Capital Solutions
Deal Of The Week
Customer has a prior repossession
The Problem: Customer Wanted To Purchase A Truck But Had A Six Month Old Repossession
Repo's scare away almost any lender. Voluntary or not, when a lender has to take a truck back they will most surely take a loss. In fact, I'm unaware of any other lender that will work with someone with a repo. Here were the facts on this deal:
- The repossession was the result of the customer over extending himself. He purchased too many trucks in too short of a time frame
- The rest of his credit wasn't perfect
- He had been in business for two years. This is okay but more depth would have made it easier
The dealer wanted to close this sale. He sent us the deal knowing the customer had additional collateral to work with. It was up to us to put it together.
The Solution: Customer Had Additional Collateral Plus Other Strengths
Getting the additional collateral is only half the equation. We want to work with someone that we know will succeed. The repo made us question this customers ability to make the payments. Here's how we did it:
- He had a 2004 Freightliner free and clear we could use for additional collateral
- He had just secured a new contract that promised him more work going forward. He stood to double his revenue
- We asked for, and he provided a written explanation of why the repo occurred. Part was due to growing to fast, the rest was due to a tightening economy
After getting to know this guy we felt more comfortable with him. Growing fast is good if managed properly. He learned a valuable lesson. We funded this deal very quickly.
Prior repossessions, bankruptcies, and tax liens are all things we can work around if we have additional collateral.