The interwebs, in all their glory, tell you approximately nothing about this key question that you’ll need answered to start making some plans.
To be fair, if you were to click around page 1 of your favorite search engine, you’ll see some generous souls offering up sample payments.
1. Can You Finance a Box or Straight Truck With Good Credit?
With good credit, you’re in like Flynn, but there is a little bit of confusion about what “good credit” means.
- Credit score 650+
- At least a few years credit history
- “Comp borrowing” – having made payments on a loan in the past few years on something with wheels
Assuming 2 or more years in business (we’ll go over startups in a second) here are some approximate numbers for when you finance a truck .
Note: We’re going over payments assuming a $50,000 truck paid back over 5 years, and with no balloon payment at the end. Payments could be made cheaper with a lease – but you’d owe money at the end of the payments if you wanted to keep the truck.
With good credit (or a strong cosigner) new businesses can usually get the equipment they need, but payments offered will make it seem like you were a bad credit risk or something.
Payments are high for startups, but as you can see if you’ve got good credit there’s usually no problem in being approved.
As credit gets uglier, you have to be more creative to score financing. but there are several more ways to get the financing you need for your business, such as.
2. Cash flow based equipment financing
Plenty of very viable businesses exist that are not candidates for low-rate financing, but have enough online installment loans New Mexico revenues that they can still qualify.
What this means is if you are buying a $50,000 truck, and your business does $50,000 or more in monthly revenues (as shown on your bank statements) in most cases you will qualify.
The typical payments on a $50k vehicle with a cash flow based model are around $2,275 based on a three-year term.
3. Bad Credit Box Truck Loans With Collateral
We often talk to business owners that have had “life” happen to them (and their credit trashed) in ways such as:
- Struggling during the recession
- Medical problems
While the easy (cheaper) financing options may not be available after some of these events, collateral can fix almost anything.
Business equipment, vehicles, or real estate that have a liquidation value (the amount the equipment would sale for at an auction) at least equal to the cost of the equipment you’re buying, virtually anyone can qualify.
When a deal has to be structured around collateral, rates are higher, but they really depend on your credit score. Find out what your rates will be here .
Also, payments will be higher as collateral based deals can rarely be stretched longer than 36 months. Let’s go back to our $50,000 purchase, but we’ll look at a 36 month term.
Since you probably don’t have time to waste being lied to (or want to be scammed) those are the real payments no matter who you use when you’ve got some uglies in your credit file.
4. Bad Credit Box Truck Leasing With Big Down Payments
The good thing about box trucks (or any business equipment that has tires) is that they hold their values pretty well.
In most cases, if you stop making payments, the lender can recover about half of what you paid for the truck.
Payments are exactly the same on a dollar-for-dollar basis as what we just went over for collateral-based solutions, except since you’re borrowing 1/2 the amount, payments are 50% lower:
5. Story Financing
. if your credit score is 550 or above and you have two or more years in business, story financing might work for you.
Story lenders look for some strength to justify the deal, whether a down payment (but not always 50%) or collateral (but not always 100%) or some other method – and payments will be somewhere in the middle between all the other formats we just discussed.
If you have a credit score below 600, zero down payment, no collateral, and under $1,000 to your name, at least one of those issues has to be fixed before anyone will consider financing your purchase.