As a national equipment finance company one of our goals is to provide our clients and vendors with the best possible information about the equipment they need to finance and Envision Capitals Group’s expertise within the equipment finance industry. What you are about to read is a transcribed podcast focusing on the many nuances of commercial vehicle financing.
Dan Lund: Equipment Finance Manager | 949.225.1718 | firstname.lastname@example.org
Wade Bergquist: DVS | 949.225.1742
If you wish to listen to the podcast:
Wade: Hello and welcome to the Ask Envision podcast. Today’s topic will be commercial vehicle finance and lease and we hope you enjoy the information. If you do have any questions we can be reached at 888-779-6989 or envisioncapitalgroup.com.
Hello everyone, my name is Wade Bergquist with Envision Capital Group and we are here with Dan Lund. Dan, welcome back to the podcast.
Dan: Thanks for having me.
Wade: We’re going to jump right in on this because we don’t want to waste anyone’s time. We’re going to be talking about commercial vehicle financing, the fact that Envision Capital Group has been doing it for well over 10 years, the industries we serve and of course your expertise is why we’re talking today.
Dan: Right on. Yes, I look forward to talking about it.
Wade: So with that said, we have someone who is calling; they’re looking for commercial vehicle financing; why is this industry as tricky as it is?
Dan: Well, there’s a lot of “ins” and “outs” of a vehicle. A lot of people will relate commercial vehicle financing to personal vehicle financing and it’s not the same thing. Apples and oranges. They’re both fruit, yet completely different types. So business loans and personal loans in general, you know they have different qualifications, they have different terms, they have different risk factors, so a lot of people will go into it thinking that it’s just like a standard personal auto purchase, but it’s not. So Yes, they have to think and change their mind frame into business loan, business purpose use, that type of stuff.
Wade: Correct. Because we’re still talking about time in business to get qualified.
Wade: And we’re talking about, obviously, business credit.
Wade: But like you said, a lot of individuals go into this thinking like, oh it’s a F550 truck, and that is obviously full on commercial, yet these utility vehicles, box trucks, tow trucks, sprinter vans, trailers, where is the disconnect? And I know disconnect might be a strong word, yet why is it people think sometimes this is like a standard [personal] vehicle lease?
Dan: Yes. I think it’s basically because people have bought vehicles their entire lives. Since you’re a teenager you walk onto a car lot, you go to the finance guy, they write down a number on a piece of paper, you drive off with the vehicle and you’re done. When it comes to commercial vehicles, a lot of times the dealership is out of state, so therefore they don’t even have the legal rights to title the vehicle in the state it’s being titled in.
Wade: Importand point Dan…I didn’t think of that.
Dan: So if we have a business owner in the state of New Mexico and he’s buying a dump truck from Texas, the Texas dealership may not have the rights to the New Mexico Department of Motor Vehicles, so therefore it’s a slower process. It does slow things down.
Dan: Yes, so the other thing too is age of the vehicle itself. Work trucks get beat up pretty hard, yet at the same time it could be pretty well maintained. You can get at truck with a ton of miles on it and standard banking won’t lend on it at all. They don’t like something that’s 13-14 years old or has several hundred thousand miles on it, whereas Envision Capital Group, we will finance on something that old as well as that many miles.
Wade: And if you are financing say a bulldozer that’s 13 years old, the bank might look favorably on that just because the nature of the piece of equipment, yet on the commercial vehicle, that makes perfect sense.
Wade: So what is it people should be looking for when they’re financing commercial vehicles? There seems to be a lot of nuances to this type of financing and I want to get your opinion on that.
Dan: Making sure they know as much about the finance company as possible is of course very important. You’re going to be in a relationship with this company for years and you also want to make sure there are going to bat for you regarding the best rate and term. Do your research. Ask questions. Get consistant answers. Demand the best rate & term you qualify for. Also, I think folks should look out for if they’re going to lease or enter into a standard equipment finance agreement. There’s of course Section 179 benefits to leasing long term as well; tax benefits if you do a true tax lease vs. a dollar buyout lease which is still available on commercial vehicles. Standard equipment finance agreements are more like traditional loans. I feel the other item they need to look out for is, like I was saying earlier, the title issue.
Wade: All that makes perfect sense, especially about the title.
Dan: Our philosophy is, we try to go in with a no money down initially, and then we’ll back into some down payment type programs if for some reason we’re having a hard time getting them qualified.
Wade: Question before I forget, let’s say you’re the vendor, I’m the lessee, I’m going to buy a dump truck from you. You’re in New Mexico, I’m in Texas, I want to pick it up; does that come about and if so, how is that handled?
Dan: Yes it does. It actually happens often because long-haul trucking for example, they want to pick up a trailer on their route home.
Wade: Another solid point Dan.
Dan: So we’ll allow for that. We’ll allow them to take the trailer; temporary tags are issued and good for 30-days; that gives us chance to do all the titling work. Some folks are use to being able to take the title from the dealership and take it with them and do all the titling work themselves. And that’s a big no-no. In fact, we actually have the dealership sign a contract that they will not release the title work to the borrower. That they must overnight that title work to us.
Wade: Which makes perfect sense…
Dan: Right, because our money is out and they have the vehicle…
Wade: And the title…
Dan: And we have no protection at all. So again, I think the best advice I can give is to adjust your frame of mind from a timing perspective. A lot of people, like I said before are use to walking onto the dealership, hopping in their car, driving off, title in hand, everything’s good to go. yet, the world of commercial vehicle financing is very different.
Wade: Now, say I want to buy a dump truck and a trailer from the same vendor.
Wade: Are there sticking points on a transaction like that? They are separate pieces of equipment obviously, yet is the overall the process typically smooth?
Dan: That’s actually a great question because a lot of people think because one is a trailer, there’s no motor oo it and the other one is the actual vehicle itself, that it has to be on separate finance transactions. That’s actually not the case. Believe it or not we will do it under one finance transaction. It’ll have separate titling of course. Each will have its own separate insurance because the policy is sometimes different, sometimes it’s the same. And then the lien-holder will be placed on each of the titles individually as well, yet the customer will only have one payment. So it’s a $50,000 transaction, 25 going to the truck, 25 going to the trailer, one payment to the customer.
Wade: Very nice. What if you are brand new into this (commercial vehicle financing) and you’re getting your first piece of commercial equipment, what are things I should be doing? What’s a checklist if you will to make sure that I’m getting the best rate, term, piece of equipment possible?
Dan: Another great question. Thanks for asking this, because a lot of times people think that. I hate to keep referring back to this, yet the personal vehicle side of things where you could have never owned a car in your life and you can walk onto a car lot and get 3% financing as a first-time car buyer. If you are a start up business, we are lending this money to the business, not to the person. The person will personally guarantee the finance transaction, yet ultimately the money is being lent to their business. So in order to guarantee the best rate and term, they have to have really good personal credit. If they haven’t paid attention to their personal credit or they don’t have credit or they were slow to pay their mortgage; these types of things will really hurt you if you are a new business and you are looking for a loan.
Wade: Got it.
Dan: So personal credit’s very important. The other thing is you have to be realistic at what it is you’re buying. If you are looking for a brand new box truck and you are a start up business, brand new box trucks can run you $80-90,000.
Wade: And that’s just a plain white box truck.
Dan: Correct, just plain white. So that’s just not going to happen for a start up business. Start up businesses should think used equipment, used vehicles, keep the mentality of maybe $50,000 at the most. And anything above and beyond that, be prepared to put that money down.
Wade: And what about collateral for commercial vehicle financing? Is that an option?
Dan: Well, sometimes. We can overcollateralize an approval just to strengthen a transaction yet again, we go back to the personal credit side of things. So if you’ve had some personal credit challenges and you don’t have a lot of money to put down, but you own another vehicle free and clear and you want to overcollateralize this transaction, that can help overcome some of the negative items.
Wade: Okay. That makes sense. One final question because I know you’re going to the seventh game of the World Series tonight.
Dan: I am.
Wade: I’m very jealous.
Dan: Yes. You should be.
Wade: From the vendor perspective, they’ve got customers coming in. How is it that Envision Capital Group can help those vendors secure financing? We’ve talked about it in the past but I just want to touch on it from the commercial vehicle perspective. Are vendors using companies like Envision Capital Group on a consistent basis? Or what is it that Envision can do above and beyond and really get those deals funded quicker?
Dan: Yes. All the time. They use us all the time and I’ll tell you why. Because every bank in the world will lend you money on the perfect credit guy, brand new vehicle, tons of years in “time in business” and they’re going to give him 2% or 3%. Envision doesn’t want to compete with that type of business so a dealership that is selling vehicles, they of course would love that perfect easy, slam dunk, cheap, go-go-go type of borrower, yet let’s be honest, we’re talking about 5% of the economic borrowing world. So the other 95% is where Envision Capital Group comes into play. Because we will work with, of course, real easy type of customers, yet as I mentioned before, start ups, tons of banks are going to turn their backs on start ups. We don’t. Another thing, used equipment. Tons of banks will turn their backs on used equipment. We don’t. Mileage, age of equipment, those types of things. Yes, of course we’re going to make sure that it’s good collateral. We’re going to watch out for the condition it’s in, we’re going to ask for some photos. We’re going to make sure it’s not salvage title because that’s an important topic as well. Yet Envision will at a reasonable price to their borrower, the vendors customer, we will get that loan funded for them. Because you got to think about it. Isn’t there two purchases happening?
Dan: There is. There is buying the vehicle, yet they are also buying the money. And so when they buy the money from us, we’re going to give it to them at a very reasonable rate to where it’s not going to make them leave the lot. Because if we come in saying, a customer who would qualify for $1,000 a month and we’re coming in at $1,300 a month, the customer’s going to leave the lot. Not necessarily just not do business with us. They’re going to walk away from the dealership. So we understand that and we appreciate that. We treat our vendor relationships with the highest regard.
Wade: That’s a good talking point to bring up.
Wade: Super important.
Dan: Yes. I would encourage anyone who is listening that (a seller or a dealer) to contact us because our programs are really highly competitive.
Wade: And with your expertise in this industry, you’ve got 10 plus years and you have those contacts where you can help people find that piece of equipment, find that commercial vehicle, I should say.
Dan: Oh Yes, absolutely. Sometimes there are tire kickers, there are people who are saying, “hey we’re not 100% certain what we’re going to buy. We just know that we want this type of vocational vehicle and we’re looking around for it.” I’ll tell them, “hey I’ve got a ton of relationships in the industry. Tell me what you want and I’ll do some hunting for you.”
Wade: I did a Facebook Live video feed earlier in the week talking about the importance of, if you’re going to be purchasing equipment 30, 60, 90 days out, don’t jump into financing in a such a hasty manner where you find the piece, you have to have it, and you don’t have the best financing set up. So try and plan this out. Yes, you might not be purchasing tomorrow, but in 45 days your goal is to have it in your driveway.
Wade: Talk to Envision. Get things dialed in wonderfully so you’re getting that best rate and term. You can plan for this. And it sounds obvious, yet so many times we get phone calls where people just are jumping and they’re paying an extra 3, 4, 5, 10% sometimes, and so we’re always looking out for the best interest of both the vendor of course and the lessee.
Dan: Yes. And good job bringing it full circle because as I mentioned in the very beginning, the mind frame is what I’m challenging people to change when going into it because like you said just right now, if you have 30 to 45 days, start the approval process now.
Dan: Not saying that it always takes that long, yet you don’t want to be under the gun where you wait til the very last second because you’re used to driving off the lot, the dealership doing the title work, everything being just at the drop of a dime, everything is done. So give yourself some time.
Wade: You have options and choices.
Dan: You have options and choices. And yes, we can get things done quickly and efficiently, however, realistically speaking, it’s best when we have a little cushion of time.
Wade: That’s for sure. Absolutely. Well, thank you for joining us. This has been eye-opening for sure and I know the people who are looking for commercial vehicle finance are going to find this beneficial because at the end of the day, once again, one of our goals is to make sure that our clients have the very best information so they can move forward using that information, it’s best for their business.
Dan: That’s right. And generally speaking, this could be a limousine, it could be a tow truck, it could be a dump truck, it could be a box truck, it could be a cherry picker, bucket truck, it doesn’t matter. If it has a title associated with it, even if it’s a trailer, a car trailer, a long-haul trailer, talk to Envision Capital Group because our title programs are great and we love financing commercial vehicles. Especially used ones.
Wade: Another perfect segue with regard to our new website page on our website envisioncapitalgroup.com, we have a dedicated page specifically for commercial vehicle financing, so by all means take a look at that. This podcast will eventually be on that page, so easy access to the information. Dan, final question and a very simple one. What’s the best way for people to get a hold of you?
Dan: My direct line is 949-225-1718. You can always contact us via our website envisioncapitalgroup.com.
Wade: Right. Well, everyone thanks for listening, Dan, once again, thanks for participating. Enjoy game seven of the World Series tonight.
Dan: Thank you.
Wade: And if anyone does have any questions, of course, envisioncapitalgroup.com. Thanks for tuning in. Take care!
This concludes the podcast.
Envision Capital Group has industry-specific finance programs:
Our commercial vehicle finance programs are for trucks, vans, and short haul work vehicles. We provide convenient financing for new or used work vehicle(s). We have a streamlined credit approval process and offer 24-60 month terms, competitive rates, and a hassle-free guaranteed purchase option. In addition, you can borrow 100% of the purchase price of new or used vehicles and trailers (including most soft costs like taxes and registration).
We understand the business customer’s needs:
Not only do we finance all manner of business vehicles (also highly specialized vehicles the bank won’t touch), we also provide the “extras” businesses need – like commercial leases in the company’s name, private seller transactions, guaranteed purchase options, longer terms, no mileage restrictions, and more.
Commercial Vehice Finance website page: