Want to start your own dump truck business but don’t have the budget?
Starting a dirt hauling business that involves used dump trucks can be financially challenging.
Dump trucks can be expensive and running the business can be even more so. Aside from the daily operating expenses, maintenance costs can be steep, especially if you are purchasing second-hand dump trucks.
But, how can you support your operations if you have no capital to acquire the dump trucks you need?
With used dump truck financing, you can easily start your gravel hauling business without breaking the bank. If you have no experience in using this type of business financing before, then this guide will help you gain an understanding on how to get the best business loan for a startup business.
In today’s blog, we will discuss what used dump truck financing is and how this type of financing works for startups.
A Guide on Used Dump Truck Financing for Startups
A dump truck business requires thorough decision-making because of the huge amount of money that is at stake. It’s not something that can be started with a small budget.
Dump trucks can be expensive and if you opt to purchase used ones, you can expect the maintenance costs to go through the roof. You got to have money saved up for fuel, insurance and your monthly business loan payments.
To help lessen the costs you’ll incur, you can choose to apply for a used dump truck financing.
But what exactly is used dump truck financing?
Dump Truck Financing for Startups
There are a few options available for startup businesses when it comes to used dump truck financing for their business. While the local bank may seem like the most obvious choice, dump truck finance companies can pose better alternatives for those needing more flexibility with the down payment and getting approved for a dump truck loan even with good and bad credit.
We will further expand on the difference between the two:
Local banks have stricter rules and regulations when it comes to financing startup businesses. The lack of consistent working capital makes startup businesses riskier than their larger counterparts, which makes business finance banks think twice before lending. In most applications, a minimum credit score of 680 is required, but even this cannot guarantee an approval.
Dump Truck Financing Companies
There are two options provided by dump truck financing companies: the dump truck loan program and the dump truck leasing program.
The dump truck loan program allows you to be the owner of the used dump truck after the end of your payment obligation. However, because of this arrangement, upfront costs tend to be higher and can discouraging to small businesses. The agreement will typically be called an equipment finance agreement.
On the other hand, the dump truck leasing program provides a rent type of arrangement during the dump truck lease term. You will then be given the option to either buy the dump truck or surrender it to the business finance company at the end of the dump truck lease.
Tips When Obtaining Financing for Dump Trucks
Before applying for used dump truck financing, it’s crucial that you have some basic knowledge of how it works before closing the deal.
Conduct an investigation of your chosen business loan company.
Are dump trucks their expertise or simply one of the many assets they lend?
Business lenders can have different specializations. It’s recommended to choose one that considers the dump truck as their qualified asset in order to receive the best value for your money.
Check the different programs offered by the financier.
What are the terms and clauses?
Business loans and used dump truck leases can last 36 to 60 months, depending on the dump truck’s age. To know the true age of the dump truck, check all its parts - while its dump box may be “new”, its chassis can be as old as 8 years.
Try to find out as much as you can about the different processes involved in the application so you won’t be caught by surprise in the middle of negotiations.
Used Dump Truck Financing for Startups
Financing a startup business entails risks from the part of the dump truck lender. Whether it’s for a used dump truck financing or a new one, there are several factors business lenders will have to analyze before approving an application.
To know what you are getting into, here is a quick run through on business financing facts and leasing rates to consider before applying for business financing for your startup business.
Payments required from startups are higher than those that have been operating longer than 2 years. This is because of the high risk involved due to the inconsistent cash flow and insufficient collateral. At the same time, companies that fail often do so during the first 2 years of operations.
Used Dump Truck Lease Rates
What can you expect to pay every month when you avail of used dump truck financing?
It all depends on your credit score.
Here’s an example: Let’s assume that you want to buy a $60, 000 used dump truck to be financed for 5 years.
If your business’ has been running for 2 years with a good credit, then the chances of you paying $1,245 per month for 5 years is higher. A decent or imperfect credit can result in a payment of $1,525 per month for 5 years.
If your business is less than 2 years old and has good credit, then you can expect to pay $1,335 per month for those 5 years.
However, if your business is less than 2 years old and has a risky credit, then you can expect to pay $1,700 per month for those 5 years.
Use our used dump truck finance calculator to calculate how much your machine tool financing payments could be and how much machine tools you can afford to buy based on your monthly budget.
Although used dump truck financing can be available regardless of credit score, keep in mind that the riskier your credit is, the higher the monthly payment will be.
Final Thoughts on A Guide on Used Dump Truck Financing for Startups
Starting a dump truck business is a costly endeavor. With the steep daily operating expenses and maintenance costs, it is not something that can be started with minimal capital.
This is where used dump truck financing comes in. In this blog post, we discussed what used dump truck financing is and where it can be availed. While the local bank is the first option that comes to mind, it’s not recommended given the strict rules they need to follow.
Because of these rules, the approval rate of applications can be low at local banks. Dump truck financing companies provide dump truck financing programs to businesses, which can offer more flexibility.
If you want to know more about used dump truck financing, you can call Trust Capital to finance a dump truck at (866) 458-4777.