Commercial Fleet Financing for Beginners: Your First Steps
Did you know that only 44% of small businesses have more than 3 months of money to get them out of a bind? If you’re hoping to avoid that financial pitfall, you need to get your financial ducks in a row. And if you’re just entering the trucking industry, you’ll need financial help to get started.
Read on to learn about the first steps of commercial fleet financing for beginners!
Prepare the Required Documents
Before you visit any financial institutions, make sure you’re prepared. Arriving with your business permit, financial statements, and license will show that you’re professional.
If you’re a new business, plan on bringing a copy of your business plan to show that you’re serious about moving forward and launching the company. You should bring your CDL license and any other permits that show you’re on track to move shipments.
When you’re a new business, you’ll need to pay attention to a few other factors. A big one is your credit score.
By having a credit score above 600 — and ideally, as close to 850 as possible — you’ll make a better financial impression. You may be able to score a better interest rate and more flexible repayment terms.
Compare Options from Financial Institutions
Make a point of visiting with several fleet financing companies before committing to one. On the front end, know that you’ll probably have to do a down payment of around 5% or more on a vehicle. In other words, don’t expect to get financing for the full price of a vehicle.
And you’ll want to show potential lenders that you have insurance coverage for your business. After all, when you’re transporting goods, there is a risk to the driver, vehicle, and cargo. Bring documentation to show that you have primary liability coverage as well as cargo coverage.
Some commercial fleet financing companies will be able to offer funding within a day of applying. They may ask to check the title of the vehicle you have in mind — and they might waive the down payment requirement. Even though that’s tempting, apply at a few other places so you can compare.
Select a Low-Risk Vehicle
In the trucking business, the last thing you want to do is invest in an aging vehicle. Fleet financing companies feel the same way. A vehicle that’s been around longer than 10 years, for instance, represents a high-risk investment.
So, if you approach a potential lender to get financing for an aging vehicle, they might be wary of doing business with you. Or you’ll end up paying a higher interest rate.
You’re better off finding a truck that has fewer than 700,000 miles and a clean repair record. And you can extend the life of any vehicle with help from Linxup. A GPS tracking device will ensure that you’re on top of maintenance and accounting for your fleet’s whereabouts.
Get Commercial Fleet Financing
Commercial fleet financing is essential when you want to get your business idea operational. You’ll want to ensure that you have the necessary license and permits, as well as insurance. And you’ll want to choose a low-risk vehicle and shop around before accepting an offer.
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