Easy Savings: Top 4 Financing Options for a Pre-Owned Vehicles

In 2016, the planets have aligned to create a true buyer's market for pre-owned trucks. Inventories are fairly high, so prices have come down.

A great deal of the used iron available now is newer, which means mileage tends to be lower than any time in the recent past. Plus, buyers can get their hands on a post-2007 emissions system without paying for it new. You need more reason? Many sellers are also bundling in warranties on deals, which is always a nice-to-have package when buying used class 3-8. More on that in a bit.

Bottom line: All of this adds up to potentially huge savings on very good equipment. With a little bit of insight on how best to pay for a used truck this year, it'll be smooth driving.

Whether you're an established fleet or an owner-operator, it's always good to remind yourself of the basics of vehicle purchase math. Obviously, those with good credit scores and demonstrable cash flow will have lenders lining up with the prime rates. The lower those two values fall, the harder it is to secure financing. Still, market watchers observe that subprime lending for heavy-duty trucks is back to a healthy level not seen since the Great Recession. Just watch those interest rates.

Some buyers are actually prepared to pay with cash. That's a great position to be in, but of course it's not for everyone. According to an OverDrive Online 2015 truck purchasing survey, of the owner-operators and small fleet owners buying pre-owned trucks in the previous 12 months, here's how they paid:

• 37% used a bank loan
• 32% used cash
• 25% used a captive/specialty financing company
• 6% cited "other" as their form of payment

With those figures as a guide, we see that roughly two-thirds of pre-owned truck buyers are accessing credit and other assistance in these transactions. To that end, here are three things you want to see when choosing where to buy pre-owned vehicles:

1. Down-payment Assistance

To make the sale, better lenders and dealers are offering qualified buyers down-payment assistance on pre-owned vehicles. This is particularly good for those who don't have the cash for a down-payment, which can be as high as 20% of the full purchase price. It's also useful for those who can't make their case purely with current business metrics or credit worthiness. More and more dealers are offering down-payment assistance to subprime buyers as pre-owned sales heat up, but it's not just for the under 600 FICO buyer. Anything that preserves capital is worth exploring.

2. Numerous Lending Partners, with Options for Most Credit Situations

The most astute dealers will have a short list of preferred lenders already vetted when a serious buyer walks on the lot. Here again, the assortment of lenders will run the gamut from specialty (focusing on vocational vehicles from dump trucks and fuel delivery), to straight commercial lenders who are experienced in processing loans for semis, trailers and other heavy-duty equipment. The point is that buying a big rig is a big deal: you want to limit the moving parts by going with someone who not only has the truck you want, but can plug you directly into the funds you need.

3. Strong Warranty Options

Remember we mentioned that many sellers are willing to bundle in warranty options? This added coverage does more than just protect your investment. Many lenders are more likely to work with a buyer who has purchased a warranty because it eliminates some risk on lender's side. For you, the buyer, the warranty then becomes a win-win: you get the financing you need, along with the peace of mind that your investment is protected

4. One-Stop Shopping (Loans Closed In-Office)

As any vehicle buyer knows, the best possible scenario goes something like this: you walk on the lot; you find the perfect truck; the dealer instantly processes your application for financing; and the deal gets done right there on the spot. Not all dealers can do this as a seamless workflow. Those that can, tend to be large, national, and respectable. By and large, these are the people you want to do business with.

Whatever you decide, remember that there's never been a better time to find and finance a low-mileage, late-model pre-owned truck.