Semi-Truck Financing: Ultimate Guide to Truck & Trailer Lending

Tags: Business Guides, Financing a Truck, Fleet management

A reliable fleet can make or break your profit margin in the commercial trucking industry. The other side of that coin is that new semi-trucks cost between $100,000 and $200,000. This is why most trucking companies take out loans to cover equipment costs.  

If you want to maintain a fleet of vehicles or your own truck, there are several things to consider. 

Think about what type of truck you want to buy.  

• Is it better to buy a new or used truck?
• What specifications do you require?
• Do you require a single truck, or are you building your fleet? 
• How you intend to pay for the truck(s) will also matter. 

While some buyers can purchase a truck with cash, many need to consider semi-truck financing. 

So you don’t go into this process blind, our guide covers all the ins and outs of financing a semi-truck.

What Is Semi-Truck Financing?

Semi-truck financing involves taking out a loan to purchase or rent a new or used truck. Commercial trailer financing can also be used for trucking equipment or repair work. 

To learn how to finance a semi-trailer, you must understand that it differs from obtaining a standard loan. Truck loans are more expensive and require a larger down payment than commercial or auto loans. Your FICO scores, trucking industry experience, length of time in business, haul references, homeownership, the kind of vehicle you want to buy, and your lender will determine your semi-truck loan installments. 

Purchasing a Semi-Truck

You can buy a truck with your money, personal loans, credit cards, and other alternative methods. Trucking is a high-cash-flow business that may provide a steady monthly income. Because a semi-truck costs an average of $165,000, purchasing a commercial vehicle can deplete your business’s working capital or strain your personal budget. In addition, it is crucial to ensure that a warranty and insurance cover your truck. 

Semi-Truck Financing

A truck loan allows you to start or develop your transportation business with only a portion of the purchase price as a down payment. Borrowers with good credit or mortgageable assets may qualify for low interest rates. A title loan can also be obtained by mortgaging an existing vehicle as security for new semi-truck financing. In the event of a default, you may lose your truck and assets to repossession. Make an emergency fund to ensure your loan payments are made consistently and on time. 

Semi-Truck Financing Requirements 

Once you’ve gathered all of the information we have covered above, such as the vehicle you want to buy and your needs, you’ll be ready to begin your credit application.  

Borrowers are frequently asked for details regarding their trucking company, including annual income and time in business. You may also be required to give corporate tax records and other personal information.  

To ensure you meet the semi-truck financing requirements, let’s prepare you for financing your truck. 

Partner with a Reputable Dealer

Most lenders will only give you credit if you purchase your trucks from a dealer rather than a private seller. Working with a skilled dealer may also provide additional semi-truck financing options. 

Have Exceptional Credit Scores

Strong credit scores can help you receive the best prices. Personal and business credit ratings are essential, so check your business credit report before applying for a loan.  

Have a Clean Credit Report

Checking your credit report before applying ensures that your business credit report has no tax liens, repossessions, or delinquencies. These unfavorable indicators may make it harder to get an ideal interest rate. 

Be Ready for a Down Payment

Other than having your down payment ready to go, lenders may require confirmation that you have working capital reserves to fund your loan payment, insurance, and repair charges. 

Secure Truck Insurance

The vehicles you purchase are seen as collateral. Your lender may need proof of insurance before you drive them off the lot. If something happens to the vehicle, its collateral will not be destroyed or devalued. 

Tips for Choosing the Best Semi-Truck to Finance 

Ensuring that your truck is not a high-risk investment is vital when deciding which option to pursue. Here are our recommended criteria for protecting your capital when investing in semi-trailer financing. 

Consider Your Needs

Evaluating rates, terms, and conditions before choosing a truck is critical. Remember what you need and what you want out of the truck. Do you like how the truck rides? Are there any features you must have? Ensure you’re getting the most out of the investment in semi-truck financing. 

Enquire the Truck’s Age

Look for a truck that is fewer than ten years old. Older trucks break down more frequently, resulting in lower earnings and higher ownership costs. To reduce this risk, lenders give a high interest rate and larger down payment requirements. The older the truck you buy, the higher the risk. 

Ensure Low Mileage

A truck with less than 700,000 miles is ideal. Some lenders will take “asset type” into account. They may impose mileage requirements on the truck you’d like. You’ll likely be charged more upfront if it poses a high risk. 

Consider Estimated Value

Aside from the cost, the loan terms are also factored into the truck’s value.  

Benefits of Semi-Truck Financing

Your financial status and needs will determine whether you purchase or finance your semi-truck. To best understand how to finance a semi-truck, check the semi-truck financing requirements and benefits.

Tax Advantages

With semi-trailer financing, you can take advantage of tax breaks based on asset depreciation. 

Lower Upfront Costs

To obtain a pre-approval, there are no fees or down payments. Once you have a pre-approved semi-truck loan, you can work with truck dealerships and be confident in your agreement and repayment schedule. 

Convenient Ownership 

Every payment you make on your semi-truck loan adds to your equity in the asset. Eventually, you will become the sole owner of the vehicle.  

The Difference Between Banks and Online Lenders 

There are several funding options for semi-trailer financing. Some options include banks (that offer business checking accounts) and even online lenders to purchase your vehicle.  

You may benefit from an existing business relationship with a bank, which makes getting approved for a loan easier, or possibly getting a rate reduction. However, the approval process may take longer. 

Note: if you don’t have good to excellent credit, you may face some challenges with commercial trailer financing. 

Meanwhile, an online lender may process your application faster and accept you even if you don’t meet your bank’s semi-truck financing requirements. 

Working with your dealer may give you the best approval odds and rates, as they can shop your loan to multiple lenders on your behalf.

Frequently Asked Questions

How long can you finance a semi-truck?

Loan periods vary depending on the lender and your eligibility, but they range from 24 to 72 months. 

How long does it take to get financed for a semi-truck?

If you apply through a bank, it may take days or weeks to receive an answer. If you apply online, you could hear back within minutes to a few hours. 

How much is a down payment on a semi-truck?

The criteria are based on items including the sale price, down payment amount, interest rate, and loan terms. 

What credit score is needed to finance a semi-truck?

The exact answer depends on the lender, but most require a credit score of 600 or more to secure a semi-truck loan.

Customized Commercial Truck Financing

Every day at Hale Trailer, we help owner-operators and fleets get the equipment they need to keep hauling. We offer competitive financing and leasing terms for businesses of all sizes. With Hale, you can expect:

• Quick approvals on new and used equipment
• Competitive interest rates
• Attractive payment programs

Interested in learning more about how Hale can help propel your trucking operations forward? Contact us today, and one of our trailer representatives will get back to you shortly to explore financing options that suit your budget and business goals.