Let’s go over each of them in no particular order.
Working Capital Refinancing. There are times when a business may require additional funds for working capital to finance growth, a slow period, or some other reason. In these situations, it can be possible to access the equity held in specialty trucks you already own. This is accomplished through a term loan or a sale and lease back transaction where financing is provided based on both the equity held in equipment and the remaining useful life of the truck or trucks to be refinanced.
Existing Loan or Lease Refinancing. In this scenario, a business owner or manager may decide to refinance and existing loan or lease outstanding on one ore more trucks in order to 1) get a better rate, increase the remaining repayment term to lower payments, and/or access additional capital for the business. Many times a loan or lease may have been substantially paid down resulting in significant equity being available in the truck which can potentially be accessed if refinancing of the existing loan or lease can occur. Truck refinancing can be through the existing funding source or it could come from an unrelated funding source.
Balloon Payment Refinancing. Its not uncommon that truck leases are structured with a large balloon payment at the end of the term which is due and payable when the financing term is complete. If the business does not have enough cash to cover the balloon payment, or does not want to drain cash when making it, if the objective is to retain the truck, the next best option would be to refinance the payout amount over a longer term through a new loan or lease.
In some cases this is an intentional strategy right from the outset in that the business owner enters into the initial lease that comes with a large balloon payment with the intent of refinancing the balloon at the end of the term. As long as the condition of the vehicle and remaining useful life of the vehicle are sufficient to support another loan or lease, this is very doable.
Refinancing can also be accomplished with good, not so good, and even bad credit, provided that there is sufficient equity in the truck to offset any credit issues. Also keep in mind that rate is directly related to credit so weaker credit will generate higher financing rates.
Refinancing also means that you are arranging financing on used equipment that has been under your control and is not being sold through a dealer, so rates will also be higher for “A” credit profiles due to asset age and ownership history.
The best way to find out what your specialty truck refinancing options are is to give us a call at 905 690 9874 so we can quickly review your current situation and go over truck refinancing options that are available to you.
When Specialty truck financing is required by a business, there are basically three different situations that can be relevant.
The most common type of truck financing is to purchase or acquire a new or used unit via an equipment loan or lease. The second scenario would be when there is an end of lease term balance owing in what we refer to as a balloon payment that needs to be financed over a longer period of time. The third scenario is when a business wants to tap into the equity that exists in trucks that it owns and wants to refinance the equipment through a loan or lease to free up capital.
Specialty Truck Leasing programs will also involve providing capital for new or used equipment. Terms of sale can also very from purchase to purchase and these also have to be taken into consideration when attempting to arrange financing. For instance, because of the nature of a specialty truck, a financing facility may have to allow for the purchase or acquisition of the truck separately from the manufacturing and installation of the related equipment. This may require several partial payments to be made by the finance company in order to get the entire truck paid for. Another issue could be the purchase of the truck and/or the equipment from a U.S. based vendor where payment needs to made to the vendor before the equipment can be released to the buyer. This will then require the truck and equipment to be imported into Canada through a customs broker with the relevant sales taxes paid at time of crossing.
The reason all of these aspects need to be properly understood is that while there are lots of different specialty truck leasing programs out there, not all of them will cover off the same scenarios. For instance, most truck financing programs will not pay a U.S. vendor directly, but some will. Some leasing programs will provide larger balloon payments to aid in cash flow management while others will not. The size of a deal, whether its new or used, whether its a new business, owner operator, or a fleet expansion can all influence which truck leasing company is most relevant for any particular deal.
There is also the issue of rate and term. You may have many different financing companies interested in your requirements, but their rates and terms can be dramatically different.
So the good news is that there tend to be lots of specialty truck leasing programs out there to consider. And the stronger your credit and financial profile, the more options and better priced options will be available to you.
The challenge then is to be able to sift through the market in a timely fashion and zero in on the most relevant options as quickly as possible so you can get the financing work completed and get back to the business of making money.
In our opinion, the best way to do this is to give us a call at 905 690 9874 so we can discuss your requirements with you and quickly provide the most relevant options available to you.
There is no cost or obligation associated with the specialty truck leasing assessment we provide and in most cases we can provide relevant options for you to consider in minutes.
Give us a call today and we’ll make sure we get all of your questions answered as quickly as possible.
The vocational truck market is continually growing as more and more equipment is being outfitted onto trucks to allow services to be transportable to wherever they are required. And with these customizations expanding to larger truck and tractor bodies, there is really no limit to what can be done with a truck these days.
With larger trucks and equipment also comes larger cost and the best way to cover off the cost of acquisition is to finance new or used units through a vocational truck lease.
Any type of vocational or specialty truck can get financed if 1) there is an existing resale market for the truck, and 2) the truck usage does not involve high mileage. For instance, a concrete pump truck certainly will have a resale market if used and its not likely going to have a great many miles on it, especially if its working in one primary geography. The key to used truck financing with respect to amount of financing, rates, and terms is the lenders assessment of the remaining useful life of the unit. The higher the useful remaining life, the more financing and leasing advantages you are likely to obtain.
The term vocation trucks refers to any type of truck that allows the performance of a specific service such as what you would find with a crane truck, concrete truck, dump truck, sweeper truck, vac truck, pumper truck, fuel delivery truck, boom truck, fire truck, garbage truck, and so on.
And compared to many other types of businesses, getting vocational truck leasing as a start up may not be as difficult as you might think. Most start up businesses have a hard time acquiring loans and leases because they have 1) several moving parts to get in place, 2) business to attract and close, and 3) cash flow to manage. Lenders and leasing companies are always leery of how well a new business owner is going transition from their theoretical business plan to practical results.
With vocational truck start ups it can be a lot easier for new businesses if certain things are in place. First, the business owner needs to have a 20% down payment with the balance to be financed through a vocational truck lease. 2) Second, the business owner or manager needs to have business already lined up with a reputable company that is prepared to provide a work contract for the term of the lease. Its ok to only have one customer if the customer is a solid company and there is a legal contract in place to perform services for a defined fee or rate.
Under this scenario, the moving parts of a new business are greatly reduced and the business owner does not have to go look for customers continuously to pay the bills each month. An owner operator with work lined up can provide a reasonable operating budget that shows the money to be earned each month according to the proposed contract and the operating costs required to perform the service.
With vocational truck financing, its very possible that a brand new business can get 80% financing on a specialty truck worth hundreds of thousands of dollars before they have earned a penny in revenue making vocational trucks and excellent way to get into business.
When it comes to Vocational truck leasing, you can structure a lease into a capital lease where there is a small buyout option of $500 or less at the end of the lease term or you can structure the lease as an operating lease where are least 10% of the principal is outstanding at the end of the lease term.
Because the cost of some trucks can be very high, and their useful life very long, its also to get leases structured where there is between 10% and 30% of the initial purchase amount outstanding at the end of the lease term. This can greatly reduce debt service in the short term, and at the end of the lease term the outstanding balance can potentially be refinanced into another lease provided that the units remaining useful life that support a future lease term.
If the vocational truck lease is an operating lease, the business also will have the option to return the unit to the lessor at the end of the term without any further obligation to pay.
When more established companies want to add trucks, the financing amount can go all the way up to 100% of the purchase price in some cases and in many cases fall higher than the 80% mark for new businesses providing incredible leverage for companies that utilize vocational trucks in their businesses.
If you are in need of vocational truck leasing today for a truck you want to acquire, or you want to see if you can improve upon a quotation you already have in hand, then I suggest that you give me a call at 905 690 9874 for a free assessment of your vocational truck financing options.
Having a Specialty Truck Vendor Financing Program in place is going to be key for any vendor, dealer or truck reseller to maximize their potential sales over the course of a year.
Especially when you consider that many specialty trucks are well over $100,000 in cost, the need for customer financing through equipment loans and leases is even more pronounced as compared to smaller ticket equipment items.
And even if a vendor or dealer has a vendor financing program available to their customers, is it doing a good job helping you close sales? Its not uncommon for vendors to loose out on sales due to the customer not being able to get suitable financing arranged, and suitable financing within a short enough period of time. Without timely approval and funding of a customer, you run the risk of the deal being lost to a competitor that does have a more dynamic and market appropriate financing partner.
This is where we come in.
Our primary goal in setting up and managing a Specialty Truck Vendor Financing Program for you is to help you close sales and maximize your sales opportunities. This is accomplished through fast approvals, great service delivered to you and your customers, and the ability to handle a wide variety of requests including new trucks, used trucks, truck units that require assembly, great credit, weak credit, bad credit, new in business, owner operators, companies with larger truck fleets, and so on.
The reality is that every vocational truck financing request is somewhat unique so you need a financing professional that can quickly figure out the best financing options and get one in place before the customer is lost.
As a specialty truck dealer or vendor, there are basically two different approaches you can take when setting up a vendor finance program for your customers.
One approach is to work with a single source of financing that administers vendor programs. This can work really well provided that you have a very homogenous customer base and their is very little customer application complexity to deal with. Most single source vendor programs come from “A” credit or near “A” credit lenders. They have a very specific credit box that applies to one and only one slice of the market. If your customer does not fall into their program requirements and gets declined, then tend to not have anything else for you. The best case scenario is that they try to farm it out to sub prime lenders that may be interested in the deal but that also doesn’t tend to get the same level of attention and importance as the deals the lender approves and is trying to close within their own lending programs.
The single source lenders are also usually larger in size and process large transaction request volume through order desks that have rotating staff. If a deal is straight forward, this can work quite well regardless of how many people may end up having to tough the file over a number of days or weeks. But if there is any level of complexity with the application, the best way to frustrate a customer and risk losing them is to have a different lender rep talk to them each time they call in with an issue with very little issue continuity from rep to rep.
The second approach is to work with a financing intermediary or broker who can fund deals for a wide range of customer truck financing and credit scenarios and who is able to provide the timely one on one contact with your customer that is going to be necessary to achieve that high sales close rate we talked about earlier.
If you are in need of a Specialty Truck Vendor Financing Program for your customers, or want to see if you can improve upon the one you already have in place, then I suggest that you give us a call at 905 690 9874 for a free assessment of your options.
As I mentioned earlier, helping you close customer sales through the timely placement of customer financing is our number one priority and we welcome the opportunity to do that for your business.
Click Here To Request A Free Specialty Truck Financing Program Assessment