Bus Loans
Bus loans and financing can be the trickiest part of purchasing a bus, especially if you are buying a used bus. Financing is typically where many dealerships make extra profits at your expense, often through special add-ons, higher rates, or special dealer fees, they pass on to you at inflated costs. Many of the larger bus dealers offer good bus financing in-house and should at least be compared and considered. They often have such a large volume of applications that are specially targeted to buses, that they can compete with typical banks and credit unions.
Follow this process - and you will come out ahead. First, settle on a bus that you want without discussing financing, settle on a price, agree to a trade in value (if you have one), then tell the salesman you are willing to discuss any financing options they have but do NOT tell them or show them the terms you have already gotten approval for from your bank or other bus loan financing sources.
The links on this page are from highly reputable bus financing institutions that may be of value to you in at least getting a free quote from them. Spend a little time now seeing what they offer BEFORE you visit the bus lot and get a bus loan.
Bus loan interest rate - Your interest rate will vary because it depends
on many factors, which include your loan total, expected down payment, credit
profile and the value of your bus. Most companies will want to process your bus
loan application BEFORE discussing terms. This is normal and since most companies
can complete your application in less than an hour, it shouldn't be an issue.
Down payment - Many bus loans require a 25% down payment. People with great
credit however often qualify for special programs that have no minimum down requirements.
Your credit score will determine this.
Minimum bus loan amount - I rarely see loans processed in amounts less
than $40,000. The value of the bus is just not worth the risk to the bank if they
have to repossess it. It costs the bank the same amount to repo your 20 year old
$40,000 Eagle conversion as it does to repo a brand new $400,000 Prevost. With
the Prevost they have something that is easy to sell. With the Eagle, they do
not.
Loan term length - most companies will not loan on an bus for less than
5 years. Most larger companies will loan for as long as 12 years since they often
see the bigger coaches as investments in a business.
Bus loan application fee - many companies charge to find out if they can
loan you money. Do not pay it! INSIST on a free application approval process.
If they are not willing to take this small risk on you then they are less likely
to be perfect to work with. Don't waste your time.
Bus makes that can be financed - Many banks only want to loan on large, expensive
buses. If you are buying an old MCI 5 or double decker or some other oddball coach,
or conversion, ask up front, before you get into the lengthy application, if they
loan on that kind of vehicle. If they just stare at you when you say Setra, or
if filling out an online application there is not a "drop down" box
that contains the word "Setra" for example, for vehicle make, then move
on.
Financing older buses - It can be quite difficult without perfect credit
to finance an older bus. Some companies will go back 12-15 years on a real solid
coach with a serious legitimate survey or appraisal on it. Other companies will
not touch anything older than 7 years regardless of value or credit score. The
point is ask FIRST if they loan on your year bus so you don't waste time filling
out an application for an bus loan that will lead nowhere.
Credit score - the better companies that will finance you on an bus loan without up front application fees or credit check fees, who have good interest rates, and can get it done in an hour or two, will require a credit score of 600 - 640 and sometimes higher. If you don't have a credit score in that range you will need to be more flexible in your approach and in the interest rates you will be willing to accept.
Getting an bus loan AFTER you bought the bus - Some banks have a cash recapture program that allows you to buy a bus using your cash, like when you stumble on a great incredible deal or distress sale and need to by it that day, then they give you the loan later and take possession of your title until payoff. This can typically be done up to 4-6 months after the bus purchase.
Bus Loan calculation - Make sure the loan you get is a simple interest loan. This way you only pay interest on the principal you owe, and that amount gets reduced every payment you make on the bus loan.
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