Capital Solutions
Deal Of The Week
Customer wants to purchase a Freightliner truck but has open tax liens
The Problem: Customer Wants To Purchase A 2001 Freightliner FLD120 But Has A $30,000 Open Tax Lien
Tax liens have always been a concern for lenders because the government can come in before a lien holder and foreclose on the asset. Through years of experience and a fortune spent on legal council we have determined that, as a lender, we are safe on title equipment (i.e. trucks, trailers, NOT real estate). Here are the particulars:
- Customer was buying a $30,000 truck. He had the open tax liens plus other credit derogatory's
- He had no comparable credit history. The biggest thing he had ever financed was a jet ski
- He had just gotten a divorce so his credit was about to get worse
This is actually a very common deal for us. A divorce complicates an already messy deal.
The Solution: Customer Had Two Other Trucks Free And Clear That We Could Use For Additional Collateral
Because the additional collateral was title equipment (trucks) we were protected from the tax lien. We could not have done this with real estate or non-titled heavy equipment. Here's how we put it together:
- The customer had two 2001 Freightliners that were free and clear. The value covered the amount we were financing
- The customer could put $5,000 down on a purchase price of $25,000
- He had a strong contract with a national carrier that he had worked for in the past. They had a strong relationship that help secure the future cash flow
We were in a good position on equity using the two trucks for collateral. His relationship with his carrier seemed solid with a promising cash flow going into the future. Good solid deal.
Lenders are afraid of tax liens but we did research and determined that we can service this area successfully.