Definitive Guide to Commercial Truck Financing

If your business relies on commercial trucking to get your inventory to buyers or you own a freight business, perhaps it’s time you considered buying your own commercial truck. Owning your own vehicle can significantly reduce the inconvenience and cost of shipping. However, it requires a large capital investment. If you don’t have the spare cash lying around, perhaps you should consider the commercial truck financing options that are available.

Commercial semi-truck financing will give you the funds you need to buy a new or used truck or pay for repairs to an existing truck. This financing option falls under equipment financing, a type of business loan used to purchase new equipment. The aim of equipment financing is for business equipment to be affordable, and the equipment – in this case, the truck – will serve as collateral. That means the lender will hold the title of your vehicle until you pay off the debt in full. The advantages of an Equipment Lending Loan and what type of equipment can be financed is valuable information for small businesses, especially if it’s not just semi-truck financing you are after.

Before we dive into semi-truck financing specifically, let’s determine what exactly your goal is. Do you want to buy the truck, finance it, or lease it? Once you’ve made this decision, you can start your search for financing. Unfortunately, looking to traditional lenders will most likely be fruitless. They rarely provide truck funding, so you will need to find specialized lenders for semi-truck financing.

In this post, we consider the difference between financing and leasing, what your semi-truck financing options are, the requirements for financing, and how Your FundingTree can help you get an equipment financing loan.

Here, we’ll cover the following:

  • Financing Versus Leasing
  • How to Get Commercial Truck Financing
  • Requirement for Financing

Financing Versus Leasing

It’s essential to weigh the pros and cons of financing versus leasing a truck. Both options have benefits to consider, and it’s critical to figure out what is best for your business.

Commercial Truck Financing

The biggest pro to taking out semi-truck financing is that you will own the vehicle at the end of the agreement. Your payments go towards equity in an asset, and the benefits of owning your own truck accumulate over time. If your business has had cash flow issues in the past or has bad credit, getting a bank loan may be difficult, but commercial semi-truck financing may be possible.

Leasing

By leasing a commercial truck, you are renting it in return for monthly payments. This is a good option for business owners who want smaller payments, perhaps can’t get approved for a considerable loan amount, or for those who worry about the depreciation of vehicles. Most leases are between one to three years and are often flexible, with fewer costs and lower monthly payments. However, once the lease is over, you don’t own the vehicle, and you will have to look for new equipment.

How To Get Semi-Truck Financing

There are a few options to choose from when financing your commercial vehicle. Different lenders will have varying financing option requirements, and these will come with various obligations and repayment schedules. Take the time to find the right lender and solution for your business.

From Banks

Although most banks see commercial truck financing as high-risk and don’t offer it, they do have other equipment loan options available for small businesses. These can sometimes be quite difficult to qualify for.

From Online Lenders

Online lenders are quite flexible when it comes to semi-truck financing. The application is also more straightforward than with a bank loan. However, you will have to provide the lender with all the necessary documents and required information. They generally charge higher interest rates than banks and since there are quite a few to consider, you can compare them and find the best rates. Online lenders tend to offer better loan terms than a truck dealership.

From Commercial Truck Dealerships

You can apply for a loan or lease for your new truck directly through the truck dealership. This is often a simple process that can be quite alluring, but dealerships can often have high interest rates because they are more than likely adding a markup on top of what they are having to pay to borrow money. Remember, only a few percentage points can turn into thousands of dollars at the end of the loan agreement period.

Requirements For Financing

Remember, the truck itself is collateral for the lender. This means that it is often easier to qualify for commercial truck financing. However, lenders will still want to review your financial and business situation before approving the loan. Here are a few things lenders may look at when considering your loan application.

The Commercial Truck: If the vehicle is not new, a lender will review the make, model, mileage, history, and even photos of the truck to ensure it’s in good condition.

The Commercial Truck Vendor: Are you buying from a private person or a reputable truck dealership? Lenders will prefer to finance with a well-known vendor.

Credit Scores: A lender will review your business credit score and your personal credit history. But don’t fear, even with bad credit, you are very likely to find an option for financing.

Down Payment: Lenders will often require your business to have enough funds for a down payment and other expenses such as insurance, etc.

Business History: It may be more challenging to find financing options if you have just started a business unless you already have strong business financials and a good credit score. Most lenders will want to see that your company has been running for at least two years.

Commercial Truck Insurance: Lenders want to ensure their collateral is looked after; this is where insurance comes in.

Business Documents: Ensure your documents are all in order, including proof of business registration, tax returns, balance sheets, bank statements, etc.

Commercial Driver’s License: A lender may check that your business is legally allowed to operate your new truck. It can take a few weeks to secure a commercial vehicle license, so before applying for financing, make sure whoever will be operating your vehicle holds a commercial driver’s license.

How Your FundingTree Can Help

It is essential to understand the process involved with financing the big assets for your small business. Now that you have a better understanding of what is involved with commercial truck financing and what the requirements are from lenders, get in touch with us at Your FundingTree.

Take the time to consider your business’ needs and then submit an application with us (free of charge) to discover all the equipment financing options available for your business. The loan proposals you receive from us will be from trusted lenders who have experience working with businesses in your industry, and you can review them free of charge.

Whether you need new equipment for your business or you’re looking to upgrade, maintain, or repair existing equipment, Your FundingTree can help. We match you with trusted lenders who can get you the equipment financing you need! Give us a call at 888-782-0348. We can help you move your business forward.