Here are some tips to know when considering financing
Tip #1: Welcome to the Commercial financing market
it’s a completely different world than the consumer market where financing a car or home is easy peasy..
The Commercial Equipment Financing Industry has its own set of risk scores which have absolutely nothing to do with or even align with the consumer market.
If you are a person with 700 score, you could walk into Mercedes, get a really low rate and drive away that same day.
That’s not the case with Commercial Equipment Financing because Commercial Equipment is used as an asset to produce revenue for a business.
Tip #2: The specific Industry you are in matters.
Meaning, are you in trucking?
If so do you run long haul or short haul?
Do run Dump trucks?
Do have Pump trucks for your waste removal business or do you run Box Trucks?
Are you in the Tree Trimming Industry and need a boom truck?
The collateral matters to the underwriter. Even the collateral has different factors that comes into play with the terms an underwriter will approve you for.
Every Industry is assigned a risk score, the lower the risk score, the better the interest rate and better credit terms, the higher risk the higher the rate and you might have to put money down depending on your credit.
Tip# 3: How long have you been in business?
Are you start up, are you a few years into or have you been around forever? This matters in the eyes of the underwriter. A Start up company will always have to come up with a down payment, how much depends on your credit score and credit history.
Tip 4#: Comparable Borrowing history or Comp Credit
As we refer to it in the industry is also taken into consideration. This is just a fancy word for saying have you financed any Commercial related
Tip #5: I bet you already know this question is coming,,,, What is your personal credit score?
If you are a brand new or newer business, or even an established business, personal credit score plays a big role to in the underwriter’s decision.
The higher your credit score, the better terms and the better financing contracts that are available.
Usually if your personal credit score is under 650 you can expect a down payment will be needed especially if you are in the Trucking Industry.
However, is you are in construction or another industry getting a $0 down get approval is very possible especially with a 630+ credit score. The reason being, is lenders like the equipment and the industry has a lower risk of default.
which means they are willing to take a issue a better credit approval to someone who has okay credit.