Capital Solutions
Deal Of The Week
Customer financing a $10,000 trailer
The Problem: Customer Had A Recent Bankruptcy And Wanted To Buy A 2001 Flatbed Trailer for Only $10,000
The explanation of the recent bankruptcy was weak to start out with. He claims he "just got over his head" and filed. Not the sort of reason we are looking for. Plus he is buying an older trailer for only $10,000. This is where we were struggling:
- Customers with BK's due to medical, divorce, etc are much more acceptable than the reason this guy gave us. It didn't give us a high comfort level at the beginning
- We do accept deals down to about $8,000 but these are deals usually coming from someone with a track record
- The customer wanted to put $2,000 down financing $8,000 which made the deal even smaller
None of these were enough to make us turn away from the deal but it was hard to get excited about it.
The Solution: A 2004 Peterbilt For Additional Collateral
This got us much more interested in the deal. With the Pete, the equity was there. But the guy seemed flakey at the start. Here's how we put it together:
- One of our greatest talents is our ability to uncover gold in otherwise lousy deals. Upon further questioning we found out this customer had some serious personal problems that disrupted his life for a time (his wife of 20 years left him suddenly). This resulted in the BK
- His life was now on track and he was serious about making things work. We believed him. After all he was giving us the title to his truck worth $25,000
- He had a contract to drive for a national company
These are the deals we like putting together. An otherwise good guy that just got into a rut. We helped him grow his business and we saved our vendor a deal.
Equity in the form of additional collateral is our main requirement. Getting a good explanation of the customers bad credit helps a marginal deal get approved. We are the best at doing this stuff.