Purchasing a truck is a major financial investment that involves a significant amount of preparation. The decision of how to finance a truck involves several key steps and will require you to do a fair amount of research to prepare for your purchase. Many commercial truck lenders are borrower-friendly even in this economy. Because the commercial truck is valuable collateral, there is little risk of loss for the lender. There are many different types of companies that specialize in industrial equipment or truck financing. It is important to know the details of how these companies operate, so you can find the best possible deal for your needs. To calculate truck financing, you must establish the cost of the truck, decide on how much you will pay as a down payment, explore loan options and make a decision that best fits your personal wants and needs.
Guidelines on Calculating Commercial Truck Financing:
1.) Determine the cost of the truck. You should identify the truck you want to buy and locate a detailer where you can purchase your vehicle. You should shop around to ensure you have the best possible price for the truck you want to buy. Once you have identified where you will purchase the truck, you should negotiate a price. Once you have the price set, you can begin to explore various ways to finance the purchase.
2.) Decide on what kind of down payment you can afford. You should examine your personal finances and establish a cash amount that will be placed directly towards the total cost of the truck. If your truck costs $20,000 and you can make a $5,000 down payment, you will have $15,000 left to finance through a loan from a financial institution.
3.) Examine options.
a. A Loan. As with any type of loan, a bank or financing company will lend you the money to purchase large pieces of equipment or large trucks at a particular interest rate, depending on the institution you are borrowing from or the quality of your credit. If you believe or know you will have steady business once you have your equipment or truck, and therefore will be receiving regular payment for your services, taking out a loan to purchase these items is an excellent idea, because you will be able to pay back the capital group or bank on time and the interest can simply be factored into the fee for each job your company performs. If business is not guaranteed to be steady during the loan period, this option becomes more and more risky.
b. Leasing. Leasing a large piece of equipment or a truck is a better idea if your company is trying to retain capital and spend money in other places. The cost of leasing a truck is much less than buying it and making monthly payments. However, the mileage of the truck comes into play, as does the wear and tear on both the truck and the equipment. It's also considered throwing money down the drain in a way, because at the end of the lease, your company will not own the truck or equipment; it was merely rented for the term of the contract. However, leasing can be ideal if the truck or equipment is only going to be used sparingly for certain jobs each year, in which case it isn't worth buying it.
c. Purchasing. Buying a truck or equipment is a good idea, even though it may be more difficult to finance. This is because you will retain a portion of your investment in the equipment or truck itself when you buy and pay it off over time. This way, though, you can rent the truck out to other companies or people for a fee when you don't need it, earning money that can help you with your payments. However, maintenance and upkeep come into play here, as they become your responsibility. Be sure to get a manufacturer's warranty for at least a few years from whomever sells you the truck or equipment; and make sure whomever you rent the truck or equipment to provides proof of insurance.
4.) Calculate your expenses over time. This calculation can be done very easily by using an online lease calculator, such as the one provided by Cars.com or Edmunds. You will need to input the information you gathered in the previous steps such as the price of the car, the interest rate and the repayment term. This will yield a calculation that will illustrate your total monthly payment, as well as the total cost of financing.
5.) Choose the best option. Once you have identified the pros and cons of the financing options available to you, you must make a decision as to your best option. The best option is usually the least expensive option that best fits your needs. If you decided to take out a loan through a financial institution or an automobile dealer, you must apply for the loan. If you are approved, you can use the funds to purchase the truck. Your payments will begin immediately.