How to Qualify for Dump Truck Financing with Bad Credit

As a company that has been offering financing on dump trucks and trailers for nearly thirty years, we’ve seen every possible credit profile. Ironically, the customers with personal credit issues have often been our best paying and longest tenured partners. Because of that, we have a passion for helping all credit types. Having an in-house finance program allows us to make loans for customers and ignore credit challenges when we know they have a thriving business, but how is it that we successfully place hundreds of dump truck loans per year even with outside lenders?

Over time, we’ve developed a tried and true method to getting bad credit, thin credit, and even no credit customers into dump truck loans and leases. This involves a simple five step approach that we train all of our representatives to follow:

1. Put your best foot forward

Prior to submitting your transaction, we ensure that all of your credit obligations show current. That means if you’re late on a car payment or have a small open collection, we’d rather guide you to bring your accounts to a positive status BEFORE submitting your application to a lender. It’s not that we can’t get rolling stock financing approved with some minor credit issues, but by being proactive we improve the character profile of your application and improve the odds that you’ll score favorably whether we look at your transaction in-house or syndicate with one our outside construction lenders.

2. Offer as much structure as possible

After addressing minor credit issues, the next biggest priority is coming up with an alternative structure to entice a lender to offer an approval. The best ways to do this include pledging a second dump truck, trailer, or other titled vehicle as additional collateral; providing a large (15% or more) down payment; being willing to accept a shorter term (like 24-36 months); and having a good credit additional signer willing to guarantee the transaction. To really sweeten the deal, having two or even three kinds of structure can make a finance company turn a blind eye to some credit hiccups, and can even result in a better rate or terms — even if you have less than perfect credit.

3. Provide proof of work

One common joke in the equipment leasing business is, “If I only had a truck…” The punchline is that owning a dump truck, or excavator, or dozer will automatically bring work, and that work will yield the money needed to make the monthly payment. The reality is that just because you buy equipment, you may not necessarily find a massive influx of revenue. Lenders know this all too well, for even some businesses with amazing work in progress and massive cash flows have gone by the wayside during slow times.

If you can provide some kind of proof that you have work in the pipeline – a letter of intent from a contractor that plans to hire you, a trucking company that will lease your unit on, or proof that maintenance on a dump truck that needs replacing is impacting your ability to do outstanding work now – the funding source will give some credence to future revenues. In general, the rule of thumb is that credit decisions are made based on what you earn now – not potential income – but lenders are also human beings with common sense and can connect the dots. If you help them see how you get from point A (buying the truck) to point B (actually making money hauling), you’ll score legitimate bonus points in the process.

4. Provide a resume

We don’t mean this literally, but giving your representative an idea of your background and body of experience in construction and trucking, including how long you’ve had your CDL, and what kinds of work you’ve done in the past can always help. This is especially true for customers with limited time in business. You may not have a track record of success under your current business name, but you can show that you’ve had personal successes in the industry. If you really want to stand out, provide work references who can vouch for your level of service and commitment. All of these things help to address any potential character concerns that pop up when they see derogatory credit marks.

5. Don’t shoot for the moon on the first try

If you have poor credit (below 600), there’s always wisdom in finding a less expensive truck or trailer, or buying one instead of multiple units. You’d be surprised how frequently we have customers contact us to buy $150,000 dump trucks with a 500 credit score. In fact, for applicants in the poor and fair credit sphere, nearly 90% end up lowering their expectations and buying something less expensive, older, or in a smaller quantity than they initially anticipated. Don’t let this discourage you. Buying a truck that can immediately generate a return on investment gives you an opportunity to use increased profits to repair credit issues and results in you showing more cash flow. All of that ultimately means that when you next apply for financing, you will have better odds of qualifying for a more expensive hauler.

Improving your financing outlook

All of the above steps are ways to minimize the damage of negative credit. In truth, nothing can fully replace a track record of paying your bills on time. Customers with bad credit seeking dump truck loans will typically have to pay larger financing charges. Nonetheless, these contracts build commercial credit ratings and references that can be powerful ammunition in obtaining better rates, longer terms, and lower or even no down payment financing in the future.

Getting the best deal on financing for a dump truck, trailer, pup, transfer, articulated hauler, or other construction vehcile doesn’t have to be rocket science, but it does require thinking outside the box. Instead of focusing in on the best interest rate programs, customers should consider return on investment, and make moves to improve their future credit outlook. By knowing how to present the best package to a lender, you’ll already be a step ahead of the pack.

At American Leasing & Financial, we’re so passionate about dump truck purchases (and financing for rolling stock and off highway trucks in general), that we actually created a special financing program just for dump trucks. Dump Truck is a niche funding processor backed by two dozen boutique funding sources and banks, as well as our own in-house funding arm American Leasefund. We pride ourselves on offering flexible truck, trailer, and equipment lending programs, regardless of credit issues, for startups and established businesses alike. Learn more at OR apply now for an easy approval in as little as 24 hours.