How to Buy a Semi With a Bad Credit Score

Bad credit can affect many financial decisions you make in your life. It can also affect the type of employment you seek. When it comes to semi-truck financing, the best credit scores get the best loans---which can become quite costly. Learning to obtain financing even with bad debt can help you develop your business with an owner-operated semi-truck.

Instructions

1

Obtain a copy of your credit report. You'll want to know exactly what your credit looks like before you begin seeking financing. Some red flags that lenders will see as increasing a credit risk are charge-offs, judgments, maxed-out credit lines, excessive trade lines (usually over four revolving accounts), delinquencies and any bankruptcies. Attempt to clear up any negative credit before seeking financing.

2

Limit your search to trucks that are not new. Financing a brand new semi-truck will be exorbitantly expensive---and with bad credit, your monthly payments will most likely be unmanageable. On the other hand, your credit may disqualify you from obtaining older models as the risk will be two-fold: both your creditworthiness and the age and potential viability of the vehicle. As such, look for used truck models with modest miles and a record of solid maintenance. You'll want to mitigate your risk as much as possible with poor credit.

3

Continue to lease a semi-truck if you have a semi-truck repossession on your credit report. While some lenders may be willing to offer high-cost financing to borrowers with poor credit, virtually no lenders will offer financing to borrowers with a history of truck repossession and poor credit. If you do have a repossession on your credit, continue to repair your report by making on-time payments, paying down your total debt load and generally being a responsible borrower with credit.

4

Research lenders who extend credit to borrowers with poor credit. It's important to be careful when you begin applying to lenders. Some unethical lenders will prey upon vulnerable and desperate borrowers---often charging illegal rates and fees, and, in the worst cases, defrauding borrowers. It's best to begin your search by asking colleagues in the trucking industry for recommendations. Invariably there are some who've used high-cost financing and have had positive experiences. Remember to research all potential lenders on the Better Business Bureau website to make sure their lending records are clear of complaints and charges of predatory lending.

5

Apply to two to three lenders. Stay abreast of the loan process---sit down with your loan officer if any terms change. Do your own personal DIR calculation (Debt to Income). For example, if your total monthly income (before taxes) is $3,000 and your monthly obligations (including a proposed loan payment for the semi) is $1,900, your DIR is 63 percent---which is too high. You'll want to stay under 50 percent to make sure you can afford the payment.