If you are a small business owner whose entire business model centers around a truck, or you facilitate the business through the use of a truck, you are probably inclined to do everything you can to save it when financial troubles arise. Applying for a commercial truck title loan can help you get out of a bind, and sometimes it may seem to be the only viable option to maintain your business. Unfortunately, putting your most valuable asset as collateral can also be a relatively risky proposition. A few of the lenders can charge heavy fees, and if you have a checkered credit history then you’re out of luck. The following article will help make things clearer when deciding to apply for a loan or not.
Factors to Consider
The kind of loans available to you largely depends on the sort of vehicle you drive, your credit history, and the history of your business. If you have poor credit, or your business is unable to prove that it has been financially solvent for some time, then you may be blocked out of the more affordable loans. The arena for semi-truck title loans is perhaps a bit more accessible, but there are other factors that determine the kind of loan you can take out and whether it makes financial sense for you. The loan you can take out may come with absurdly high-interest rates if you have a weak credit score or you have had a series of accidents with the truck.
Obtaining a Decent Loan
Getting the actual loan is a whole other ballgame. As with any other loan you may consider applying for, you need to show that you are a low-risk proposition for lenders to take on. A good credit score will of course work in your favor, but it’s not enough.
Obtaining a decent loan rate will depend on other factors as well. For example, your capacity to demonstrate strong driving experience in addition to an established revenue stream at your business will definitely help boost your case and allow you to receive a loan with a lower interest rate. Finally, one key way you will be able to obtain a decent loan is if you have a long credit history, especially one that can be traced to ten years or so.
Type of Vehicles Covered
Before looking into securing a loan, you should be aware of the kinds of vehicles covered. Some of those include semi trucks, dump trucks, box trucks, log trucks, those carrying asphalt, flatbed or dolly trailers, car carriers, end dump or belt trailers, dry vans, grain hoppers, and even reefer trailers may qualify. At the same time, not every vehicle qualifies for a commercial truck title loan. So before assessing whether or not it is for you or makes financial sense, make sure that you don’t begin the tiring legwork of shopping for the loan before you know for sure that your vehicle can be covered. Most commercial vehicles will be covered through a title loan, although the main caveat is anything that carries heavy equipment. Those tend to be considered collateral in lieu of the titled vehicle itself, but in any case, read the fine print of any loan before deciding to sign up.
Understand the Limitations
As briefly mentioned above, there are a few things that may stand in your way from receiving a favorable deal. For example, if you are a first time owner or operator of a truck, you may be approved but the loan will come with a high interest rate. Also, if you’ve had limited driving experience, then you’re probably not in luck in terms of receiving a favorable price on your loan.
Of course, bad credit or having your name become a regular with the collections office will almost never get you approved by affordable title loans. Likewise, having a history of bankruptcy, or your personal finances or property repossessed may not bode well in terms of your prospects with a decent loan. Also, if you have other loans or financing plans on the backburner, you may want to tread carefully. Things like repair loan financing, having too many operating capital loans or subjecting your business to a buy-out in the past is bound to cast a pall on your prospects.
Reality of the Vehicle
The terms of the title loan largely depends upon the make and model of your vehicle. Also, the condition itself plays a large role. When shopping around for loans, you will be asked to provide a vehicle specification sheet that highlights different details such as the year, make, model, and identification number of the vehicle. Furthermore, you will need to list actual mileage, have an engine running, check the transmission type, and list any accessories that may be in your possession. This information will prove to be crucial when getting your loan or title loan finalized. Of course, it will definitely impact the extent to which you qualify for a loan that comes with affordable interest rates from platforms such as Titlelo.
Average Cost
The average cost of the title loan in general for your business will largely depend on how many you need to purchase, their condition, and your past financial history, as we’ve already outlined above. However, they typically run in amounts from two thousand to fifty thousand, depending. If you manage to use your title to secure the loan, you can find them lasting several months. In fact, for larger loans, you may be able to extend the terms to more than forty eight months, provided that you meet the necessary criteria.
Prepaying loans isn’t always an option for certain types of titles. This is because you may receive a penalty if you pay off everything too quickly. So, as you look into the average cost of the loan and how much it may end up costing you, you should also look into how the fine print about repaying a loan quickly. In some cases, you can do so when it proves to be convenient to you, and without penalties. Although, you do need to make sure to inquire first.
Boosting Your Chances
What if your business has been suffering for a while? Or, other mitigating factors have come in the way of proving that you are good for the loan, and you need smart ways to boost your chances. One tactic you may consider is getting a trusted cosigner on your loan, or to diversify your lines of credit. You can do this by providing proof of your car loan as well as your mortgage, and revealing to the lender that you are making fixed payments every month.
Whether or not obtaining a truck title loan works for you ultimately depends on your financial circumstances. Deeply analyzing your finances is important for any business before making a large investment. You may be able to qualify for a more affordable loan depending on your history, but if you have too many factors working against you, it may be time for you to consider other options. The information that we’ve provided here should be able to make the decision that much easier for you to make. At the end of the day, you need to take a step back and look a the facts, numbers and long term goals in order to understand whether a certain investment makes financial sense for your company in the long run or not.
