You want to start your own trucking business but you need to get owner operator truck financing in order to get started. Where do you begin? Will you even qualify? What documents will you need to have? Financing is essential if you want to get your business up and running smoothly and as quickly as possible. Here’s everything you need to know about acquiring owner operator truck financing:
How To Qualify
To qualify for a loan, you need to know what things the financing company is looking for. The first detail that will help you qualify is buying a truck from a dealer instead of a private party. This helps assure the lender regarding the condition of the truck. Your personal credit score is extremely important if you want to get better rates and lower down payments. What credit score do you need? Having a credit score of 650 or higher will assure the lender that you are a responsible borrower that will make payments on time.
You will also need at least $10,000 set aside for a down payment, even if you have a great credit score. Many lenders also do not like to finance owners who have been in business for less than two years. Around 30% of businesses fail because the owner ran out of money for operating costs. The longer you have been in business, the more likely a lender will trust you to be able to pay back the loan. You can get financing with bad credit, but you may have to pay higher interest rates.
What Documents Will You Need?
You will need to provide a number of documents to the lender in order to secure the loan. One document you should have is proof of insurance for the truck you plan on purchasing. You should also be prepared to show business and personal tax returns for the last three years. Other documents you will need include your driver’s license, balance sheet, and current business licenses. Your lender can give you a list of items they will need to decide whether or not you qualify for financing from their company.
Choosing Between a Lease or a Loan
When considering loan options, you will need to decide whether a lease or a loan will be better for your business needs. There are slight differences between these two options. For a truck lease, you are basically renting your truck from the lender and agreeing to return it when the term of the lease expires. This means that you will have to look for a new truck at the end and go through the entire lending process all over again. If you want to own your truck outright, you will want to choose a loan option.
Acquiring owner operator truck financing can take a lot of work but it is extremely useful if you want your trucking business to be successful for the long haul. The more prepared you are, the better the chances are that will qualify to receive the lending you need. Gather all necessary documents, set yourself up to meet any lending requirements, and decide which type of commercial truck financing you need. If you do these things, you will be ready to hit the road in no time.