Conventional truck financing poses serious challenges because of the economic conditions that face banks and independent truck operators. Diesel fuel has reached record highs of $4.50 or more, and the cost affects truck profitability more directly than any other expense. The rise of food prices destabilizes the market further, and industry-wide defaults have made bankers more skeptical about truck financing. The Kenworth brand, manufacturers of popular industrial trucks, has restricted internal financing approvals even more tightly than the lending market at large. Kenworth financing proved difficult to obtain at the best of times, and deteriorating market conditions now make the task nearly impossible. Kenworth has pulled funds and imposed substantial down payments of 10-30 percent.
Long-haul trucks face the strictest financing qualifications. Startup businesses must provide significant down payments and enjoy excellent credit to qualify. Established trucking companies without sterling credit might need to produce 10-20 percent down. Trucking entrepreneurs can maximize their chances of approval from any lender by finding the best deal possible. Repossessions, auctions, off-lease trucks, and private sellers can generate substantial risk/reward benefits that might make a deal more attractive to lenders. Truckers can suffer credit denials from numerous conditions such as slow payments, tax problems, keeping poor financial records, or getting poor FICO scores, which analyze overall credit worthiness.
Poor credit need not disqualify owners from financing options. Leveraging business or personal collateral can guarantee the sale and leads to loan approvals. The extra collateral allows lenders to bypass credit score criteria in the decision-making process. Heavy equipment, fully owned trucks, commercial and/or residential real estate, and co-signers can facilitate approvals. Outright equipment collateral can lead to fast approvals within a week. Real estate might take longer, often requiring two weeks or more to clear titles. Lease/purchase programs generate tax benefits, and the method might lead to quicker acceptance.
Regardless of what method truckers choose, they should obtain sufficient insurance coverage to protect their assets and livelihood. Full purchase-price coverage can offer peace of mind, and accident and health insurance will indemnify truckers for circumstances beyond their control. Credit life insurance, physical damage coverage, and other alternatives provide complete protection against all possibilities. Repossessions and off leases make trucks available at favorable terms for first-time buyers or established owners seeking to expand operations, including strict loans from the internal Kenworth financing department. Truck financing opportunities exist for those people willing to shop carefully and exploit all their options.