Ways To Get A Commercial Truck When Your Business Has Yet To Establish Credit
Typically, when your business needs to purchase commercial trucks, you can apply for a loan using the credit rating for the business. However, if you have a new business, you likely haven't established a credit rating yet. This can make it difficult when you need to get a loan for large items, such as commercial trucks. Fortunately though, there still are options available to you and your business if you need a commercial truck but don't have established business credit yet. Here are a few of those options.
A Third Party Guaranty
If you are looking to purchase commercial trucks for sale, but your business lacks the credit to obtain financing, one option available is to get a third party guaranty. Typically, you can act as your own third party guaranty if your credit is good, or you can ask a family member or friend. A third party guaranty is a co-signer of sorts. Basically, if your business is unable to pay off the loan, the finance company will turn toward the guarantor to pay off the loan. Most business owners keep their personal finances different from their business finances. However, with this type of loan, you can be personally sued if you are a third party guarantor and you fail to make the payments. So it is important that this loan is only used if you are positive you can afford the payments should your business fail to thrive and produce enough money to pay down the debt. However, unlike when you co-sign on a vehicle, this type of loan will not show up on your personal credit report unless the business defaults and doesn't make the payments. This helps ensure you aren't increasing your personal debt to income ratio.
A Closed-End Lease
If your business is in need of a commercial truck and you don't have credit established, another option may be to lease a commercial truck. A closed-end lease gives you use of the commercial truck for a specified period of time. During that time, you pay to use the truck. When this time frame is up, you will then have the option of buying the truck from the company you were leasing it through, or walking away. The amount that you have to pay at the end of the lease is determined at the time the lease is taken out, so the price may or may not be fair market value depending on whether commercial trucks go up or down in value. However, this option allows you to use a commercial truck that you need, while establishing credit. Once your business credit is established, you can finance the leased truck at the end of the closed-end lease, or finance a new truck.
Put Down a Hefty Down Payment
The last way you can go about getting a commercial truck for your business when it has yet to establish its credit is to be prepared to put down a hefty down payment. Lenders typically look at your business credit to determine how risky it is to loan you money. However, if they can't look at your credit, they may still be able to lend you money if you put down a hefty down payment. This is because a hefty down payment may give you some equity in the truck. If you were to fail to make your payments, a finance company can repossess and sell the car to get their money back. It is unlikely a finance company can get full value for the truck at auction, which means they may take a hit if you don't put money down. However, if you have a substantial down payment, they can likely recoup what you owe if they are forced to go this route. This makes you less of a risk and makes them more likely to loan to you. Be prepared to put up to 25 percent down on a commercial truck if your business has no established or poor credit.
If your business needs a commercial truck, but you haven't yet established credit, you may still be able to get the truck you need. Using a third party guaranty, doing a closed-end lease or putting down a hefty down payment can get you the truck you need without having established business credit. For help with finding commercial trucks for sale, check out websites like http://www.arrowtruck.com/.