Is It Hard To Get A Truck Loan?

Getting a truck loan isn’t hard, it just really depends on your situation.

You may have credit issues like bad credit scores or no credit score at all, you may not have a stable employment history, or you may not make enough income per month for your desired loan amount. There are many factors that determine whether you’ll get your truck loan and you can make it easy for yourself by doing a little research.

Having a low credit score doesn’t mean you’re bad with credit. You could be a business starting out and have no credit history.

Essentially, you’ll want to have all your financial, insurance, and identification records ready when you start searching for your truck loan. This is so you aren’t scrambling around looking for them when you need them most.

You can easily apply for a truck loan from IAFA. We have connections and access to internal truck companies if you’re looking to finance a new or used truck. Our loan agents have vast knowledge of trucks and trailers so contact us for more information if you need assistance applying for a truck loan.

Keep in mind that investing in a truck loan is a big decision and you want to make sure that you’re financially prepared for the repayments, otherwise, it will impact your business and potential future contracts.

Is It Easier To Finance A New Or Used Truck?

Commercial trucks are expensive to get a loan for in general. There are many different types of trucks and sometimes there is the equipment required to keep the truck running. It is typically easier to finance a new truck than a used truck. This is because it is easier for lenders to determine the value of a new truck compared to a used truck. Newer trucks also have lower interest rates so it seems like the optimal financial choice to make.

How To Get A Truck Loan In Australia

As mentioned above, outstanding credit history is a key factor in easily obtaining a truck loan. Having a good credit history shows loan brokers that you have a sustainable income and pose a low credit risk.

However, if you are a new business, you won’t have any history to show. Some loan brokers require businesses to be well established before approving the truck loan since it significantly increases the chances of the loan being paid back and on time.

There will be financing options even for those of you who do not have any credit history, but the interest rate might be higher. A large down payment can help you with your loan. How much you can pay from the start is a strong consideration truck companies take in determining whether you can meet the repayment obligations and pay off the loan quickly. Most truck loans require at least a 10% down payment.

If you put a good amount down, the higher your chances of getting your loan application approved. You might even be able to obtain a truck loan with a good interest rate, regardless of your credit history. Additionally, some loan policies may require you to have a cosigner if you have a bad credit history.

Getting Started On Your Truck Loan

Before you even start applying for your loan, figure out which truck you want to buy in advance. This will help you budget accordingly and help the truck finance broker figure out which lender and loan policy is best suitable for your situation.

Ideally, you should figure out an estimated amount that you want to borrow so you can calculate and prepare for your down payment and the length of the loan.

One of the biggest factors that play into the approval of a truck loan is your business’s cash flow. If your business has been around for a couple of years and you have the financial records to show your current stable cash flow, then it’s enough for a loan broker to predominantly approve your loan application. You should get your company’s accountant to create a cash flow forecast so it is accurate and includes all information required for your loan approval.

Truck Loan Considerations

There are actually a few rules truck loan lenders take into consideration before endorsing your truck loan. You must let the loan broker know some things about your business.

  • Why do you need the truck loan?

    • Your truck loan needs to be suitable for your business’s situation. Businesses invest in new vehicles all the time, but you’d be surprised at how the truck actually doesn’t fit their needs. You should take some things into consideration like if the income made and the time saved by purchasing the truck is more than the cost of repaying and maintaining it.

  • What type of truck are you buying?

    • Semi-truck, box truck, tank truck, dump truck, etc. If you’re a business, you should always consider your client when you’re investing. Your clients are your income and essentially your future. What doesn’t work for your client will not work for you.

  • Is the truck suitable for the work required?

    • You cannot finance a truck if your business does not need a truck for any situation. Some industry laws and contracts only allow businesses to operate trucks of certain ages and types on job sites. For example, if you’re operating a moving company and are in need of moving trucks, you won’t be in need of a dump truck. That’s why you should know the requirements of the majority of your clientele before you invest in a loan so you won’t have a truck sitting around not being put into use. Some specifications include size, body type, horsepower, and more.

  • Is the loan amount practical?

    • If the cost of the truck is $30, 000, you will not be able to obtain a $100, 000 loan.

  • In case of an emergency, do you have more than the necessary finances to pay back the loan?

    • Emergencies happen all the time, whether you’re a new or well-established business. Make sure you set aside at least three months’ worth of the repayment just in case you run into any financial problems. At least you’ll have a backup of finances so you don’t violate the loan policy.

  • Is your business financially stable?

    • Financially stable businesses are generally those that have been around for a few years and are well established. New businesses tend to find it a lot harder to obtain a loan because of no financial history.

You can get our truck loan experts at IAFA to point you in the right direction. If your loan amount is too high or too low, they’ll help you secure a truck loan with the appropriate interest rate and down payment term rate that suits your situation. The objective of your truck loan is to meet your business’ needs so the loan must be reasonable.

For example, you’re not going to get approved for a truck loan of $100, 000 if you’re a brand new business and a first-time borrower. You might get a cash amount to purchase a truck that addresses the current issues of your business.

As always, you will need to provide your tax receipt, financial records, identification, and any other supporting data and make it as straightforward and organised as possible to clearly indicate how you can pay back the loan in the desired time frame.

Any loan broker will feel more comfortable lending to a well sorted out and organised business than a business that doesn’t have anything together.

Get Pre-Approved For Your Truck Loan

Buying a truck or fleet of trucks can be challenging, especially if you’re a new business applying for the loan for the first time, have a bad credit history, or have an unsustainable income. While getting your truck loan may be tricky, it isn’t impossible.

When you get pre-approved for a truck loan, a lender is agreeing to loan you money to purchase your truck, which is subject to approval, while an invoice is sent to the truck company. Your pre-approval will help you plan and budget accordingly because it lets you know the maximum amount the lender is willing to let you borrow.

Be Reasonable With Your Truck Loan Budgeting

Trucks are expensive and so is maintaining one. If you have a fleet of trucks, they’re even more expensive. Apart from maintenance and petrol, there are other expenses such as insurance, registration, stamp duties, and more. All of these will add up, and if you aren’t budgeting well, this will be your downfall. Always remember that any lender can reject your application if you don’t meet the baseline requirements of the loan.

Understanding Truck Loan Requirements

If you can afford the loan but don’t have any of the necessary paperwork to obtain one, your application will be rejected. As mentioned above, you should do your research and review all requirements needed to qualify for a truck loan because different lenders will have different loan requirements.

Your Down Payment

If you have a large truck down payment deposit, there will be a higher chance that your loan will be approved. It’s proof to lenders that you have the finances to be a responsible borrower. Bigger deposits means lower monthly repayments since the size of your loan is reduced. However, if you don’t have a down payment, you will still be able to obtain a loan. It just might have a higher interest and repayment rate. Consult our loan experts at IAFA if you don’t have a down payment to see what truck loan options we have for you.

What’s Your Credit Score?

As you should know, a bad credit score is a big red flag to any lender. If you can, improve your credit score by paying off all debts in your name by paying off all your loans on time. If you can show truck lenders that you’re able to pay off your debts in a timely manner, you will be able to obtain a loan. Just work on your credit score until it is at an average score.

The Right Truck Loan For Your Needs

It is important for you to choose the right truck loan for your business’s needs. You need to determine how long you want to own the truck for and organise your cash flow structure so it suits the loan policy. If you’re planning on retaining the truck for a long period of time, a long-term loan is suitable for your needs. Short-term loans are as the name suggests, loaning a truck for a shorter period of time, but having a higher repayment per month.

Do You Have A Bank Account?

If you haven’t already, you should consider opening up a bank account. For those of you who have bad credit, a bank account opens up the world of credit for your business. It allows lenders to examine your financial records, account balances, and transaction history when they determine whether you’re suitable for the loan amount.

Securing A Truck Loan In Australia

You should seek a loan broker instead of applying for a loan yourself if you’re trying to finance a truck in Australia. Individual loan applications generally don’t have the buying power loan brokers do with truck companies. Truck loan brokers like us at IAFA have a vast connection and knowledge of the trucking industry and we will be able to help you secure a loan that suits your needs. When you apply for a truck loan directly from a truck company, you may miss important opportunities that a loan broker would have been able to obtain for you.

You can rely on our loan experts to guide you and advise you on which truck loan would suit your business and give your business the best possible outcome. You can start by applying for your loan and getting conditionally approved within the day. You can compare truck loans across over 40 lenders from IAFA.

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