Table of Contents

  • Types of Commercial Truck Financing
  • Who Offers Commercial Truck Financing?
  • What You Need to Know Before Applying
  • Requirements
  • Interest Rates and Terms
  • Applying for Commercial Truck Financing

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Commercial truck financing works differently than a conventional car loan. This can make the loan application process more challenging for a first-time buyer.

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.

Types of Commercial Truck Financing

You can use funding from lenders to purchase an array of vehicles you may need to start or continue to run your small business. Some of the most common loans include:

  • Commercial semi-truck and trailer financing
  • Commercial dump truck financing
  • Commercial truck fleet financing
  • Commercial truck tire financing
  • Commercial truck repair financing

No matter the industry, there are lenders out there who can loan you the money you need to purchase or repair a commercial vehicle. 

Who Offers Commercial Truck Financing?

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. 

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 financing for commercial trucks. 

Smaller regional banks may also shy away from funding these loans. 

There are other options.

Large National Banks

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

But only the most qualified borrowers will qualify. If you don’t have a good credit score, high revenues or established business history, your chances of approval are slim.

Truck Financing Companies

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

The main benefit these lenders offer is their knowledge working with these types of loans. 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.

Specialized lenders do, however, sometimes carry requirements that can’t be met by startups and business owners working to repair their credit.

Alternative Lenders

Online lenders offer fast, secure access to affordable commercial truck financing loans. 

These lenders extend funding opportunities to business owners unable to meet the requirements of banks and select equipment lenders. Of course, this means shorter repayment terms and higher interest rates than what you’d find from a traditional lender.

If you’re seeking commercial truck financing with bad credit, alternative lenders may have the best options for you.

What You Need to Know Before Applying

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

Regardless of the lender, they’ll need information on:

  • The vehicle
  • Your business
  • You

Lender performing appraisal for commercial truck financing application.

Gather Vehicle Information

Unlike other business loans, commercial truck financing lenders need to know the exact details of what you’re using the funding to purchase. You’ll need to give them everything from the usual details to info about the seller.

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

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

  • 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 trucks are your common semis used for hauling cargo across long distances.

The next thing they’ll ask for is the basic info of the truck, whichever type it falls under.

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, a 10-year old truck with 150,000 miles may be less risky to invest in than a 5-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.

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 a loan. Likewise, a monthly insurance payment that is too expensive could cut into the funds you have to pay them.

 

To obtain a commercial truck loan, you’ll need a plan that has:

  • 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 levels you need, but commit to a plan that balances a reasonable monthly payment with strong coverage.

Submit Business Financial Documents

If the lender approves of your purchase, they’ll assess your fundability. This starts with the viability of your business.

Although you can 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. 

Lenders will need the following documents:

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

They’ll also ask to see your USDOT and Motor Carrier numbers from the Department of Transportation and Federal Motor Carrier Safety Administration (FMCSA). 

Adding 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 they look for are:

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

Commercial Truck Financing Requirements

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

Banks will always have the strictest prerequisites. Generally, you’ll need to have a good or excellent credit score (think 700 and up) 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.

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 industry and take in a lot of applications from it, they’re not as likely to approve less-qualified borrowers. 

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 those repairing their credit.

Fast Capital 360 can help you get affordable commercial truck financing in as fast as 2 days. You’ll be likely to qualify if you have:

  • A credit score above 620
  • Annual revenues of at least $160,000
  • At least 2 years in business

Business owner driving off the lot after receiving commercial truck financing.

Commercial Truck Financing Interest Rates and Terms

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

Are You Buying or Leasing?

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

Leasing is usually for a shorter 3-5 year term. It carries lower monthly payments and interest rates 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, offers longer repayment terms and higher payments, but you’ll own the truck once the debt is paid in full. 

Note: Some lenders offer “capital” leases. These have terms like buying a car but are considered leases because you don’t pay the full amount. Structuring payments this way leaves a small buyout amount, sometimes only $1. Lenders do this simply for bookkeeping purposes.

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 more. 

As we already covered, banks offer the lowest rates, starting around 5%.

Equipment and alternative lenders will generally 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. 

Commercial truck loans are generally fully amortized with fixed interest rates. Origination and appraisal fees are standard. 

Small business tip: Ask your lender for a full list of the rates, terms and fees before signing. The APR will give you a complete look at how much you’ll pay in interest.

 

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

Down Payments

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, most lenders will require a down payment.

The amount of this payment falls between 0-25% 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.

Applying for Commercial Truck Financing

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

If you’re applying with a bank or specialized equipment lender, you’ll need to meet with one of their loan specialists. They’ll go over your info and pre-qualify you 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 easy 4-step process, you can have your application expedited and receive approvals in a few hours. All you need to do is provide business and personal financial info and you’re on your way to receiving the funding you need to get back on the road.

How much can my business qualify for?

Estimate My Terms

Apply to multiple lenders with just one application.

Learn More