Capital Solutions
Deal Of The Week
Customer wants to finance an over the road truck
The Problem: Customer With A Two Year Old Bankruptcy Wanting To Buy A Ten Year Old Truck
We had a dealer send us a guy with a recent bankruptcy, hurdle number one. He wanted to buy a older truck, hurdle number two. The real problem here was not the bankruptcy, it was the liquidated value on the truck. Today's market is saturated with inventory and auction values have plummeted. Here's what we had to deal with:
- Sales price of the truck was $12,000, but auction value was around $7,000 so we were way under collateralized
- The recent bankruptcy indicated poor payment history so there was concern over his ability to make the monthly payments
- There was no warranty on the truck. If this guy breaks down we are all put in a bad position
Because our focus is more on equity than credit our concern was the lack of collateral. Should this guy default we would lose big time.
The Solution: Explanation Of The Bankruptcy And Additional Collateral
Before we went any further we needed to make sure he could make the payments. Also we needed to fill in the equity gap brought on by the older subject equipment. Here's how we put it together:
- After speaking with the client we found out that the bankruptcy was the result of an ex-partner taking him for about $50,000. Prior to that he always paid his bills.
- He had a 2005 reefer trailer that he could put up for additional collateral. This filled in the equity gap.
- He had a contract to haul for $2.30 a mile from a national carrier.
The contract along with the explanation of the bankruptcy reassured us that he could make the payments. The trailer help put the final piece together and we funded the deal that same week.
With Additional Collateral And Some Digging We Can Work With Almost Any Customer.