Dump trucks are useful tools to have in a number of industries, though they don’t come cheap. Often, entrepreneurs are faced with deciding whether it makes the most sense to purchase, lease, rent, or sub-contract a dump truck.
Buying a commercial vehicle like a dump truck is a big commitment that involves a significant financial investment, which is why most business owners look for dump truck financing options when they’re ready to own. If you’re looking to become a dump truck owner, this article will help you navigate the financing process.
How to Finance a Dump Truck
Commercial vehicle financing works a lot like buying and paying off a car, except the price tag is higher. One of the most popular means to purchase a dump truck is by using a commercial truck loan. This type of loan is available through traditional bank lenders and alternative lenders. The vehicle itself serves as collateral on the loan, which means the creditor can repossess the truck if your business fails to make the agreed-upon loan payments. Because of this, interest rates tend to be lower and monthly payments more affordable. Additionally, businesses with less-than-ideal credit may be able to access this type of loan more easily.
A lease is another option to consider if your business wants to invest in work trucks. Many conventional bank lenders offer dump truck leases along with specialized commercial truck financing companies. As with any vehicle lease, a business makes payments in exchange for use of the truck for a certain amount of time. At the end of the period, the company has the option to turn the truck in or purchase it for the residual value (otherwise known as a TRAC lease). Some people prefer equipment leasing because the truck is generally returned before they have to deal with significant maintenance or depreciation. Additionally, monthly payments are typically lower than a loan, making this option more affordable from a monthly cash flow perspective. Though, higher interest rates might consume any cost-savings.
Equipment financing can also help a business obtain all types of dump trucks and equipment. Some lenders may consider a dump truck to be heavy equipment and handle financing of this hard business asset as they would other machinery like construction equipment or commercial hardware. Traditional banks, alternative lenders, and specialized equipment creditors offer heavy equipment financing programs. Since the truck itself acts as collateral, this option is more easily achieved than some alternatives. Often, a borrower will need to make a small down payment on the equipment as part of the financing agreement.
If you’re searching for dump truck financing programs, the Internet is a great place to start. You can quickly compare offers and determine the most favorable rates for your business. You can also efficiently begin the application process to ensure you get the funding required to put your truck on the road as soon as possible. Nav has qualified a number of trusted partners offering personalized business financing options that meet an array of business needs. From SBA loans to invoice financing to business credit cards, Nav can help connect you with lending partners to help grow your business, including BlueVine, OnDeck, and American Express.
Below, we’ve included information on some of the most popular alternative lenders that offer small business loans and dump truck financing.
Balboa Capital is an online lender that provides equipment loans, business loans, and lines of credit to growing companies.
|One year in business, $100K annual revenue, “decent” FICO credit score
|Up to $500K
|No collateral, same-day funding, flexible term lengths
|No short-term financing, sometimes confusing terms
Crest Capital is a national creditor with a focus on funding equipment, vehicle, and software purchases for small businesses.
|24 months in business, minimum 650 credit score
|Up to $1 million
|Minimal paperwork, few restrictions, A+ BBB rating
CAG Truck Capital
CAG Truck Capital is a lender specializing in the trucking business. Exclusively offers commercial vehicle and engine overhaul financing.
|As low as 10%
|Dependent on credit report and business history
|Dependent on credit report and business history
|Online application process, early payoff options, entrenched in trucking company needs, bad credit OK (even history of bankruptcy and tax liens)
|Less affordable for individuals with bad credit
Other Financing Options
Additionally, the financial establishment where your business currently banks (whether a large national bank like Wells Fargo or a small local credit union) may have vehicle loans or equipment loan programs to assist you with buying a dump truck. The dealership where you purchase the truck might also work with partner lenders to support financing and offer incentives like deferred payment.
How To Qualify for Dump Truck Financing
Before you begin the truck financing application process, take some time to gather the items you’ll need to be approved so you won’t be scrambling when lenders request them. Some of the things most banks and alternative lenders require include:
- Personal identification like your driver’s license or passport
- Relevant business licenses, including state and local registrations as well as any specific to your industry
- Legal entity documents if your business is a partnership or corporation
- Employer Identification Number, which acts like a Social Security Number to distinguish your business
- At least two years’ worth of tax returns
- Current bank statements
- Recent cash flow statements
Prior to starting the loan application process, it can be helpful to review your business credit report so you know your business credit score and what your chances are of obtaining more favorable rates. Reviewing your credit report ahead of time also gives you an opportunity to check for mistakes and remedy them before applying. You can access your business credit scores online via Nav.
What are Typical Dump Truck Financing Rates?
Just like any other type of financing, the rates you’ll get with a dump truck loan will depend on your qualifications. If you have excellent credit, you’ll pay a lot less in interest than if you have bad credit.
If you do have bad credit, you might invest some time in improving your credit by paying down debt and making monthly payments on time so you can better qualify for lower rates.
Generally speaking, you can find rates between 5 and 10%.
What Credit Score is Needed to Buy a Dump Truck?
While you can finance a dump truck without good credit or a lengthy credit history, you may not be able to land the most attractive rates and you may need to put up a sizeable down payment.
Credit score requirements will vary from one lender to another, but you may see requirements of scores over 600 or even 650.
If you don’t have excellent credit, not to worry. Because the truck itself serves as collateral when financing a vehicle like a dump truck, some of the risk is removed for the creditor. Certain alternative lenders use unconventional loan qualifications, looking beyond your credit at things like cash flow health and existing purchase orders. If your company is a startup, the moneylender may measure your personal credit records.
How Many Years Can You Finance a Dump Truck?
Dump truck financing terms typically last from about 36 to 60 months.
Is Used Dump Truck Financing Available?
Used dump truck financing is available, though not all lenders will fund a loan for a used truck. In most cases, the creditor will want to review an appraisal of the vehicle (evaluating things like fuel efficiency, mileage, and maintenance history) before committing to a loan, in addition to their standard application materials. Specialized industry lenders and online lenders may be more amenable to financing used vehicles than big banks.
How Can I Grow My Trucking Business?
Whether you’re looking to lease one dump truck or purchase a commercial fleet, there are a number of finance options to help you expand your business. From traditional bank loans to cash flow loans to merchant cash advance opportunities, lending can help your company get the money it needs to reach its next milestone. Ask your accountant, financial advisor, or trusted dealer which finance approach might work well for your business.
Nav’s Final Word: Dump Truck Financing
When you’re looking to add a dump truck to your company, the first step in the process is to decide whether a dump truck loan or a lease makes the most sense for your business. In some situations, you may also be able to finance your truck as a piece of business equipment.
Because the dump truck stands as collateral, many lenders are more forgiving with these loans, allowing companies that don’t meet standard lending requirements to finance a vehicle. However, in most cases, poor credit will equate to higher interest. In addition to traditional banks, there are alternative lenders and specialized industry lenders that offer dump truck financing.
Thorough preparation will ease the application process no matter what type of loan you are aiming for. Be sure to round up all relevant documentation and do a check of your credit report. With a little groundwork, planning, and research, your company will be adding a shiny new (or used) dump truck to its operations in no time!
This article was originally written on March 12, 2020 and updated on January 4, 2022.
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