“The trucking industry is a vital component of the global economy, with semi-trucks transporting a significant portion of goods worldwide. In Canada alone, the trucking industry generated a staggering 39.55 billion Canadian dollars from 63.7 million shipments in 2018, employing over 312,000 truck drivers. Access to crucial lending is essential for the growth of these owner-operator businesses, making semi-truck financing an important consideration.
Unlike personal car financing, semi-truck financing involves borrowing money with the truck serving as collateral. To secure such a loan, you’ll need to have an excellent credit rating and be prepared to make a down payment. Lenders will also require proof of steady revenue generation over the past two years to assess your creditworthiness.
Fortunately, various financing options are available in the market, from equipment financing and leasing to unsecured credit. Traditional banks, equipment leasing companies, and alternative lenders all provide semi-truck financing, and it’s crucial to find the best offer for your business based on factors such as the condition and cost of the truck, and whether it’s new or used.
While banks may be the right choice for those with a strong existing relationship, alternative lenders often have more flexible credit criteria and are willing to work with a greater variety of equipment in different conditions. Whether you’re a new owner-operator or an experienced fleet manager, understanding the approval process for semi-truck financing in Canada is essential to ensure you get the funding you need to grow your business.”
The Application Process for Semi-Truck Financing In Canada
“If you’re ready to begin the semi truck financing process, there are five critical steps to follow to increase your chances of approval and secure the best possible terms and rates. Take the time to carefully and thoroughly complete each step.
1. Make Sure Your Are Eligible For A Loan
Determine Your Eligibility for a Loan Before applying for any loans, ensure that you meet the necessary qualifications. Most financing options have similar requirements, including a sizable down payment and a valuable truck. Here are the essential criteria to consider:
- A down payment of 5% or more (up to 10-20% for new owner-operators)
- A truck that is less than ten years old and has fewer than 700,000 miles
- At least five years of experience with a CDL license
- A credit score of 600 or higher (660 is preferable)
Meeting these conditions will increase your chances of loan approval. However, keep in mind that each lender may have different criteria. It’s crucial to lenders that you have at least five years of experience with a CDL license, as this ensures that you’re a skilled and experienced driver capable of operating the truck safely.”
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“Here are the next steps to follow for semi-truck financing:
2. Collect The Necessary Documentation
Collect The Necessary Documentation After ensuring that you meet the eligibility criteria for semi truck financing, the next step is to gather all the required documentation for your loan application. This will speed up the process and make it smoother for both you and the lender. Having all the necessary documents ready shows the lender that you are a serious buyer and gives you an advantage in today’s competitive market.
Some of the documents you will need include:
- Bank statements for the past 12 months
- Profit and loss statement for your business in the current year
- Current business balance sheet
- Proof of your registered business
- CDL (Commercial Driver’s License)
- Any required certifications or business licenses for your company
- Motor carrier number
- NSC (National Safety Code) number and registration number/certificate, depending on your province.
Collecting these documents is not a difficult task. Once you have them in order, you will be ready to move on to the next step.”
3. Select The Truck That Suits Your Needs
Choosing the right semi-truck is a crucial step in semi-truck financing. Follow these steps to make sure you get the best possible vehicle for your business:
3.1 Determine Your Business Needs Consider the goods you will be hauling and select a truck that can accommodate them. Don’t choose a vehicle that’s too small or too big for your needs.
3.2 Look for a New or Slightly Used Truck A newer truck with fewer miles is more likely to be approved for financing. Ensure the vehicle is less than ten years old and has less than 700,000 miles on it.
3.3 Buy from a Reputable Dealer Buying from a reputable dealer improves your chances of getting approved for financing. A dealer can also provide warranties and other protections for the vehicle.
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3.4 Negotiate and Get a Written Quote Negotiate a fair price and get a written quote that includes the mileage, pictures of the vehicle, model, make and year, specification of condition (new or used), condition report, and truck serial number. This quote will help speed up the financing process.
Once you’ve selected your semi-truck, move quickly to secure financing. Cash buyers have an advantage in the market, and you don’t want to lose out on the perfect truck for your business.”
4. Pick Out The Best Insurance
Choose The Right Insurance Proper insurance coverage is crucial for semi-truck financing. Lenders won’t assume the risk of potential accidents or damages, so it’s important to have adequate coverage. Different types of insurance are available depending on the nature of your business, but primary liability coverage, physical damage coverage, cargo coverage, and bobtail coverage are some of the most common.
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The cost of insurance varies depending on the size of the business and coverage requirements. To ensure you get the right insurance policy, it’s best to seek help from an insurance broker. They will provide you with expert advice and make the process of choosing the right insurance much easier.”
5. Deliver The Whole Documentation To The Lender
Submit Your Semi Truck Financing Application Once you’ve completed the previous four steps, it’s time to submit your application to the lender. Take some time to double-check everything, as accuracy is crucial in this delicate process. However, if you forget to include something minor, most financing companies are flexible and will accept additional documentation.
When submitting your application, ensure that you have included all the required documents, such as proof of business registration, bank statements, current balance sheets, and the quote for the truck you have selected. Be sure to provide your insurance policy details as well.
Finally, submit your application and wait for the lender’s response. With the correct preparation and attention to detail, you increase your chances of approval and receiving the best possible financing terms and rates.”