Owner Driver Truck Finance – Understanding What Lenders are Looking For
Written by Phillip Gruppelaar
After 25 years dealing with lenders for Owner Driver Finance and Truck Finance, it may be a shock to many that the formula that Banks and Finance Companies use to make decisions for Owner Driver Finance & Truck Finance making is the same as when I first began.
Getting finance or loan approvals for many things such as car loans and personal loans in 2013 is virtually a computer driven decision making process. The criteria for finance or loan approvals for these become less and less strict. Consequently most of the population gain access this these types of loans quickly and simply.
Advertising on the internet, is not monitored with any real authority, which transpires to, too many companies asserting that the process for approval for Owner Driver Finance and Truck Finance is also simple.
Yes, this may be true, but only for a very small percentage. Over 90% of Owner Driver Finance and Truck Finance Applications we see require various quantities of additional work and preparation.
Banks and Finance Companies need to see 7 points covered to their satisfaction, before they will issue an approval. Most applicants do not pass on all seven, so any direct contact with a Bank or Finance Company will normally result in the Loan or Finance application being declined.
At Harley Finance we call this the “Blank Look” You need to understand that in many instances your application is being input into a computer system that has preset standards. As most applications have weaknesses the computer system will say No!
You also need to be aware that within the finance industry, bank and finance company analysts are monitored for errors or misjudgments they make. Like any reasonable person they quite often prefer to say No! than be subject to a supervisor’s rebuke.
So what are the 7 things, Banks and Financiers looking for;
1. Appropriate Vehicle – The vehicle must be suited to the work proposed, including fittings such as tail gates, winches etc. The price of the vehicle and the amount to be borrowed need to be match the profile of the applicant. (e.g. if you have never had a loan before, the amount a lender will give you will be less than someone with a well-established good credit history
2. Experience – A high emphasis is placed on experience, due primarily to the failure rate of new start Owner Drivers. The attraction of being your own boss and driving all day (particularly if you enjoy driving) This attraction quickly wears off with things like income less than anticipated, traffic congestion, long hours & irregular workflow
3. Work Contract – A work contract is a must, particularly for the new driver, the funder must have confidence that you will be able to meet your payment commitments for the period of the loan or finance agreement.
4. Credit History – Poor credit history doesn’t necessarily mean you won’t get approved, but it certainly means you will incur a higher interest rate than someone with good credit.
5. Business Plan – Being an Owner Driver is a career not a job, if you cannot show you have thought this purchase through properly, your loan or finance application will almost certainly be declined. At Harley Finance we assist all our clients with business plans and cash-flow projections.
6. Fall Back Position – Bad luck happens. Lenders like to see that if something goes wrong, you will still be able to meet your commitments. Home equity and savings are the primary focus for lenders.
7. Risk (Potential Loss) – Only a consideration when all of the above have been dealt with. There is an old saying in finance “cash is king” A good deposit in many cases will overcome weaknesses in other areas mentioned above.
In summary. If you want Owner Driver or Truck Finance, make sure you are well prepared. Find an experienced Finance Broker who is prepared to help you with preparation and submission. An experienced Broker will not give you the “Blank Look” he will produce the best submission possible to assist your application.