The Structure of Commercial Truck Financing
Tuesday, March 9th, 2010The Structure of Commercial Truck Financing
Captive Finance Companies
You cannot talk about commercial truck financing without first considering Captive Finance Companies. These companies are usually the financial arms of virtually all the major manufactures. Their major function is to provide financing to the public to enable them sell their trucks. They have been known for their liberal nature of underwriting criteria for so long which has eventually caused serious defaults today. A further effect of this is that they have tightened credit, selling only few trucks and trailers thereby making customers to face difficulties in financing.
Independent Financing Companies
Their business is all about making profits from the financing commercial trucks and other relate equipment. They are good in the sense that when a good credit customer is tapped out with the captives, they are usually the ones to turn to for a helping hand. The reason why they would not want to do more for the customer is because they already have financed trucks with the captive financing companies. They can also help a customer search for TRAC lease with different parameters greater than what is being offered by the captives.
In-House Financing Arm
This arm of commercial truck financing is usually offered by small vendor and it has the tendency of offering benefits to both the customer and the dealer. The dealer that offers financing in-house will be able to move more inventory than ever before. This is great because most small dealers dont always benefit from captive finance programs. As independent financing companies are loosing their popularity, small dealers can take the advantage and act like independent financing companies by offering the same products while they enjoy the benefits of interest earned for selling the trucks.
Note that the major function of commercial truck financing is to provide financing to the public to enable them sell their trucks.
