What is Semi-Truck Financing?

You can obtain a truck loan to purchase or lease a new or used truck. Semi-truck loans can also be used to fund trucking equipment and repairs.

Obtaining a small business loan for a semi-truck can be very different from regular loans. Truck loans require a larger down payment and are more expensive than commercial or consumer auto loans. Your monthly loan payments for a semi-truck can be determined by your FICO scores, trucking industry experience, homeownership status, the sort of vehicle you wish to buy, and the lender you choose.

Bad credit is common in truck financing, and lenders are prepared to finance riskier borrowers for a premium. People with bad credit can still get semi-truck financing with a higher APR, larger down payment, and shorter term.

Best Companies for Semi-Truck Financing in the United States:

There are several options to finance your semi-truck. You can purchase a truck with a commercial loan, a truck dealership loan, an in-house semi truck loan, a company auto loan, or a bank small business loan. Here are some of the top firms offering semi-truck loans in the United States.

National Funding:

National Funding is committed to assisting truckers and fleet managers in making the most of their businesses. We will not make you wait weeks to find out whether you have been authorized or not. Get started now with our simple online loan application.

Bank Of America:

Bank of America offers low APR loans to small business owners with good credit scores. If you have a decent FICO score above 750, you might acquire a semi-truck loan from Bank of America for as little as 2.95% APR over 48-72 months. To qualify for a secured line of credit from BoA, you may require at least two years of industry experience and $250,000 in yearly revenue.

Wells Fargo:

It provides ambitious truck owners with customizable terms, including new loans and refinancing choices for new or used semi trucks. Wells Fargo offers fixed and floating-rate loans for Class 6, 7, and 8 automobiles with terms ranging from 12-84 months. The rates are above the industry norm. You can select from a variety of leasing alternatives, including operating lease, standard/modified TRAC lease, lease purchase agreement, dealer retail finance programs, and seasonal payment plans.

US Bank:

If you need zero-down payment semi truck financing for up to $1 million, the US Bank Equipment Finance program could be a good fit. You can get 25% more finance for other expenses like taxes, delivery, and installation. Unlike other lenders, US Bank does not blanket lien your business assets and only hypothecates those created through its financing. In the event of default, your business assets will remain unencumbered.

Commercial Fleet Financing, Inc:

Texas-based Commercial Fleet Financing Inc., with the purpose of financing “One Truck At A Time,” is one of the top companies for individual truck owners. They offer vehicle loans for up to $500,000 with minimal documentation. Experienced truck drivers with no credit history might receive rates as low as 5.5% APR. If you meet their lending conditions, you can have your semi-truck loan authorized within 24 hours.

Pros of financing:

Here are the benefits of financing a commercial truck:

Ownership: Every payment made on your semi truck loan grows your equity in the asset. You will eventually become the sole owner of the vehicle.

Fast funding: If you have all of the required papers, you can be funded within a week.

Tax Benefits: When you finance a semi-truck, you can deduct asset depreciation.

Improve Credit Score: If you have bad credit, obtaining new credit and making timely payments will help you improve your credit score.

Pre-Approval: There are no fees or down payments required to obtain a pre-approval that is good for weeks. Once you’ve secured a pre-approved semi-truck loan, you may interact with truck dealerships with confidence.

Cons of financing:

Here are several disadvantages of financing a semi-truck:

High Costs: Because commercial vehicles are a riskier asset class, lenders demand higher interest rates (6-30%) than consumer auto loans, personal loans, credit cards, and business loans.

Complicated Terms If you desire a commercial car loan for more than $500,000, the terms and documentation can become complicated. You may be required to submit your personal asset information and business financial statements to your lender for approval.

Lower Term: Truck loans offer shorter periods than regular lines of credit (often 48 months).

High Down Payment: Semi-truck loans normally require a 10-15% down payment for borrowers with good credit (650+) and up to 35% for customers with low credit (500-600).

Repossession Risk: If you fail to make loan payments, your lender may repossess your vehicle.

Dealership Scams: Some truck dealerships can defraud customers by purposefully offering a substandard loan for a higher commission, charging documentation costs before loan approvals, marketing unnecessary warranty/insurance packages, and not being open about loan terms.

Choosing between financing, purchasing, and leasing:

You can own a semi-truck through purchase or finance. You can also select partial ownership through lease models.

Semi-Truck Purchasing:

You can buy a truck using your funds, personal loans, credit cards, and so on. Trucking is a high-cash-flow industry where you can produce steady monthly revenue from your investments. However, with the average cost of a semi-truck at $165,000, purchasing a commercial vehicle can deplete your company’s working capital or stretch your budget for several quarters. Make sure to protect your vehicle with a truck warranty and insurance.

Semi-Truck Financing:

A truck loan allows you to start driving your vehicle or expand your trucking business with little or no down payment. Borrowers with good credit or mortgageable assets might achieve reduced interest rates. You can also obtain a title loan by mortgaging your current car as security for new semi-truck financing. If you fail to pay, you may lose your truck and other assets to repossession. Create an emergency fund to ensure that your loan payments continue uninterrupted.

Semi-Truck Leasing:

Under the lend-and-lease strategy, your lender finances your semi-truck but ultimately owns the vehicle. Leasing is flexible, but it is usually more expensive than buying or financing a truck. Lease-to-own models allow borrowers to repurchase the asset from the lender. Lenders might impose usage limits on trucks under lease. The rules of semi-truck leasing are flexible, and it is normal to negotiate terms with your lessor.

If you have an established business or have held a CDL license for at least two years, you can acquire attractive loan terms and rates from major banks such as BoA, Wells Fargo, and Chase. Banks have stricter credit criteria, but you can bring in co-borrowers or use personal property for collateral. New truck owners who have no or bad credit can evaluate loan offers from in-house semi-truck financing providers.

If you’re looking for semi-truck finance, contact National Funding immediately and speak with one of our Funding Specialists.