Whether you're starting out or expanding your commercial truck fleet, buying used can be a great way of reducing costs. Cold hard cash might be king when it comes to buying a used semi truck, but cash deals aren't the only way to seal the deal. Financing is a popular option for buyers who enjoy the flexibility it offers, as well as those who might not have ready access to hard funds. The following offers an in-depth guide on the most common financing options available for commercial truck buyers.
Commercial Truck Loan
One way to buy a used semi truck without having to pay the full amount upfront in cash is to take out a commercial truck loan. A truck loan means you'll be borrowing the money to buy the semi truck from the seller. In exchange, you'll pay the lender a certain amount of money each month to reduce and eventually eliminate the debt, plus interest and fees.
Your monthly payments will depend on the length of the loan, the loan's interest rate and how much money you paid as a down payment on the loan. The down payment required by the lender usually depends on your credit history. Those with excellent credit may not have a down payment, while those with less-than-stellar credit may have to pay half the cost of the truck upfront before borrowing the remainder.
There may also be other conditions that must be met before the loan is finalized. Some lenders want proof of driving experience, while others will only finance trucks no older than 5 model years. Once you've made your last commercial truck loan payment, the truck belongs to you. However, you may find it a bit harder to upgrade to a newer truck since you'll have to sell your older truck first.
Commercial Truck Lease
Another option for getting behind the wheel of a used semi truck is the commercial lease. Instead of making monthly payments towards full ownership of the truck at the end of the financing period, you're essentially renting the truck for a specific period of time. The exact lease period depends on the total amount being financed and how much the buyer is willing to pay each month and whether the buyer wants a short-term or long-term lease, among other variables.
Keep in mind that commercial truck leases differ somewhat from automotive leases. While an automobile lease offers limitations on wear and tear, mileage and overall usage, the open-ended nature of a commercial truck lease means that drivers can use their trucks as they see fit without worrying about penalties when the leasing period ends.
At the end of the leasing period, drivers can turn in their old truck and lease another newer truck. This option is ideal if you want to move up to a newer and more advanced truck every few years.
The lease-purchase option works similarly to a typical commercial truck lease. At the end of the leasing period, however, you'll have the option of returning the vehicle to the leasing company or buying the truck based on its residual value. As with a typical commercial lease, the lease-purchase option may offer lower payments than financing through a commercial truck loan. In addition, the residual value of the truck may be substantially lower than the total cost of a comparable loan.
Carrier leases are a variation of the lease-purchase option. Instead of dealing with a leasing company, you can lease a truck directly from a carrier in exchange for driving on behalf of the carrier. The leasing carrier will deduct the cost of the truck lease directly from your paycheck and handle most major repairs. This gives first-time drivers an opportunity to experience truck ownership for the first time and gain valuable work experience.
However, there are a few drawbacks to consider. For starters, the lease amounts are often deducted from your pay regardless of how many hours you've actually worked. Secondly, you may not be able to take work from other companies while under the employ of the leasing carrier. This option may not be ideal for owner-operators who don't want to be confined to a single client for the duration of their loan or lease.
Now that you know how to finance a commercial truck, consider visiting a dealer online at a site like http://www.arrowtruck.com/.