Posted on: 12 September 2016
It's common for individuals and companies to seek financing through a bank or credit union when they're purchasing a used semi truck. However, many dealerships also offer in-house lending options. While the interest rate you're charged may be a little higher than what you could get at a credit union, there are a number of reasons why you may want to opt to have your purchase financed by the dealer. Here are three you should consider.
Looser Credit Requirements
Ever since the 2008 banking crisis, financial institutions have tightened their credit requirements for loans. Banks have become increasingly less tolerant of risk and may not be willing to give people with credit challenges a second chance. This means that if you have less-than-perfect credit or your income isn't as high as the banks would like, you may have a difficult time qualifying for a loan with good terms or even getting approved at all.
On the other hand, dealerships are typically more willing to take a chance on people who are credit challenged. Be aware, though, that you may be required to pay a larger down payment or higher interest rate. Additionally, some dealerships require buyers to agree to have a device installed on the vehicles that will track and disable them if they fall behind on payments. However, if you find you're getting turned down at traditional lending places, opting for dealer financing may be the best option for you.
Dealerships make money on the sale of vehicles, auto loans, and maintenance and repairs of vehicles. If you purchase and finance the vehicle through the dealership, the company may be willing to include certain types of maintenance for free or as part of the finance package.
For instance, the dealer may include free oil changes for a certain period of time or add an extended warranty to cover problems that may crop up within the first year of ownership. This can help reduce the cost of ownership somewhat so you can invest the money you would have spent on those products and issues on improving your business.
One thing to watch out for, though, is that you will typically be required to get the repairs and maintenance at the dealership. If the company is local only (i.e. doesn't have locations in other states), then you'll have to carefully plan your trips to ensure you're in town when maintenance needs to be done on the truck. Additionally, you may need to set aside money for emergency repairs at non-dealer locations if you break down while on the road.
More Loan Flexibility
Depending on the industry you're in, you may experience fluctuations in your business income. For instance, many transportation companies experience slowdowns during the first quarter of the year (January through March), after the holiday season has ended and before the harvesting season in warm areas begins. This may mean lower income during those months, which can make it challenging to meet your financial obligations.
Dealerships that specialize in financing commercial vehicles will typically have a better understanding of this issue than banks. This means the dealership may provide more flexibility with your loan. For example, the company may craft your loan so that your payments are lower during times when your business is slower or may let you skip one or two payments and just append that debt to the end of your loan.
When shopping for a used semi truck, take a moment to consider the financing offered by the dealership. You may find the loan options provided by the company may work better for you personally and professionally. For more information about dealer financing or to buy a semi truck, contact a dealer near you or check out websites like http://www.arrowtruck.com/.Share