The trucking business is a solid business to be in. The demand for professional, efficient fleets continues to grow every day. Are your revenues and profits going up? This great news may mean it is time to increase your fleet size to be able to handle even more loads with greater efficiency and success. A commercial trucking business loan can help you increase your fleet size.
However, commercial trucking business loans can be used for so much more than buying new trucks. You can also use them to pay for maintenance and repairs necessary for your fleet. Other costs that can be covered include insuring your fleet, registration and certification costs, and training and safety courses for your drivers.
A commercial trucking business loan may be better than a general business loan as some of the terms may be better suited for a trucking business. For instance, payback schedules may allow for seasonality. Additionally, you can get better terms if giving trucks as collateral. Here are some of the key terms that you will want to carefully review in your loan offer:
How long will the loan last for? The term is typically expressed in months or years. The term is typically about the same as the useful life of the truck - around 5 to 10 years. The longer the term is, the higher you can expect the interest rate to be, but the more affordable each monthly payment should be.
When will you be expected to pay back the loan? Typically, loans are expected to be paid back in equal monthly installments, however there are other possibilities as well. You may be given a balloon payment schedule, when the full amount of the principal (the amount borrowed) is expected at the very end of the loan term, with interest either paid along the way or accumulating until the end.
How much will you be expected to pay upfront, for the cost of your truck? This could range anywhere from 0-25%, with borrowers with the highest business credit scores possibly not putting down any downpayment. It certainly pays to work on your business credit score!