Truck Financing – Why Rates are Only Part of the Conversation

Friday Q&A with George Vandel: Active, Not Passive
March 22, 2019
Friday Q&A with Travis Van Houten: Hawaii or Bust
April 5, 2019
Show all

Truck Financing – Why Rates are Only Part of the Conversation

So, you’re looking to finance a truck. Common sense says the thing you need to know is “what’s my rate?”

While that’s fair, there are other factors you need to consider and how those factors may affect your business. Can the rate be important? Sure. But let’s look at a few other items that should be a bigger part of your decision-making process.

Number One: What’s the down payment?

You could have a rate that looks great, but what if the down payment doesn’t match what your business can feasibly put forward for a new truck? Or maybe you want a lower down payment to conserve cash flow? Maybe you want to put more down so you have less to finance over your term. The down payment should be an important part of your conversation with a commercial lender. And speaking of terms…

Number Two: What are my term options?

Again, your rate could look great, but how many months are you paying that rate for? Even at American Equipment Financial, we have different programs with different term options, so you can only imagine what that looks like across the commercial lending space. Some programs allow for more term options so you can find a sweet spot for how long you will be financing your truck for. Some programs may cap out their term offerings below what you are looking for, so your monthly payment ends up higher than what you were hoping for. Make sure you pay attention and don’t get sucked in by low rates when there are other factors involved. Check out this example:

Number Three: What other fees do I have to pay?

Most commercial lenders will have a fee that is due at the beginning of your contract, and in some cases, certain lenders will charge a fee to even get started. While these fees can seem less important in comparison to the large price of the equipment as a whole, you should pay attention to the differences in fees between different lenders. A lower fee with a higher rate can still come out cheaper in the long run than a higher fee with a lower rate, and vice versa. Even if it’s just a small difference, that’s still money that you can save to re-invest in your business. Make sure you’re taking everything into account when you’re looking at commercial lending options.

Looking to get some conversations started with us on financing for a truck? Get payment and term options in just five minutes without us running your credit: https://americanefs.com/pre-qual/