Semi-Truck Financing With Bad Credit
Are you in the market for a semi-truck or trailer, but your credit is not the greatest? Go Capital can help you get the semi-truck or trailer that you need. Whether you are becoming an owner-operator or trying to expand your fleet by one, here are some answers to some questions you may have regarding your credit.
How Can I Finance a Semi-Truck With Bad Credit?
Getting yourself a big rig with bad credit can be difficult, but it can be done.
There are many factors considered when someone decides to loan out money. A detailed but incomplete list of these for loaning to a trucking business include:
- Credit score
- Interest rate
- Down payment percentage (loan to value ratio)
- Loan duration
- Proof of income (debt to income ratio)
- Length of credit history
- Credit utilization ratio
- Number of cosigners
- Time in business
- Owner driving experience
- Age and mileage of the truck/trailer
- Mortgage amount and pay history
- Unpaid child support or tax liens
- Recent hard credit checks (past two years)
Provided that you have enough strength in other areas, such as a higher down payment or proof of being in business for a long time, you can get a loan despite having less-than-desirable credit.
Go Capital provides semi-truck and trailer funding. Our terms include:
- Used semi-truck or trailer
- No mileage restrictions
- Fund up to $25k
- Low down payments
- 1+ year time in business
- 500+ FICO credit score
What Credit Score is Needed to Buy A Semi-Truck?
There are many things that determine whether or not you can purchase a semi-truck. Theoretically, if you had a 100% down payment (also known as paying in cash), your credit score could be zero and you could still get the truck!
Think of getting financing for a big rig or trailer as a balancing act between many pillars. Some of your pillars may be stronger (down payment percentage, interest rate, loan duration, credit score, etc.), and others may be weaker, but what matters is that all the pillars are able to keep the roof up!
Is it Hard to Get Financing For a Semi-Truck?
Normally we would say no, but in 2021 with the shortage of semiconductors and worker strikes that are reducing the production of new commercial vehicles, big rigs are harder and harder to come by on the market. Even used 18 wheelers are getting bought up!
If you need to get a big truck for your business, now is the time to get them before they are all gone!
But for financing, lenders have different lending deals based on the things that we mentioned before. Simply put, if you have a particular scenario that looks good to creditors, they will be lining up to give you the financing you need!
Can I Buy a Semi-Truck With No Money Down?
It is possible, but not easy. Lenders prefer a down payment because the loanee has skin in the game, meaning they are more likely to take good care of the truck and make proper payments on time.
Having no money down on a semi-truck loan is usually reserved for only the most trustworthy drivers in the industry. This often takes years of consistent payments on previous trucks, such as Peterbilt and Mack trucks, that had down payment requirements.
You might also hear about “upfront” payments. These are different from down payments because upfront payments decrease the length of the loan rather than the payment for each month. These are generally used by people who want a nonstandard pay period, such as 53 or 22 months.
Another thing to consider is a balloon payment instead of a down payment. Balloon payments are like down payments, but happen at the end of a loan rather than the start. This is an alternative that some lenders may consider to a down payment if you can prove that your business will make more money as time moves forward.
To get a loan with a bad credit score and no money down at all will often put it in the subprime category of loans, where the interest rate makes it a very expensive deal.
What Are Semi-Truck Financing Requirements?
Lenders have different requirements to fund a commercial vehicle. Even the type of vehicle, be it a Freightliner or a Volvo truck, can make all of the difference.
For Go Capital, we require:
- Used semi-truck or trailer
- No mileage restrictions
- Fund up to $25k
- Low down payments
- 1+ year time in business
- 500+ FICO credit score
An alternative that may work for you instead is a semi-truck lease. Instead of owning the vehicle outright, you have the company buy it and you pay them to use it over time, paying the remaining value of the vehicle at the end of the term if you wish to purchase it outright. Using a lease agreement and then not opting to purchase the equipment at the end of the term is a way to consistently upgrade to new trucks as more technology advancements make trucks more efficient.
The Bottom Line
People want all possible benefits of a loan, but low-interest, no down payment loans for people with imperfect credit are scarce, especially in today’s trucking market where demand exceeds supply. To get the best loan you can, leverage the positive aspects of your credit and work on improving the others. Taking a high-interest loan can be considered an investment in this regard, as fulfilling the loan will boost your credit score and allow you to take on lower interest loans in the future. Work hard to raise your credit and work your way up to a stronger business!
About Go Capital
Go Capital is a trusted funding source for commercial trucks and trailers, and we service most types of credits.
Whether you are looking for your first semi-truck or trailer, or if you are looking to expand your fleet, we can help you fund it.
We have special focus on small and medium-sized businesses who are looking to generate more cash flow for their business than they currently do. If this sounds like you, read on below to see how we can get your business some equipment!
