of as much as $250,000 on new and used equipment and may even provide financing nationwide.
Financing options include $1.00 out financing for those who are certain that they will want to own the equipment at the lease’s end, and will take ownership after the payment of $1. Another option is the FMV lease in which the applicant can continue leasing the dump truck at the conclusion of the original lease term, but at a recalculated monthly lease charge based on the fair market value of the truck, or lease on a month by month basis, or purchase the vehicle at a fair market value or return the truck and cancel all obligations. Simple interest loans and 20% residual financing are also possible financing options.
Many dealer financing arrangements are concluded without the buyer providing financial statements or prior years’ tax returns; the approvals can be completed quickly, often within a day and the successful dump truck applicant will get his purchased dump truck.
Commercial truck financing options are quite varied to suit a number of different business situations. The prospective applicant should thoroughly research as many as possible to determine the best option for his business.
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