Details About Business Vehicle Financing
Some businesses use commercial vehicles as a source of income — those vehicles include semi-trailer trucks, tow trucks, catering trucks, and limousine services — while other commercial vehicles may be needed to conduct or improve a business, such as delivery trucks and cargo vans. When you are pursuing commercial vehicle financing, it is important to disclose the intent of use for the commercial vehicle because lenders are more inclined to offer financing for vehicles that are used as a source of income. Additionally, lenders may offer a loan that exceeds the value of the vehicle to include taxes, registration, and title fees etc.
What do lenders look for?
Most lenders will require a personal guarantee to approve commercial vehicle financing. Therefore, the borrower will need a good credit rating, proof of income, and tax returns — even if the vehicle will be titled in the business’ name. This does not mean the lender won’t require the business to have solid financials as well, however, good personal credit is still important when obtaining financing. Additionally, when purchasing a commercial vehicle that will not generate income, be prepared to show proof of profitability for 2 out of the last 3 years in business.