Truck Finance Update: Tougher, but Possible.

11/08/08 Update to the Update
If your business really demands additional equipment, you might want to check out the re-marketing departments of the major finance companies. One Cottrell dealer I spoke with recently told me that finance companies are dumping equipment on the market, possibly in hopes of taking part in a government bailout plan. A 2006 truck and trailer which would ordinarily sell for around $200,000 was recently sold for $116,000 by the finance company who had to repossess it. The truck had 300,000 miles on it! The guy who owned that truck before you probably didn't have the money to keep up with the maintenance on it either. You could buy a truck that has serious issues relating from deferred maintenance.

I was talking with Mark Mecklem at Boydstun the other day about truck finance issues in the current economic climate. Mark says that there is no doubt that conditions are more challenging, but they're still finding ways to get deals done.

He says that slower unit sales are not necessarily directly related to a financing slow-down. In many cases, it's simply a matter of a trucking company deciding to delay purchasing new equipment until they get enough business to justify the investment.

Mark says that some finance companies like GE Capital have tightened their lending guidelines and raised interest rates, but this isn't something that is industry-wide.

On the whole, what lenders are looking for is the following:

Decent FICO scores, not necessarily perfect. For people with less than perfect scores, loans are still. possible by cross-collaterizing the deal, i.e., lien against an existing asset like a truck.

Previous experience in the industry

A history of making truck payments on time

And even if all of this doesn't line up exactly, there are so-called "hard-money" lenders who will take a look at a deal and listen. If you've got the business to justify the investment, they just might be willing to make a loan. After all-- if they're not lending money, they're not making money.

Bottom line: if you really need a new truck and you've got the business to support the investment, don't sit on the sidelines thinking you can't buy a truck. The deals that need to get done will probably get done.