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3 Ways Leasing Companies Beat the Bank in Commercial Truck Financing

Commercial Truck Financing banks vs. leasing.pngAll fleet owners are familiar with bank loans -- who hasn’t sat in that chair, crossing his fingers while a loan officer decides his fate? Far fewer owners understand the great commercial truck financing alternatives out there.

Lease financing is a lease-to-own scenario that offers many benefits to the commercial vehicle industry. In fact, we’re going to go ahead and call a winner in the banking-vs.-leasing fight before it even starts: Lease financing.

Need evidence? Here are a few ways the bank is making you pull your hair out, and how lease financing helps you avoid them:

Commercial Truck Financing: Why Do Banks Make It So Hard?

1. Limited Lending Practices

A lot of local banks are being swallowed up by larger institutions. Or, at the least, staffing levels are down. How do you expect to get good service if you walk in and there’s one teller and nobody else working?

Even if you find a ready and willing bank, chances are it won’t understand the specifics of commercial trucking like a lease financing company that specializes in your industry does. The bank would have to do a ton of due diligence on your company, the industry, and collateral. And every bank has a stringent loan process it follows.

All of this red tape can cost you time and -- ultimately -- money. By the time that due diligence happens -- if it does at all -- you may either miss out on the vehicle you wanted or lose weeks (or even months!) of profit by not having that vehicle on the road.

Need to act fast? When buying used equipment, a bank is not always the answer.

2. Tough Terms

Just because a bank is willing to finance your commercial vehicle doesn’t mean you’re safe. Sometimes the bank’s terms are far from customer-friendly.

Think you’re going to walk in and get a 10-year loan on the truck of your dreams? Think again.

Want to swoop in and nab five vehicles for your fleet? The bank might say, “Sorry, we can only finance one for you.”

Bottom line: Banks are more risk-averse when it comes to commercial trucking -- even institutions that claim to cater to small businesses. If there's a slight downturn in business and you don't have the proper financing structure to weather the blow, you could lose your truck very quickly.

Good lease financing partners won’t limit you in these ways. They try to structure your lease in a way that gives you long-term options. Those companies will even restructure your lease before resorting to yanking your moneymaker out from under you.

3. In the End, a Bank Isn’t Gonna Help You

Say that, after a great ride together, you’re trying to sell your truck and want help financing it for the buyer. Word of advice: Don’t bother going to the bank.

If you financed with an industry-specific leasing company, it’ll be familiar with and comfortable working with the vehicle you're trying to sell. A leasing company has incentive to help you.

How do they do that? By examining:

  • The strength of your business
  • The strength of the customer behind the business (i.e. credit background)
  • Condition of the collateral, including whether the truck has a fair market value

Financing Doesn’t Have to be a Downer

A lease financing company can help you focus on what’s important to you: Keeping your fleet strong. It’s almost always best to let a lease financing partner handle your headaches, rather than letting a bank create more.

Your scouting work isn’t done yet. Check out these other ways your commercial truck financing deal can go sour.

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