Today there are dozens of finance companies, leasing companies, and truck companies that have financing programs to get you into a truck. With over 30 years of experience dealing with both truckers and truck financing, we’ve helped thousands of owner-operators through the process – even those with bad credit or bankruptcy. If you have poor credit or bankruptcy and are wondering how to obtain truck financing, we’d like to help you identify the advantages and disadvantages of some of the options to help you make a better choice.

If you answered no to most, if not all, of these questions, you aren’t alone. There is nothing wrong with feeling sick and tired of others controlling your outcome and wanting to be in charge of your destiny.

If you lease a truck from a “trucking company” under a lease purchase program, it is highly likely they will be in control of your work life. You will probably be in a truck they choose, for as long as they choose, and limited to the loads they choose.

Another option is to deal with a general equipment leasing company. They will let you choose the truck and you choose where it works. The challenge will be the structure they offer you. The term is usually no longer than the life expectancy of the truck and, more than likely has a balloon buyout at the end of the contract. Hopefully, they disclose this up front and don’t surprise you with it four years later.  This does you no good when the truck needs an overhaul and you still have 18 months of payments to make.

The other option, and in our opinion the best option, is a straight forward simple loan that is designed around the life expectancy of the truck. This gives you the freedom to buy the truck you want, put it to work where you want and, when it’s time to overhaul the truck, you own the truck because you financed for the proper term.

With challenged or bad credit, you’re going to pay a higher rate than a bank would typically charge. In most cases, the truck finance rate for poor credit is in the 20% – 30% range and sometimes more. There are two general reasons for this.  First, challenged or bad credit is simply a higher risk. For a finance company to succeed, let alone survive, it has to be able to generate enough revenue to cover losses. This is similar to an insurance company rating your driving record and adjusting the premium according to risk. Second, the term of the loan is shorter, so the finance company needs to charge more to justify the loan. If the loan was for 30 years like a home mortgage the rate would be less, but the total payback would be considerably more.  Another way to look at it is would you charge half the rate per mile if someone gave you half a load? Of course not, you need to charge your full rate in order to cover your costs.

Now let’s look at the interest rate from a business perspective. How does one justify paying a 25% interest rate? The answer may surprise you. Let’s say you have $15,000 to put down on a truck. The truck cost is $50,000 and you finance $35,000 for 24 months at 25% APR with monthly payments of $1,868. After two years, you will have paid a total of $44,832 and YOU OWN THE TRUCK! During that time, the truck will have generated at least $300,000 in income for you. That’s a remarkable 900% return on your investment!

There is more good news. When you choose the right finance company, they will report to the commercial credit bureaus.  You will build commercial credit and, in a short time, you will be able to borrow from the major captive finance companies like Daimler Truck Financial, Volvo Credit, Paccar, and many more.  There is one final and very important point. Never ever give any finance company money up front for any reason. After you get your approval, check them out.  Ask for dealer references and customer references. There are many dishonest brokers posing to be legitimate finance sources. 10-4.