There used to be a saying in the commercial truck financing business which went something like this, If the applicant can fog a mirror they will be approved. These days nothing could be further from the truth. Like other segments of the economy commercial truck financing has gotten very tight. At one time anyone with a credit score higher than 625 could easily be approved. As a financing company that specializes in people with bad credit we are seeing people with credit scores at 675 indicating they are not getting approved through the main stream companies. So what is a truck driver to do? There are some things you can do to better your chances of getting approved. Here are some ideas:
Current or Future Contracts. Informing the financing company or dealer of any contracts you have that support the fact you will keep the truck working. If you can give them a copy of the contract that helps the financing company get a better understanding of your financial health. They want to loan money to people that have the cash flow to service the debt. You would be surprised of how many people want to purchase a truck that have no place to put it to work. They might rely on load boards or brokers they don’t have a relationship with to get loads, etc. Not a good way to run a business. A contract tells a financing company that you are established and have worked lined up.
Past References. Have you financed a commercial vehicle before? The potential financing company wants to know about it. Most credit applications have a section for trade references. Bringing in letters from past creditors showing your good credit history goes a step further in establishing you as a good credit risk. Just call your previous financing company a week or two before applying elsewhere to give them time to send you something.
Seek Out a Recourse Dealer. This requires some homework. A recourse dealer is a dealer who is held responsible if a deal goes in default. The manufacturer will look to them to remarket the truck and make the manufacturer “whole”. To find a dealer that is on recourse simply ask the salesman. A dealer that’s on recourse will be more willing to sign off on an application when sales are down. Work the slow economy in your favor.
Explanations of Past Credit Problems. Have a bankruptcy, repo, etc. Write up an explanation of why it occurred along with any supporting documentation. This puts the blemish in it’s best light and can put a potential creditor at ease. Here’s a good example. We had a customer with a foreclosure on his credit bureau. Not a good thing to have when applying for credit. Turns out his ex-wife got the house in the divorce. The court ordered her to make the payments which of course she did not resulting in his credit problem. When we got the explanation it turned it around for us and we approved him. Bankruptcies due to medical bills are another example of a good explanation.
Bring Something Else To The Party. If you are well aware of your bad credit offer the financing company something to compensate it. A cosigner is common to help get around minor credit issues. If you have major problems offer additional collateral. This is a very common strategy to get around bankruptcies, repossessions and other major credit problems.
As you can see there are ways to better your chances of obtaining financing if you go into it prepared. Open communication with the potential creditor is a must. Being honest and forthright upfront will help put your situation in the best light. Good luck to you.