Capital Solutions
Deal Of The Week
Customer wants to finance an older truck
The Problem: The Customer Wants To Purchase A 1996 Freightliner
As you know this truck is too old for most financing companies to handle. That can make it hard to move some of your inventory. When you work with a financing company that can look beyond this initial problem you can often find ways of putting it together. Here are some of the reasons these deals are hard to put together:
- Older trucks can mean break downs and when a truck breaks down the lender doesn't get paid. This is the main reason a lender wont do these deals
- Lenders go by auction values. The auction values on older trucks have nose dived in the past year. In a lenders eyes these trucks have no value
- Many lenders have trucks in their possession. Most of these trucks are older. The last thing they want is more older trucks on their books
Combined with the fact that these deals are typically smaller than on newer trucks, its hard for a lender to get excited about doing them.
The Solution: The Dealer Offered a Limited Warranty On The Motor
This protects the lender in the case of a break down. It also tells us that the dealer had enough confidence in the truck that he was willing to stand behind it. Here's how we did it:
- The warranty was for two years, which covered the term on the deal. We we covered for the whole term
- The customer put up additional collateral in the form of two other trucks. These trucks were newer and allowed us to over come the customers credit issues
- The customer had 15% for a down payment giving us equity in the subject equipment
We got around the age issue and over came the customers bad credit. With this sort of arrangement a dealer can better move his older equipment.
If your looking to purchase an older truck we may be able to help.