It’s a question that should be asked early on in the truck-buying process, right up there with, “What kind of freight will you haul?” and “Where are you gonna run?”

Yet few salesmen want to break the buoyant buying mood with a detailed discussion about how you plan to pay for the truck you’ve been tapping with the steel toe of your boots for the last half-hour.

At the dealership, that’s the job of the finance and insurance department, also known as F&I. That’s where the salespeople help you work through the nuts and bolts of your truck spec, making sure you get the most productive configuration possible.

Any reputable and accountable F&I manager will help you develop a finance package that will give you a better-than-fighting chance of making it back for a trade three, four, or five years down the road. This should include evaluating different combinations of lenders, interest rates, the payment amount, and other terms so they are tailored to your specific circumstances. At the risk of overstating things, your future cash flow and creditworthiness may depend on the diligence of the F&I guy.

He’s important to the dealer, too. The F&I department, with income opportunities from both the finance and lease businesses, has the ability to be the most profitable of any department at the dealership.

So when there’s an opportunity to close a deal at the F&I level, there’s a temptation from both the prospective buyer and the dealer to close the sale quickly. It’s not always an easy ride. Stringent credit requirements and the size of the required down payment have made it tough for smaller companies to finance the trucks they want. There aren’t many alternatives.

Banks, for example, consider trucking a high-risk industry because it’s so sensitive to external factors such as fuel prices, insurance premiums, and the ups and downs of the economy at large.

Many carriers will finance a truck purchase for their employee drivers, who pay back the carrier over time. This so-called lease-purchase program can give drivers with a spotty credit record an opportunity to own a truck, although it’s generally accepted that it will take longer and cost more for the driver to pay back the loan.

Lastly, most truck manufacturers can finance the trucks they sell through their own “captive” finance companies. It may seem convenient to arrange the financing through the dealer, but the various incentives, payment options, interest rates, trade-in value, and fees you pay for a loan to be set up and managed can be downright bewildering.

So here are some steps you can take to ensure that you’re thinking with your head and not your heart:

Talk to your accountant: He’ll have access to a lot of the financial information you’ll need to qualify for a loan. Just as important, though, are the tax, depreciation, and capital cost allowance implications of your deal — you should talk to an accountant who understands the ins and outs of acquiring commercial trucks in order to avoid surprise tax bills or audits. Finally, your accountant works for you. The F&I guy is paid by the truck dealer.

Separate the truck and the financing: Several dealers we talked to say their prospective buyers know what they want when they walk in the door and won’t be deterred. Because you’re buying the truck and the money, the sticker price isn’t the actual price of the acquisition.

Know your credit score: There are several credit reporting agencies in Canada that lenders use to determine the best interest rate available. Find out your credit score, and then ask the F&I manager what rating qualifies a buyer for favourable financing terms. Make sure the rating the dealer has matches the one you have: when they don’t, you can bet that you’ll be on the losing end.

Terms: The best deal isn’t necessarily the one with the lowest interest rate or lowest monthly payment. It’s the one that costs you the least amount over the term while meeting your needs with respect to payment, term, payout, trade cycle, etc. It’s simple to lower the monthly payment by raising the residual at the end of the loan, leaving you with a huge balloon payment to make in order to inject equity in the truck. Or stretching out the term of the loan and ignoring the resulting higher interest charge. Or, if you’re leasing, not factoring in all applicable taxes in your payment calculations.

Fees: Look on the bill of sale, invoice, or finance/lease contract for administrative fees, processing fees, miscellaneous fees, filing fees, etc. Naturally, there’s a cost associated with setting up and managing your loan. Ask for a plain-language explanation of what you’re paying for.

Interest rate: Most F&I managers we talked to say that buyers are fixated on haggling over the interest rate — yet apparently do little shopping around to get quotes from other sources of financing, or offer them to their accountant for an objective analysis.

Insurance: Most lenders require a $5,000 maximum deductible and a minimum $1 million liability coverage. Get competing quotes for credit life and credit disability insurance on the finance contracts. Most of these premiums are rolled into your financing but are prepaid to the insurance company. You end up paying more interest than you should. Consider purchasing term insurance instead of credit life.

Fair market value: The true cost of the vehicle is determined by what it’s worth at the end of the term. If you’re building equity in the truck, there’s less chance you’ll owe more on the truck than it’s worth. Shorter amortization periods and smaller residuals will reduce the chance of this happening.

Capital lease, RIP: In 2002, the Canada Revenue Agency effectively did away with the capital lease, a financing arrangement that contained a bargain purchase option, or BPO, outlining what you’ll pay for the truck in order to take title at the end of the lease term. The alternative is an operating lease: the payments are a straight business expense, and you can still exercise a BPO.

“We don’t have to track the capital cost allowance, set the truck up with a purchase price, and then look at a recapture situation or rolling the truck into a trade,” says Chris Bennett, general manager of TFS Group, a Waterloo, Ont., firm that specializes in accounting and other business services for transportation companies. “Say your BPO is a dollar, but the truck is worth $30,000 on the street, so you sell it. You have a capital gain that will be taxed at one-half your normal business rate. It’s a significant tax savings for our clients.”

Be transparent: Just as you should demand accuracy, fairness, and expediency from the F&I department, so to should you be ready to provide financial data and a business plan that supports your request for a loan. The lender wants to see that you have the ability to succeed — which is often predicated on realistic expectations of what your operation entails and is capable of earning. Expect to answer questions about the mix of freight you haul, the routes you run, how you insulate yourself from spiking fuel and insurance prices, and what you’re doing to manage your receivables and cash flow.

Do the math: Be sure the deal’s specifics are reflected in the contract before you sign, and that’s they’re accurate. Misunderstandings and misinterpretations are costly. Finally, once you have an offer you like, stop and ask a couple of other dealers to beat the price. You never know how low they might go.