If you are considering starting a trucking business, the first thing to note is that how financing works for commercial trucks is not the same as financing for a personal vehicle. This is with regards to cost and where to look. Whereas personal vehicle loans usually carry interest rates of below 5%, with truck finance, the interest rate is between 5% and 30%. Also, if you want a personal car loan, you can simply go to a bank. This is different with trucks; banks do not give loans to most truck businesses as they are associated with a high failure rate. However, you can find alternative lenders whose main focus is on truck financing. Below are some of the types of finance you can consider.
Hire Purchase
With this type, the purchase cost is normally spread over a period of three to five years. The agreement will require you to make a deposit first which will then be followed by payments on a regular basis. Those payments basically cover the entire capital cost of the vehicle, as well as interest and fees. You will get ownership of the vehicle at the end of the contract.
Truck Leasing
There is also a lower cost alternative and that is a commercial truck lease. There are a number of benefits that come with getting a truck lease. One benefit is that the operating lease as well as rental payments will be fully tax deductible. You will not be required to pay a huge upfront deposit and because the rental payments will be fixed for the duration of the contract, it is easier to budget.
Advantages of Using a Finance Broker for Truck Finance
If you are thinking of applying for a truck loan, the best thing to do is to approach a finance broker. There are several benefits of using a finance broker. One of the advantages is that you have a higher chance of getting the loan application approved. These brokers are experts in the area of applying and getting finance; this is so even when the situation seems difficult. They also save you energy and time. It is their job to take care of everything while you focus on other commitments.