Things you should understand before buying a truck through commercial financing

by

johndavide

If you are in the market for a new or used commercial truck or commercial trailer, there are a few things that you should be sure you understand prior to making a purchase through commercial financing.

First, you should know that structure of your financial transaction will be prepared according to your credit score and your financial situation. This means that the rate that you receive will be determined based on your personal credit score and the amount of cash flow that you have flowing through your business. Many commercial truck lenders have set standards of credit criteria that must be met in order to receive financing. At a lot of the different commercial truck lenders the minimum credit score allowed is 650. With this in mind, you will be able to select a commercial finance company whose credit requirements you can meet. Another thing that you should understand is the age restrictions upheld by many commercial lending institutions. A lot of the commercial truck financing companies have age restrictions. This is really to protect their self interest in the vehicles, which is certainly understandable from a business perspective. Most the time, the age restrictions are as follows: Ten years or newer for a commercial truck; Seven years or newer for a commercial trailer. Age restrictions on commercial equipment are something that is important for you to understand when you are considering buying a truck or trailer by using commercial financing. You want to be sure that the equipment that you choose will fall under the age restriction guidelines of your commercial truck lender. Otherwise, you will have to select new equipment, or a new lender, and this could significantly set back your funding time frame. Another thing for you to know before buying a with commercial financing

is the difference between a commercial vehicle loan and a commercial vehicle lease. Many commercial lending institutions will offer both options, and you may be able to choose which option is going to be best for your business. A commercial vehicle loan will most likely require that you put down a hefty down payment, whereas a commercial vehicle lease will usually only require the first and last months payments up front.

Another difference between a loan and a lease is the way they reflect on your financial statement. A commercial vehicle loan will reflect the entire amount of the purchase as a debt, but with a commercial lease, all that is reflected as debt is your monthly payment not the entire amount of your lease. So, instead of showing that you have a debt of $40,000, your financial statement will only reflect whatever amount your monthly payment is, for example, $900. Before applying for commercial truck financing, be sure that you know how much per month you will be willing to pay for the new equipment because you dont want to over extend yourself. Also, keep in mind how much income you anticipate the new equipment to generate and weigh that against the monthly payment amount. You want to make sure that acquiring new equipment will be beneficial to your cash flow.

John Davide is a professional blogger and financial expert, advising people on various finance related topics including loans and lease. He also writes on issues like

commercial equipment financing

and

commercial vehicle financing

.

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ArticleRich.com