Truck Financing | Credit Score and Approval Amount
We at TopMark Funding love financing statistics. We have already covered the link between credit score and down payment, but that is only one piece of the financing puzzle. Another factor to consider when it comes to financing is the amount of money that you need to be loaned to you to get the equipment you require. If you cannot get approval for the amount you need to finance the new truck or used truck, it may be difficult to find the financing you need, but TopMark Funding certainly has options for you. Using TopMark Funding’s financing statistics for 2019, perhaps we can estimate how much more money we can get for a commercial vehicle with a higher credit score of 100, 50, or even 1 more point?
Beyond TopMark’s financial expertise, we also have the details of all funded transactions at our disposal. Here is an aggregation of funded transactions in 2019, anonymously comparing FICO scores with the total approval amount of the equipment purchase deals. Before we do some number crunching to draw conclusions, here are some things to consider:
- For groups of people that had the same FICO score, we took the average of their approval amount, otherwise the graph would be difficult if not impossible to read.
- Approval amount and the amount used to finance are two different things. If someone approves you for $100,000 and you want to purchase a $75,000 truck, that is a difference of $25,000. Being approved for more than you need is unlikely, but not uncommon.
- The statistics come from over 900 data points. They are funded transactions, meaning a smaller amount of data but higher quality as the clients were ultimately satisfied with their approval results based on their credit.
Here is what we find:
- There is a weak positive correlation (.365) between credit score and the approval amount. As credit score rises, the approval amount tends to rise, though that is not always the case.
- Using regression (the dotted trendline), we find people with a credit score raised by one point get approved for a loan that is $157 more. That might not seem like much, but a credit score increase from 400 to 800 would mean $62,840 more in approved financing, on average. The dotted trendline is not an end-all-be-all for approval amount, as evident by 400 FICO and below on the graph, but it gives us a good rule of thumb.
- The average approval amount for FICO score 618 is a massive outlier (seen on the graph as stretching far beyond all the other data points). If we remove this outlier from the equation, the correlation and regression both rise (.427 and 164.83, respectively).
While people with a higher credit score tend to be approved for larger financing amounts than those who do not, this is not always the case. As to be expected in the realm of finance, there are other factors that impact the approval amount.
Truck loans are self-securing, meaning that a person who already has his eyes on an expensive, new truck is more likely to be approved for more money than someone who is financing a big rig in need of an overhaul, as the financing company has their loan backed by a stronger investment.
Another thing to consider is just because a business is approved for a large amount does not mean a person should take out a loan that large. Larger loans tend to be paid over a longer period, meaning a larger interest rate and more paid in interest over the term of the loan.
We value our clients’ privacy, so we will not go too far into detail about the companies that contributed to the 618 data point with an average approval amount of about $300,000, but we will say briefly that the people with 618 FICO did not take loans equal or close to their approval amount. In fact, it would be harder to find people who maximized their loan amount to be close or equal to the approval amount than those who went far under it in general. Remember that the approval amount and amount loaned are two different numbers.
If you are interested in financing a semi-truck or trailer and want to find out how much you can be approved for, it cannot hurt to try with TopMark Funding. We offer soft credit pulls when doing an application, meaning your credit score is not impacted and can stay as high as possible to give you the highest approval amount.
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ABOUT TOPMARK FUNDING
TopMark Funding is a top-rated semi-truck financing and equipment financing company located in Roseville, CA. We specialize in commercial trucking and heavy equipment. Our mission is to become your long-term financial partner by helping you grow your trucking business and fleet.
We’re not here for the short-term, we’re on the long-haul with you!
We have financing options for semi-trucks, commercial trucks, trailers, and small businesses. We have great rates, low down payments, and flexible monthly payments regardless of credit history.
Learn more about: Semi-Truck Financing
Fill out the contact form or give us a call at (866) 627-6644. One of our truck financing specialists will contact you as soon as possible to go over your truck lease needs and learn more about you and your business financing goals.