At Axe Business Funding we listen to your story. We do not have a set criteria that we try and fit you into but rather structure a deal that works best for you and your business, challenged credit and bad credit semi truck financing is what we do! We work with ALL credit types in an effort to get you into the truck or trailer your business needs.
Financing a truck or trailer with good or bad credit should not be more of a headache than its worth. Here is a quick guide to help you understand the programs and items you need to help your transaction get the approval you deserve. To get the biggest amount of money for the least amount of trouble, here’s what you can do.
1. Take a good look at your finances.
Most people shop for a truck before they shop for truck financing. We suggest you do it the other way around for the simple reason that truck prices are unlimited but your budget isn’t.
Knowing how much you can afford is the most important decision in this process. Set a price range and you stick to that range no matter what, it’s easier to narrow down your options to the trucks that serve your needs and are easier on your bank account.
To calculate the highest amount you can realistically afford to pay per month, you need to know:
- Your monthly income before taxes. How much do you earn every month before taxes are deducted?
- Your trade-in value. If you have a vehicle that you can swap for the truck at a dealership, how much will the dealer pay for it?
2. Get your business paperwork together.
If the truck is for commercial or business use, you’ll have to submit proof of business paperwork. The “proof” depends on what type of business you have. For example:
- If you have a new sole proprietorship/partnership, you have to present either an Employer Identification Number (EIN) or a Doing Business As (DBA) name to your lender.
- If you have an old sole proprietorship/partnership (that is, your business has been running for at least a year), you can submit your IRS Schedule C as a sole proprietorship with at least one year of income or an IRS Schedule K-1 as a partnership.
- If you run an LLC or corporation, you simply have to print out a record of your business from your state’s Secretary of State website.
Aside from proof of business, you might have to submit other documents to show that you have the ability and authority to pay off your loan. Business bank statements are usually used as a snap shot of the business income and reserves. Having the last 3 to 6 months statements are useful.
3. Work out your down payment.
It’s hard to pin down an exact answer to “How much will my down payment be?” However, there are a few factors guaranteed to bump up your initial expenses.
- You have a low credit score. Generally, a credit score above 700 is considered “good.” Anything below that will usually require more down payment. 700+ Credit is usually 10% down
- You’re a new business. New business owners don’t have consistent cash flows yet, so they’re considered credit risks. The credit score needed is higher and the down can be roughly 15%.
- You’re an owner-operator. Owner-operators usually own just one truck. If that one truck goes down, so does the owner-operator’s ability to pay off their loans. These deals usually are 15-25% down
- You have a sub 620 credit score. Scores below this are considered “high risk” or “challenged credit” transactions. These transactions are risky for the lender and to lomit their risk require a larger down payment. Usually ranging from 20-40%
Luckily, these factors can offset each other. For example, if you have a low credit score but your business has been going strong for at least 2 years, your down payment will be lower than that of a person who has poor credit and has been in business for less than a year.
4. Choose the truck you want to finance.
Lenders won’t just finance any truck. They’ll also look at whether it’s new or used, whether it’s a dump truck or a semi, and whether the truck is worth the loan they’ll be handing out. You can try to remember all of this or you can put yourself in the lender’s shoes: If you were them, would you finance the truck you have in mind?
Of course, money shouldn’t be your only consideration. You should also look at the size of the truck, how much mileage it has (if it’s used), how fuel-efficient it is (since gas is a regular expense for any vehicle), and other features that’ll affect how you use it. The older the truck the higher the risk because older trucks breakdown and don’t hold as much value. Most banks want trucks no older than 4 years, other lenders will go out 10 years on the age of the truck.
The good news is that Axe Business Funding can work with ALL credit types from gread credit to bad credit customers. We can work with any dealership and some Private Seller transactions as well. We will help you not only get the truck or trailer you need but put you on a path to bettering your credit and strengthening your business for the next deal.