Off highway truck financing can be obtained in the form of an equipment loan or an equipment lease.
The most common form of equipment financing for this type of asset is via an operating or capital lease facility.
This is because the financing company can reduce and control risk better through a lease where they actually own the asset that you are using.
For off road truck assets, there can be several transportation equipment financing options for used equipment, even when assets are older than 10 years in age.
This is due to the fact that used equipment financing is based on the remaining useful life of the asset, and when you have trucks that can be operated far beyond ten years, there can be a strong case to be made with a financing company to provide financing.
From a lender or leasing company’s point of view, off highway trucks will depreciate very little from the tenth year of operation to the eleventh in most cases as compared to the drop in market value from say the second year to the third. As a result, older assets tend to hold their market value, or at least provide a more predictable value to lend against as compared to a newer model.
That being said, newer trucks are going to get the most financing company attention and provide for the best rates and terms.
The key with new off road trucks is how you want to manage your assets over time.
If you have a fleet of trucks, do you want to own them longer term, or replace them every five years or so when the higher levels of repair and maintenance will start to creep into the picture.
Depending on your objectives, financing can be arranged in the form of a capital lease or equipment loan where ownership of the asset is required long term as compared to an operating lease where the asset can be turned back to the leasing company at the end of the lease term without any further cost or obligation incurred by the borrower or lessee.
Even if you are a start up operation, there can be a case to be made for getting an equipment financing approval for an off road unit.
The keys to getting financing for someone starting out is a good down payment of between ten percent and twenty percent, solid credit, strong net worth, and a business plan that shows that the work is lined up and will be available to the operator for the financing term being requested.
And for established operators with three or more years in business, it can be fairly straightforward to finance one or more trucks. The challenge for existing operators will come more when they require several units and then will need to provide a balance sheet and corporate guarantee that can support the larger lending exposure that will be created from three or more units.
If you are looking to acquire a used off highway truck, then its going to be important to get an accurate condition report from the vendor or reseller so that the financing company in turn has a solid basis from which to assess their potential security value in the unit.
For getting financing on either a new or used truck, your first step is to get us a call so we can complete a free initial assessment of your options with you.