Nothing can put the brakes on your trucking business faster then having a major breakdown and not have the money to fix the problem. If you’re not putting enough money away each month for maintenance or the repairs are larger than what you budgeted for, you could be out of business until you find a way to get your truck out of the shop. Nobody wants to find themselves in this situation. Unfortunately a lot of truckers do get themselves in this situation and are left wondering how they’re going to pay for these repairs. The most common solution is to finance the repair bill.
Truck repair financing has become more common in recent years as the cost of repairs have gone up. We get about ten request per day for truck repair financing and we are able to help a large number of them. So how do you get approved for truck repair financing? It mostly comes down to equity, what is the truck worth and how much money do you need. Of the few banks that do this type of financing most will go by a loan to value calculation. That LTV can be anywhere from 25% to 50% of the value of the truck, sometimes higher depending on the truck and the repairs required. The most common conflict between the bank and the customer is how they determine value. Here at Capital Solutions we go by low market value. Other banks will go by trade value or what they call liquidated or auction value. For example let’s say a truck has a market value of $50,000 meaning if you sold that truck on the street today you could get $50,000 for it. On a truck like this we could consider financing between $20,000 and $25,000, this is assuming the truck is free and clear of course. Other banks will take this $50,000 truck and reduce its value for loan purposes down to what they feel is its liquidated or auction value. So this $50,000 truck now becomes a $30,000 to $40,000 truck. From this amount they calculate their loan to value. Assuming they’re going off a value of $35,000 they will then consider between $15,000 to $20,000. This represents about 50% of this lower value.
If your credit is strong however they will base their approval on your credit score and rely less on the value of the truck. We have had people apply for truck repair financing and had excellent credit and we told them to go to their bank. They were able to get much better terms there because of their high credit score. Also because the bank will rely less on the value of the truck the truck owner can get a lot more money if needed. I have seen people get 100% of the value of the truck or even more in cases where their credit was very strong.
Some truck repair shops will also provide financing for their customers. If you consider this option make sure you understand all the details going in before you hand over your title.
Financing repairs is never a good option if you can avoid it. But if you do find yourself in this situation there are options. Make sure to get your terms quoted before you sign anything and make sure you get those terms in writing. Otherwise if you do have to go the financing route consider giving us a call here at Capital Solutions at 520-760-3648. We have a very popular program for truck repair financing and we can help you get back on the road very quickly. We can do these deals in a matter of a few days.