Do you have a down payment? It’s a primary consideration when you buy a truck. If you have it, your lender could hand you a loan given you satisfy its other requirements as well. But what if you don’t, will it lower your truck financing chances? What are other options available? Let’s find out.
Do you need a down payment?
The answer would depend on several things and conjure different scenarios. There are factors that compensate or mitigate the downpayment requirement. Lenders can offer zero-down financing for the creditworthy!
First off is your credit. Like any financing out there, the best rates and terms are reserved for borrowers with stellar credit. They are those with high credit scores and little to no blemishes on their credit reports. If your credit is great, your lender could shave off your share of the truck’s purchase price or approve your loan with zero down payment.
If your credit is not really perfect, your lender can look into your other assets. If you own other vehicles, for example, they could be used as additional collateral securing your loan and could mean little or no down payment for you.
But what if your credit is average and you’re running low on funds for down payment? This can be a problem. Your down payment can actually serve as a compensating factor that offsets your average credit. If you don’t have any money for down, you could be turned down for financing.
How much is your down payment?
Aside from credit, you should be aware of other factors that add to the lender’s risk in making your loan and weigh toward your down payment size.
There’s the length of your business operations. Someone who has yet to launch his/her business (thus the truck loan) can be required to shell out a higher downpayment compared with someone whose business is up and running for two years.
Being an owner-operator can contribute to the size of the down payment requirement in that he/she usually owns one truck and if it breaks down, he/she could find it hard to make the monthly payments.
The age of your truck also matters when it comes to down payments. An older model will likely require more visits to the repair shop, increasing the chances that the borrower might not be able to pay off his/her loan.
When you buy your truck, make sure its documentation and condition can easily be verified by the lender, otherwise it would look risky and you know what happens next.
It’s the lender’s call on how much down it can ask from you. Make sure you come prepared when you apply for a loan.