Best Semi Truck Financing Options

Buying a commercial truck or trailer for your business is a significant investment. With new semi trucks costing as much as $250,000, you’ll likely have to take out a loan. Fortunately, there are plenty of semi truck financing options available — whether you buy new or used.

Like any small-business loan, the best semi truck loan is the least expensive one you can qualify for that meets your needs.

Semi truck financing refers to a small-business loan that’s used to buy a commercial truck for your business. Depending on your lender, you may be able to purchase new or used vehicles, such as dump trucks, box trucks, flatbed trucks, service trucks, vans, trailers and more.

Like other types of equipment financing, semi truck loans use the truck you buy as collateral on the loan. This means that if you don’t repay your loan, the lender can take possession of your truck and sell it to recover its losses.

Semi truck loans are typically structured as normal business term loans. Here’s how they work:

If you’re in the market for a commercial truck, equipment financing is often a better option than equipment leasing. Big rigs may cover a million miles before they require serious work. That means they’ll likely remain productive long past a three- or five-year loan repayment term, making financing a potentially more cost-effective solution in the long run.

Still, commercial truck leasing can make sense in the following instances:

• You’re just starting out. Qualifying for a commercial truck loan can be difficult if your business lacks a track record. Consider leasing a truck while you’re proving your concept before investing a lot of money into a truck of your own.

• You need to free up cash. Leases typically come with lower upfront costs. Depending on where you live, you may even be able to spread the sales tax over the lease’s term, which can result in smaller monthly payments and free up cash flow for your business. 

• You’re worried about longevity. Long-haulers have long shelf lives. But vehicles like delivery vans may face more wear and tear, and specialty trucks with complex parts may need more frequent repairs. If your trucks are used in direct interactions with customers, you may want consistently new models to make a good impression. Leasing can help in all these cases.

There are a number of places where you can get a commercial truck loan to buy your next big rig:

• Direct semi truck lenders. Direct lenders offer deep expertise in the trucking business. They may also be more flexible compared with other lenders because they lend their own money. In addition to traditional business loans, freight factoring companies work specifically with trucking companies to provide upfront cash in exchange for outstanding invoices. 

• Banks. Although banks offer some of the most competitive interest rates, approvals can be time-consuming and tough.

• SBA lenders. SBA commercial vehicle loans are a great alternative to bank loans due to their low interest rates and long repayment terms. They often require good credit and a couple years in business.

• Online lenders. Alternative semi truck lenders generally provide faster funding than banks and have more flexible qualification requirements. These companies may be willing to work with new businesses and borrowers with bad credit, but you should expect higher interest rates.

Here are some of our top recommendations to kickstart your search for a semi truck loan:

Knowing how much you can afford as a down payment is a good place to start when buying any vehicle. It’s especially important since commercial trucks can cost six figures — even if you buy used.

For example, if a lender requires a 20% down payment on a $100,000 big rig, you would need $20,000 on hand, plus money for soft costs such as taxes, registration and other fees. Some lenders may offer no-money-down options, but you’ll need good credit to be eligible and will pay more overall by financing the entire purchase.

The monthly loan payment amount is another important consideration. Determining the amount that fits in your budget can be helpful in deciding what loan will work best for you. When estimating the amount of an affordable loan payment, don’t forget to include other costs that will come with the truck, like fuel, maintenance, tires and commercial truck insurance.

In addition to thinking about a potential down payment and monthly costs, you’ll also want to consider common business loan requirements, to determine what loans you may qualify for:

• Credit score. Many lenders want to see a minimum credit score in the mid- to high 600s, but others are more flexible. Typically, a higher credit score will help you access lower interest rates.

• Time in business. Because commercial truck purchases are often expensive, it’s helpful to have two or more years in business. Some lenders may be able to work with younger businesses, however, if they have good credit or can provide a larger down payment.

• Annual revenue. Some semi truck financing companies don’t have a minimum annual revenue requirement or don’t disclose one upfront. In general, however, you’ll want to be able to show a lender a strong financial history that demonstrates your ability to repay a loan.

What kind of truck you need will have a direct impact on financing options. For example, some lenders may have vehicle age or mileage requirements. Others may not finance sleeper cab trucks or private-party purchases. Do you need multiple trucks? A lender’s maximum funding amount may limit your options.

But opting for a semi truck loan will keep that working capital available for other business costs. Plus, the vehicle itself offers built-in collateral for lenders, so it may be easier to qualify for semi truck financing than other options.

Commercial truck lenders have different application processes and requirements. You should be prepared with details about your company (annual revenue, type of business), the vehicle you want to finance (type of truck, its mileage and age, the seller) and yourself (your credit score, whether you have a commercial driver’s license and how long you’ve had it).

It’s important to shop around and compare multiple lenders, even if you need funding quickly.