Last Updated on May 21, 2021 by MoneyVisual
Obviously, you know what commercial vehicle loans serve. But what’s exactly you should know before getting heavy-duty commercial vehicle finance? No? Don’t strain too much. We’re here to guide you with the purpose of these loans, document information, and many other relevant things.
When it comes to a commercial vehicle loan, it seems a very complicated process. You need to produce many documents such as income proof, business proof, and many more. Why so? Because commercial vehicles are very spendy.
What if you default on heavy-duty commercial vehicle finance? That’s why most of the lenders find it too risky to provide heavy equipment loans.
That’s why you have to face more scrutiny from lenders. Let’s dig out what you should know before getting a commercial vehicle loan.
Here we are to tell you all the ins and outs of the heavy-duty commercial truck financing! You may also have a look into what lenders generally check before lending a commercial vehicle loan.
What You Should Know Before Getting a Commercial Vehicle Loan
1. Know-How Much Money You Need
It’s a wise move if you have estimated how much money you require for the downpayment and another documentation process. Better start prepping early!! Plus, consider the repayment options, interest rates, and length of the loan as well.
2. Decide Which Commercial Vehicle You Want to Buy
Another thing you need to consider which the type of commercial vehicle you need to buy. Research well which type of commercial vehicle will be the best suited for your business needs.
3. Which Documents and Revenue Proof You Need
Are you wondering what documents you need handy for the commercial vehicle loan? Worry not, We will guide you step by step. You need to show proof of whether you have got your business registered or not. Let’s discuss the list the lenders may be interested in checking:
- LLCs and corporations
- Existing sole proprietorship and partnerships
- New sole proprietorship or partnerships
- Sales and revenue
- Business age
- Business credit
- Insurance information
Now that we got to know and understand what documents and revenue proof that we require to show the lenders. Let’s take a deep dive into the things we expect to have our loan approved.
3.1) Cash Flow Forecast
You may hire a professional accountant to project a cash flow forecast. A comprehensive cash flow statement helps the lenders to take an informed decision regarding your commercial vehicle loan application. Let’s check out what the lenders look into your cash flow forecast.
3.2) Time in Business
You are lucky enough if you have been running your business for at least 2 years. What’s the point here?
Inevitably, your application becomes more appealing!! Because your financial statements represent your current financial position. That’s enough to get heavy-duty commercial vehicle finance.
You may like to Read: Business Equipment Financing
3.3) Assets and Liabilities
What lenders consider the most is your A & L statement. Let’s discuss the major points that the lenders evaluate:
- Current Debts
- Current Repayments
Sometimes the lender demands security over the vehicle you purchase. That may be your commercial property or assets.
3.5) Sales & Revenue
Are you running a successful business? Lenders often check whether your company generates revenue on a regular basis. Well, it makes your application stand out among others.
3.6) Credit Rating
Your credit score is the key to secure commercial vehicle loans. Believe it! You can get a better interest rate on your heavy-duty commercial vehicles to finance. In most of the cases, you can skip a downpayment. What’s the best credit score? Well, it should be more than 600.
Don’t get disheartened if you haven’t a good credit score. Without a good credit score, you can get your commercial vehicle loan approved. What you have to do is to pay a larger down payment. Your credit score affects four major things:
- Downpayment: The lenders check how much you have for a downpayment.
- Long Term: The length of the loan depends on how much you have to pay for your commercial vehicle loan.
- Interest Rate: The length of the loan impacts the interest rate. The longer it is, the more you will pay the interest.
- Monthly payment: if the length of the loan is longer, it lowers your monthly payment.
4. Choose an Alternative Lender
Difficult to find a lender nowadays? Certainly not! Many of the local lenders and online lenders are available for a truck loan in Canada. What matters the most? Well, choose the type of truck you want to buy and which lending company you are going with.
These lending companies lessen your burden a lot. They will be successful to get your loan approved if you meet all the requirements.
Bottom Line on Commercial Vehicle Financing
Hopefully, we have covered all the things you need to know before getting a commercial vehicle loan. Through this guide, you have got an idea of how you should prepare before applying for a heavy-duty commercial vehicle finance.
Bear in mind! You need to check where you stand financially. What will be the down payment, interest rates, and monthly payments? It entirely depends on how much savings you have for a commercial vehicle loan.
This article provides you with precise, transparent, and complete information regarding commercial vehicle loans. Surely, it will be helpful to set up your goals as per your business needs and funds. Go ahead for commercial vehicle loan application! Expectantly, you will be able to get your commercial vehicle loan approved.