Financing A Vehicle In A Recession

Posted on May 11, 2009

Edward P. Kaye, president of Advantage Funding Inc. of Lake Success, N.Y., a leading financer of livery fleet vehicles, addresses the following TOP FIVE misconceptions he's heard among clients and prospective customers.

1) Since the manufacturers are struggling to sell inventory finance rates are at an all time low.

Unlike the consumer automotive market, commercial vehicle manufacturers do not have finance arms that can support 0% financing programs. Commercial vehicle manufacturers need to refer the financing portion of their sale to outside lenders (banks, independent finance companies, and leasing companies). While prime rates continue to be low, outside lenders typically charge higher rates to commercial borrowers than consumers.

2) I have excellent credit, so I will not need a downpayment to buy new equipment.

The days of 100% financing on commercial vehicles are over. Lenders have changed their buying criteria to more heavily weigh the risk of the collateral than the risk of the buyer's credit. Even if you qualified for 100% financing in the past, it is unlikely you will find a lender in today's market that will approve your loan without a down payment. Be prepared to come up with some money (10% to 20% of the sale price).

3) The media keeps reporting that the banks are not lending. How can I get a loan?

Banks and independent companies need to lend to stay in business. They are lending, just not as much as they used to and not to people who cannot pay them back.  Creditworthy customers will be able to get vehicle financing.

4) I'm a start-up transportation company. I will never be able to get new vehicle financing.

It is true that you may not be able to finance new vehicles, but you will be able to take over a bank repossessed vehicle. Commercial vehicle lenders are holding record levels of repossessed inventory and they are making deals to sell and finance repos. Call them! Not only will you get a good deal, you will have the opportunity to establish a relationship with a lender that will help you grow your business for the long term.

5) I have a great long-term relationship with my existing lender. My ability to finance won't be effected by the recession.

Open your eyes. Your existing lender may not be there anymore or may have given up on commercial vehicle lending altogether. Didn't your mother ever tell you to never put all your eggs in one basket? Try to establish funding relationships with several lenders, even if some rates are better than others. Long-term relationships go a long way in this industry. In today's economy it's more important than ever to continually establish new relationships and find the best one that will have a long term perspective to this niche industry.


View comments or post a comment on this story. (0 Comments)

More News

70 Defining Moments In Luxury Industry History

From the 1970s to the present, check out these incredible events that affect the wider luxury services and products sector. 

Do You Provide Customer Service Or Experience?

Companies may be tempted to stick with the former, but clients can almost immediately notice when the focus isn’t on the latter.

5 Ways To Improve Customer Service With Tech

As customers expect more from companies, businesses and brands need to step up to the plate to meet those challenges.

Operator Shakes Things Up With GoGo Party Bus

Lenesia Cooper plans to make her service the number one preferred form of transportation for celebrities and professionals in Atlanta.

Uber Doesn't Know The Meaning Of Customer Service

TNC Travesties Of The Week: The company continues to kick duty of care to the curb.

See More News

Facebook Comments ()

Comments (0)

Post a Comment



See More

See More

See More

See More

LCT Store

LCT Magazine - October 2016 $12.95 COVER STORY: * Leverage Tech To Levitate Your Operations * *


Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment



Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close