Keeping your semi truck on the road can be difficult, especially as a single owner operator. Not only are you responsible for running your rig at all hours of the night; you have to maintain the business side of things as well. This can prove to be difficult. If you include cash flow issues into the mix, it can become stressful. While there are factoring companies that specialize in truck factoring, it may not be the right choice for you. An alternative that has been growing in popularity is the semi truck title loan.
What is a Semi Truck Title Loan?
A title loan is a financial product that uses a vehicle’s title as collateral. In this particular instance, you’d use the title to your semi truck as collateral for a loan. Semi truck title loans are available for actual power unit itself, or your trailer if you own one. It can be any type of trailer, such as a dry van, reefer, flatbed, step deck etc.
Commercial truck title financing allows you to free up capital to help run your business today, while paying back the loan over a period of 1-5 years.
How do you Qualify?
Qualifying for a semi truck title loan is actually easier than you think. The primary requirement is that your vehicle is paid off in full. In other words, you can’t already have a loan for your truck. Besides that, approval is based on your personal or business credit. Of course, the better your credit is, the better loan terms you’ll be offered.
How Much Can you Finance?
You can usually finance between 50-70% of the value of your truck. But be aware, the truck’s value will be determined by the lender. They will almost always value it lower than what you think it’s worth. That is because in the case of a default, they’d have added costs to repo the truck, and auction it below market value for a quick recovery of their funds.
The type of vehicle that you are seeking financing for also plays a role in determining the LTV (loan to value) that the bank will offer. Generally, the more specialized your equipment is, the harder it is to sell. Therefore, the bank will not want to lend as much in order to protect themselves in the case of a potential default.
What Types of Commercial Trucks Qualify for Title Loans?
The simple answer is, most of them. As long as you otherwise meet the requirements talked about above, your vehicle should qualify. But as we mentioned, the terms and loan amount will vary depending on the type of semi truck or other vehicle you are using as collateral for a title loan. Some common commercial trucks that are financed include:
- Semi trucks
- Semi trailers
- Box trucks
- Dump trumps
- Food trucks
- Local delivery stepvans
Commercial Truck Title Financing May be the Answer
While each business has it’s own unique set of circumstances, taking out a semi truck title loan can be the key to unlocking additional capital. The benefits can be tremendous, and can help your business reach new heights.