If you are looking for ways to finance a semi-truck, this guide will help. Find out how to select the right semi-truck loan terms, what to look for in a semi-truck financier, and common mistakes to avoid while taking a commercial vehicle loan.

What is Semi-Truck Financing?

You can take a truck loan to buy or lease a new or used truck. You can also finance trucking equipment or repair works through semi-truck loans.

Securing a small business loan for a semi-truck can be quite different from traditional loans. Truck loans require more down payment and are costlier than business or consumer auto loans. Your monthly loan payments for a semi-truck can depend on your FICO scores, your work experience in the trucking industry, whether you are a homeowner, the type of vehicle you want to purchase, and the lender you choose.

Bad credit is not rare in truck financing, and lenders are willing to finance riskier borrowers for a premium. People with bad credit can still secure semi-truck financing for higher APR, more down payment, and shorter term.

The Best Companies for Semi-Truck Financing in the US

There are multiple ways to finance your semi truck. You can buy a truck with a commercial loan, truck dealership loan, in-house semi truck loan, business auto loan, or a bank small business loan. Here are some of the best companies for semi truck financing in the US.

National Funding

National Funding is committed to helping truckers and fleet managers get the most out of their business. We won’t make you wait weeks to learn if you’ve been approved or not. Get started today with our easy online loan application.

Bank of America

Bank of America provides low APR loans for small business owners with good credit scores. If you have a good FICO score above 750, you may get a semi truck loan from Bank of America for as low as 2.95% APR, varying over 48-72 months. You may need a minimum of two years of industry exposure and annual revenue of $250,000 to get a secured line of credit from BoA.

Wells Fargo

Wells Fargo offers flexible terms to aspiring truck owners with fresh loans and refinancing options for new or used semi trucks. Wells Fargo provides fixed and floating rate loans for 12-84 months for Class 6, 7, and 8 vehicles. The rates are higher than the industry average. You can choose from multiple lease options like operating lease, standard/modified TRAC lease, lease purchase agreement, dealer retail finance programs, and seasonal payment structures.

US Bank

If you want zero-down payment semi truck financing up to $1 million, the US Bank Equipment Finance program can be a great find. You can secure 25% extra financing for additional costs like taxes, delivery, and installation. Unlike other lenders, US Bank does not blanket lien your business assets and only hypothecates assets created out of its financing. In case of default, your business assets will remain unencumbered.

Commercial Fleet Financing Inc

With a goal of financing “One Truck At A Time,” Texas-based Commercial Fleet Financing Inc is one of the best companies for individual truck owners. They provide truck loans up to $500,000 with minimum documentation. Experienced truckers with no credit history can get rates as low as 5.5% APR. Your semi-truck loan can be approved within 24 hours if you meet their loan requirements.

Pros of Financing

Here are the pros of financing a commercial truck.

• Ownership: Every payment to your semi truck loan increases your equity in the asset. Eventually, you will become the sole owner of your vehicle.
• Fast Funding: You can get funded within a week if you have all the necessary paperwork.
• Tax Benefits: When you finance a semi-truck, you can claim tax deductions based on asset depreciation.
• Improve Credit Score: If you have bad credit, taking fresh credit and making prompt payments can improve your credit score.
• Pre-Approval: You don’t need to pay fees or make down payments to get a pre-approval that stays valid for weeks. You can confidently deal with truck dealerships once you have a pre-approved semi-truck loan.

Cons of Financing

Here are some cons of financing a semi-truck.

• High Costs: Since commercial vehicles are a risky asset class, lenders charge higher rates (6-30%) compared to consumer auto loans, personal loans, credit cards, or business loans.
• Complicated Terms Over $500,000: Commercial vehicle loan terms and documentation can get complex if you want a high-value loan. You may need to submit your personal asset details and business financial statements to your lender for approval.
• Lower Term: Truck loans have lower terms (usually 48 months) than traditional lines of credit.
• High Down Payment: Semi truck loans typically require a 10-15% down payment for borrowers with good credit scores (650+) and up to 35% for borrowers with bad credit (500-600).
• Repossession Risk: Your lender may repossess your vehicle if you miss loan payments.
• Dealership Scams: Some truck dealerships can cheat borrowers by intentionally selling a bad loan for higher commissions, charging documentation fees before loan approvals, selling needless warranty/insurance packages, and not being transparent on the loan terms.

Financing vs. Purchasing vs. Leasing

You can own a semi-truck by purchasing or financing. You can also choose partial ownership through lease models.

Semi-Truck Purchasing

You can purchase a truck with your savings, personal loans, credit cards, etc. Trucking is a high cash-flow business, and you can generate consistent monthly income from your investments. However, with the average cost of a semi-truck being $165,000, purchasing a commercial vehicle can deplete your business working capital or stretch your personal budgeting for a few quarters. Make sure to secure your vehicle with a truck warranty and insurance.

Semi-Truck Financing

A truck loan helps you start driving your truck or expand your trucking business with little or no down payment. Borrowers who have good credit or mortgageable assets can get low rates. You can also take a title loan by mortgaging an existing vehicle as collateral for a new semi-truck financing. However, you may lose your truck and assets to repossession in case of default. Make sure to build an emergency fund to maintain continuity in your loan payments.

Semi-Truck Leasing

Your lender finances your semi-truck but becomes the final owner of the vehicle under the lend-and-lease model. Leasing is flexible but often more expensive than purchasing or financing a truck. Lease-to-Own models allow borrowers to buy back the asset from the lender. Lenders can put usage restrictions on the trucks under a lease. The rules of semi-truck leasing are not set in stone, and it’s common to negotiate terms with your lessor.

You can get good loan terms and rates from big banks like BoA, Wells Fargo, and Chase if you have an established business or are a trucker holding a CDL license for at least two years. Banks have higher credit requirements, but you can bring in co-borrowers or use personal property as collateral. New truck owners with no credit history or bad credit can submit their details to in-house semi-truck financing companies to compare loan offers.

If you’re interested in semi-truck financing, then contact National Funding today to speak with one of our Funding Specialists.