Pros and Cons of Commercial Vehicle Loans for Bad Credit
Before jumping on the bandwagon, it’s important to understand the pros and cons of bad credit commercial vehicle loans, so you can make the best decision for your business.
Pros
- Bad Credit Accepted – The good thing about commercial vehicle loans for bad credit is that they are usually not as stringent as other types of financing. Instead of scrutinizing your credit history, lenders that offer bad credit commercial vehicle loans will look at your capacity to pay back the loan. You may be required to provide proof of income to show that you have the capacity to pay back the loan.
- High Approval Rate – For as long as you are able to demonstrate your capacity to pay back the loan, you can expect a high approval rate for bad credit commercial vehicle loans. If you want to increase your chances of getting approved, you can provide additional documentation such as a business plan, revenue history, and proof of assets. You can also pay a bigger down payment if you can afford to.
- Repayment Period – Probably the biggest benefit of bad credit commercial vehicle loans is that you can expect to have a long repayment period. This means that you’ll have the flexibility to make your payments over a longer period of time, which is great for your cash flow.
Cons
- Higher Interest Rates – People with less than stellar credit ratings usually end up paying higher interest rates for bad credit commercial vehicle loans. The reason behind this is that bad credit loans, in general, are considered to be high-risk loans. But, you can always negotiate with your chosen lender to lower your interest rate. You can also get a lower interest rate if you are willing to pay a higher down payment.
- Negative Equity – One of the most overlooked downsides of bad credit commercial vehicle loans is that you can end up with negative equity. This means that you have to pay off more than the vehicle’s actual value. So, in some cases, it may be wise to choose a shorter repayment term. Not only will this help you save on interest, but it will also help you avoid negative equity. Ask your lender about this, so you don’t fall into this trap.
- Downpayment – Because of the high cost of commercial vehicles, some lenders will only be willing to finance a portion of the total cost of the vehicle. This means that you should be prepared to put down a larger down payment to ensure that you can afford the remaining balance.
Lending Companies That Offer Commercial Vehicle Loans for Bad Credit in Canada
Here are some of the most popular lending companies that offer bad credit commercial vehicle loans in Canada:
Capital Hands
Capital Hands is an Ontario-based lending company that offers bad credit commercial vehicle loans in Canada. Their loan amount varies from one applicant to another but their repayment term ranges from 3.7% to 35%. Their loan maturity date is from 12 months to 84 months.
Sparta Finance
Based in Victoria, British Columbia, Sparta Finance is a reputable bad credit commercial vehicle lender that puts no limit on how much you can borrow. They charge an interest rate between 3.9% and 34.9% with a repayment term ranging from 3 months to 240 months.
Core Capital Group
With commercial vehicle financing that can go as high as $10M, Core Capital Group is a trusted bad credit commercial vehicle lender that can help you finance a wide variety of vehicles including vans, trucks, trailers, and more. They have a loan repayment term of between 12 months and 96 months and charge an interest rate ranging from 2.9% – to 19.99%
Conclusion
Just like with any other kind of loan, you need to do your research before signing any loan agreement. Shop around, study your options, and compare rates and terms before making your decision. Don’t rush into signing any agreement, as you don’t want to end up in a situation where you end up paying more than you expected.
Aunt Piggyy
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