Alternative Ways To Buy A Used Commercial Truck With Bad Credit
When you have bad credit, securing financing for a commercial truck can be challenging. Although the trucks serve as collateral for the loans, banks typically require applicants to have a minimum credit score that offers some guarantee the money will be repaid. All is not lost if you have poor credit, however. Here are some alternative ways to get money to buy a commercial truck.
Look for Grants
Sometimes you can get cash from the government or an organization to purchase a used truck and other assets for your business in the form of a grant. Grants are a great resource because the money doesn't ever have to be paid back, unlike loans. At the same time, programs that offer grants usually have stringent qualification requirements that applicants must adhere to. For example, the National Association for the Self-Employed gives grants of up to $4,000 to businesses, but you must be a member of the organization and show you need the money to fulfill a particular business need.
To find federal grants, visit Grants.gov for a list of government grant opportunities. The Small Business Administration is another resource for finding government grants for small businesses. You can also find numerous grant opportunities offered by various organizations using a search engine.
Government Lending Programs
In addition to grants, the government has lending programs where you can get a loan to finance the purchase of a commercial truck. Although you do have to pay the money back, your personal credit is usually not a factor for approval. Typically, these programs look at various aspects of your business to determine if you qualify for the money. For example, to qualify for the Small Business Administration 7(a) Loan Program, you must be small according to the SBA's standards and not owe money to the government, among other requirements.
The government also has loan guarantee programs where it operates as a sort of co-signer for any loan you obtain from a lender. Even if you have bad credit, a bank may be more willing to approve your loan request if you have the backing of the state or federal government. The Small Business Administration, US Department of Agriculture, and Veterans Administration are a few agencies with loan guarantee programs. It's best to visit their websites to locate programs appropriate for your business.
Make a Deal with the Seller
Instead of getting a loan, some individuals or dealerships may let you make monthly payments on the truck, only signing over the title once you have paid off the entire purchase price. For instance, there are Buy Here, Pay Here lots where the dealership becomes the "lender" and you make your truck payments directly to the company.
In this situation, the individual or dealership is generally more lenient when it comes to credit scores, preferring to focus on your ability to pay (e.g. your income). In fact, if you're contracting with a private party, the person probably won't check your credit rating at all. Be aware, though, that many dealerships with Buy Here, Pay Here arrangements do charge higher interest rates, so you'll need to budget for that additional cost.
Sell Account Receivables
Also known as factoring, accounts receivable financing involves selling your invoices to a third-party company for an upfront payment. For instance, if a company you do business with owes you $1,000, you can sell that invoice to a finance company for $750. That company will then collect the full amount from your customer.
This is a good way to get cash quickly to purchase a new truck instead of waiting 30 to 60 days for your clients to pay. For example, your current truck breaks down and you need money to get a new one to continue operating your business. Using factoring in this instance can help you avoid a devastating work stoppage.
Even though you may have bad credit, there are numerous ways you can obtain money to purchase a commercial truck for your business. When you're ready to buy, connect with a used truck dealership in your area by visiting sites like http://www.arrowtruck.com/.