There are many misconceptions to getting a truck loan approved. It’s not quite the same as getting a car loan approved, especially if you are an owner-driver with specific needs. Here are our top 5 tips to get truck loan approval.
1. Figure out your needs
A truck loan is more like a business loan than a car loan. People don’t often drive trucks “just because.” Trucks have a specific business purpose the majority of the time. If you’re hauling non-perishable loads long distances, a curtain-sider is the right choice. If you’re a suburban mover, you may only need a semi-trailer. You must approach your truck loan application like a business plan. If you have no plan to pay the loan back, it makes approval much harder.
2. Buy new or near-new
Trucks have a definite life cycle. If you buy a truck that’s nearing the end of its life cycle, you increase the risk of the truck breaking down beyond repair. This means lenders will feel nervous about lending to you. Some trucks might need four to five figures worth of repairs and maintenance to bring it up to serviceable condition. It’s not worth the hassle – lenders know that too.
3. Set a realistic budget
With any purchase in life, you have to spend within your means. Your chosen truck should comfortably return a profit, not leave you struggling. Lenders will not look kindly on people who buy trucks that are unnecessary for the task and give them trouble in their business. This is especially true for first truck buyers. Lenders simply won’t give money away to someone who has no record of paying back a loan. The more homework you do and the more sacrifices you can make, the better.
4. Buy with economy in mind
Impress upon your lender or broker that you want to run your haulage or transport business as if it was a bricks-and-mortar business. You wouldn’t leave unnecessary lights on all night at a shop, so why use more fuel than you need? Look for trucks with low tare weight, fuel efficiency and increased aerodynamics. This will mean more money in your pocket to meet repayments.
5. Have some kind of fall-back
It also helps to have some kind of fall-back position if your truck goes out of commission for an extended period. One sure method is having adequate savings. Another option is taking out the right insurance policy that covers all these eventualities. You may already have income protection insurance, which gives lenders peace of mind when lending capital for trucks.