Financing Guide

Get the Best Rates on Commercial Truck Financing

10 Min Read

Looking to add a commercial truck to your business’s vehicle inventory? Unless you have a hefty cash reserve, you’ll likely need some type of financing to help.

Commercial truck financing works differently than a conventional car loan, though, which can make the loan application process challenging.

If you know where to look for lenders – and what they look for when judging your application – you can find the best commercial truck financing rates and get on the road in no time.

Costs of Owning a Commercial Truck

Running a business that involves the use of commercial vehicles comes with a particular set of challenges. Commercial trucks need special upkeep that makes them expensive assets for any small business.

Use commercial truck financing to cover maintenance, fuel, tires and brakes, oil change and body repair expenses

Many of these industries (especially freight trucking) are considered risky because failure rates are high. Because of this risk, some lenders are hesitant or unwilling to offer in house semi truck financing for commercial trucks.


Who Offers Commercial Truck Financing?

Large banks, truck financing companies and alternative lenders offer commercial and semi truck financing, while smaller regional banks may shy away from funding these loans. Let’s look at each type of lender in detail.

Large National Banks

Although smaller chains and regional companies can’t usually afford to take on the risk of providing semi truck financing, you can find large national banks that finance commercial trucks and trailers. Their resources allow them to offer the lowest rates and longest terms of any lender.

But only the most qualified borrowers are approved. If you don’t have a good credit score, high revenues or established business history, your chances of approval for commercial truck or trailer financing could be slim.

Commercial and Semi Truck Finance Companies

Some lenders specialize in providing funding for equipment. This includes a few dedicated strictly to commercial truck and semi truck financing.

The main benefit these truck finance companies offer is their knowledge. Their experience can help you find good value in your purchase and better facilitate the deal with the seller. This leads to a smoother process overall.

However, specialized lenders, such as commercial truck financing companies, sometimes carry requirements you won’t be able to meet if you have a startup or you’re a business owner working to repair your credit.

Alternative Lenders

Online lenders offer fast, secure access to commercial truck loans and commercial truck fleet financing that meets your needs.

These lenders extend funding opportunities to business owners unable to meet the requirements of banks and select equipment lenders. For this convenience, your commercial loan will likely have shorter repayment terms and higher interest rates than you’d find with a traditional lender.

If you’re seeking commercial or semi truck financing with bad credit, alternative lenders offer some of the the best bad credit commercial truck loans for you.

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What to Know Before Applying for Commercial Truck Financing

Before you reach out to lenders, gather everything they require for a commercial truck financing application.

Regardless of the lender and whether you’re looking to refinance a commercial truck loan, get commercial truck repair financing or obtain new semi truck financing, you’ll need to provide information on:

  • The vehicle
  • Your business
  • You

Lender performing appraisal for commercial truck financing application

Gather Information About Your Commercial Truck

Unlike other business loans, commercial truck financing lenders need to know the exact details of what you’re using the funding to purchase, including information about the seller and the vehicle.

Commercial truck financing loans are secured by the truck itself, making the vehicle almost as important to vet as your creditworthiness as a borrower. Having all of this information on hand allows lenders to make a judgment as to whether it’s a smart investment for you and, by extension, them.

First, they’ll need to know what kind of commercial truck it is. This can be broken down under two types: vocational and long-haul or transportation vehicles.

  • Vocational trucks are single-purpose vehicles, often set to be used in a limited geographical area. Examples include garbage trucks, ice cream trucks and dump trucks.
  • Long-haul or transportation trucks are your common semi trucks used for hauling cargo across long distances.

For example, you’d tell your lender you’re purchasing a vocational truck if you’re applying for a dump truck loan. In contrast, a long-haul truck is the type of vehicle you’d be buying if you’re seeking semi truck financing.

The next thing your commercial truck financing lender will ask for is basic information about the truck.

Be ready to provide the following:

  • Year, make and model
  • Vehicle identification number (VIN)
  • Mileage
  • Condition report (if pre-owned)
  • Repair history (if applicable)
  • Photos/videos
  • Seller information

Generally, newer vehicles mean less risk. Mileage, of course, plays a part. For example, an 8-year-old truck with 150,000 miles may be less risky to invest in than a 4-year-old truck with 500,000 miles.

Buying from a dealer assures lenders they can trust the condition of the vehicle. Dealerships also will have more detailed repair histories that can alert you (and the lender) to any potential problems that could leave you without a truck to generate revenue.

Commercial Truck Insurance

Another cost that commercial truck financing companies take into account is insurance. Repairs and liabilities can be expensive, so lenders want to know that an accident won’t put you in jeopardy of defaulting on your commercial truck loan.

 

To obtain a commercial truck loan, you’ll likely need to show you have insurance. Your plan may need to have the following:

  • Liability coverage (including bodily injury liability)
  • Non-trucking liability (for when you use the truck off-duty)
  • Physical damage coverage
  • Cargo coverage
  • Trailer interchange coverage

Buying or leasing will determine the coverage levels you need to obtain your commercial truck financing, but commit to a plan that balances a reasonable monthly payment with strong coverage.

Submit Business Financial Documents

When you’re applying for commercial truck financing, lenders will require you to provide documentation that demonstrates you have the funds to repay your loan. You may be asked to submit the following:

  • Proof of business
  • Business tax returns
  • Profit-and-loss statements
  • Balance sheets
  • Bank statements

They may also ask to see your U.S. Department of Transportation (DOT) number and motor carrier numbers from the Federal Motor Carrier Safety Administration (FMCSA).

If the lender approves of your purchase, they’ll review your documents and assess your fundability, starting with the viability of your business.

Although you could receive commercial truck financing as a first-time buyer, a history of strong revenues and a solid business plan will afford you better rates and higher funding amounts. Experience in the business assures a lender that you know the industry, lowering their risk.

Adding Your Personal Information

Commercial truck financing companies look into your personal history before they accept your application.

Since the industry is risky, lenders need to know, from top to bottom, that they can trust you to repay them.

Some things truck finance companies look for are:

  • Current credit score
  • Past delinquencies or bankruptcies
  • Lending history
  • Criminal background

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Commercial Truck Financing Requirements

Each type of commercial truck financing lender has its own expectations for borrowers. From credit scores to time in business, you’ll have to meet a lender’s minimum requirements to be eligible for a commercial truck loan.

Bank Requirements

Banks have the strictest prerequisites. Generally, you’ll need to have a good or excellent credit score to qualify.

Banks also favor businesses that have a long history of generating revenues. They tend to work with high-amount loans, so they need to know you’re experienced and capable of making more than enough to pay them back.

This makes it a great choice for business owners with multiple years of experience. Startups and first-time buyers may need to look elsewhere.

Truck Finance Company Requirements

Specialized commercial truck financing companies aren’t as tough as banks, but approval is far from guaranteed. Since they have such a handle on the trucking industry and take in a lot of applications from it, they’re not as likely to approve less-qualified borrowers.

Alternative Lender Requirements

Alternative lenders are more likely to work with you and not disqualify you from obtaining commercial truck financing for bad credit or other common reasons. This makes them an excellent option for younger businesses or business owners who are repairing their credit.

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A business owner is getting ready to get in his new semi and drive off the lot after receiving commercial truck financing


Commercial Truck Financing Interest Rates and Terms

A few factors will impact your interest rates, payment terms and down payment.

Buying Vs. Leasing Your Commercial Truck or Semi

The choice to buy or lease has a significant effect on the terms of your commercial truck financing or loan.

Leasing repayment terms can be up to 3-5 years. Leasing carries lower monthly payments because you’re not taking out a loan on the full value of the vehicle, reducing risk to the lender. You can “buy out” a lease, but otherwise, you won’t own the truck at the end of your lease agreement.

Buying, on the other hand typically equates to longer repayment terms and higher payments, but you’ll own the truck once the debt is paid in full.

Commercial Truck Loan Interest Rates

Commercial truck financing interest rates usually fall between 5%-30%. The rate you get will be based on your lender, credit history and financial health. So take this into consideration if you’re seeking semi truck financing with bad credit.

As we already covered, banks offer the lowest rates, which can start around 5%.

Equipment and alternative lenders may start around 8% for their most qualified borrowers. If you have a low credit score and are making a riskier purchase, you could be facing a rate in the teens or higher.

Often, commercial truck loans have fixed interest rates and a set term, which allow you to repay the total cost of your loan at the end of your repayment period. Repayment terms can range from 1-10 years, depending on the lender and loan.

Small business tip:

Ask your lender for a full list of the rates, terms and fees before signing. The annual percentage rate (APR) will give you a complete look at how much you’ll pay in interest. Keep in mind that origination and appraisal fees are typically standard.

 

Want to estimate the cost of your potential commercial truck loan before you meet with a lender? Check out our equipment loan calculator.

Down Payment for Your Commercial Truck Loan

Many advertisements will read “Commercial Truck Financing, 0 Down!” While it’s possible to receive up to 100% of the value for your commercial vehicle and get your business loan with no money down, most lenders will require a certain percentage of funds up front.

The amount of your down payment could be 10%-30%. For example, if you take out an $80,000 loan for commercial dump truck financing with 15% down, you’ll need a $12,000 down payment.

Do you need a loan for your small business?
Are you a small business owner?
How long have you been in business?
What's your annual revenue?
How much funding do you need?
We've found a match!
Looks like we have a few options that fit your needs. Continue below to see your options.
Invalid Full Name
Invalid Business Name
Invalid Phone
Invalid Email
Unfortunately, we're only able to fund a more established business at this time.
However, please subscribe to our newsletter to learn how to grow your small business.
Invalid Email
Great! Subscribe to our newsletter to learn how to grow your new business!
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Related Articles Here's more info from our experts to help your small business thrive.
  • We've researched what a typical small business loan amount is, making it easier for you to find the perfect match by lender and loan type.
    Average Small Business Loan Amount: Outlined and Defined Read article
  • bad-credit-business
    Bad Credit Business Loans: These Are Your 5 Best Options Read article

Applying for Commercial Truck Financing

Once you’ve found the perfect commercial truck and gathered all of the vehicle, business and personal information you need, it’s time to apply.

If you’re applying with a bank or specialized equipment lender, you’ll need to connect with one of their loan specialists. They’ll go over your information and pre-qualify you for commercial truck financing before taking a closer look at your credentials. This process can take weeks, so it may not be an option if you’re in a hurry.

Online lenders can get you funding in just a few days. Through Fast Capital 360’s quick and easy application process, you can receive approvals from multiple lenders in a few hours. All you need to do is provide your business and personal financial information. Then you’ll be on your way to receiving the commercial truck financing you need to hit the road in your new business vehicle.

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