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november 2011

    CHOOSING THE RIGHT TRUCK FINANCING

    november 2011


    With interest rates at current lows and used truck trade-in values reaching new highs, new truck buying conditions are expected to be better this year and next than they have been in the past three to four years.

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    With interest rates at current lows and used truck trade-in values reaching new highs, new truck buying conditions are expected to be better this year and next than they have been in the past three to four years. To help you understand the options available for financing your equipment, we spoke to the experts from Navistar Capital, a GE Capital program.

    Question: What are the primary benefits of financing a truck through Navistar Capital versus a local bank?

    Answer: Navistar Capital takes what banks traditionally do—provide financing—and tailors a solution for the customer. You’ll work closely with a team of credit and documentation specialists, along with your sales representative, as they guide you through the financing process from application to closing so that you can quickly acquire equipment and keep your business running smoothly. Our solution avoids the cookie cutter approach to financing by listening and finding a solution that gets customers into the truck they need.

    Q: What are some advantages of working with one lender for equipment purchases and another for a business’s working capital?

    A: In today’s economy, diversifying your sources of capital is more important than ever. Using Navistar Capital for equipment financing and your local bank for day-to-day working capital needs increases your diversification. This allows you to maximize your financing capacity and reduces your risk if a lender pulls out of the industry, leaving you searching for a new one. Leveraging Navistar Capital as your equipment financing source gives you comfort that you’re working with a company that has been financing trucks for more than 35 years.

    Q: What are some of the factors a truck buyer needs to consider when determining the right financial product for his business?

    A: You need to work with a reliable, value-added financing source—one that knows your business, your industry and your equipment as well as the importance of responding quickly to opportunities—in order to find the right financing product. Here are the main products offered by Navistar Capital, and the benefits of each:

    1. Retail Finance Contract

    If your business is looking to own equipment to build equity, you should consider a retail finance contract. Benefits include: Competitive rate with flexible repayment schedules (including accelerated payments; skip payment plans to meet changing cash flow needs with seasonal business; and balloon financing alternatives); financing up to 100% of the sale price; and pre-approved lines of credit.

    2. Fair Market Value (FMV) Lease

    If you’re looking to maximize cash flow and owning the equipment is not as important as avoiding worry about trade-in values, an FMV lease could be the right solution. Benefits include: Lower down payment (typically one month’s rental payment is needed to start your lease); fixed monthly payments that are lower than traditional retail financing; and options to purchase, renew or return at lease expiration.

    3. Terminal Rental Adjustment Clause Lease (TRAC Lease)

    A TRAC lease makes sense if you’re looking for low monthly payments to maximize your cash flow or you’re simply looking for a low payment to ease your expenses. At the beginning of a TRAC lease, you and Navistar Capital agree upon the TRAC amount, an estimate of the equipment’s value at the end of the lease. Having an agreed-upon residual amount upfront takes the guesswork out of the equipment’s market value at lease expiration.

    4. Rebate Lease

    The mechanics of the rebate lease is very simple. At the beginning of a lease, it’s difficult to know exactly how many miles you will use a truck before your lease ends. Whether you over-estimate or under-estimate, our rebate lease helps you lower costs and gives you great flexibility: If you over-use the equipment, you’ll pay overage charges that are lower than today’s industry averages; if you under-use the equipment, you’ll receive a direct cash rebate.

    Q: What are some of the ways to improve the chances of success when applying for financing?

    A: The good news is that many lenders are actively seeking new opportunities to put their money to work. When reviewing a credit application, they’re interested in a variety of factors beyond a company’s cash flow and credit history. To increase your chances for success, reach out to lenders early and build relationships before applying for a loan. Be transparent when demonstrating the issues facing your business. And finally, create a forward-looking business plan that shows how you’ve overcome obstacles and solved problems—and how you plan to grow your business.

    For more information on financing options, visit: Navistar Capital.

    For more information on the Turn-in-Three payment solution, which offers customers a fixed monthly payment over six years, full warranty coverage and a new truck after three years, visit: Turn-in-Three