If you don’t have enough working capital available to pay for trucks and trailers yourself, commercial truck financing can help offset the cost. Commercial truck financing allows your business to purchase the trucks it needs to make deliveries, transport goods, and expand operations.

In 2023, eCommerce and Amazon orders have skyrocketed, following the trend set in place by the pandemic. That means more orders for trucking companies to fulfill.

Trucking companies are now looking for ways to take advantage of new business opportunities. So, how can commercial truck financing help you?

How Does Commercial Vehicle Financing Work?

Commercial vehicle financing gives you access to the funds needed to buy a new vehicle, buy a used vehicle, or pay for upgrades/repairs.

Since vehicles are considered “equipment,” commercial vehicle financing falls under the larger umbrella of equipment financing. Unlike personal loans or car loans, equipment financing doesn’t actually involve a loan – the only goal is to make the equipment more affordable by spreading out the total cost on an extended schedule.

The equipment or vehicle you purchase often serves as collateral for the financing, so you won’t have to put up another asset. Once you’ve finalized a contract, the lender holds the title of your vehicle until you’ve repaid your financing in full. If you’re unable to make your payments, the lender has the right to seize your vehicle to recover their losses, as outlined in your financing agreement.

Some lenders may also require a down payment, usually between 5% to 25%, in order to secure the loan.

Benefits of Commercial Vehicle Financing

Commercial vehicle financing allows entrepreneurs to break down the cost of an expensive asset over a more manageable schedule. Here are a few of the most notable benefits.

  • Ability to afford higher-priced assets
  • Streamlined cash flow
  • Predictable payment schedule
  • Potential tax advantages
  • Freedom to choose the vehicle you finance and the lender you work with

Breaking down the cost of an asset over a longer schedule has many benefits. For one, you’re able to afford a higher caliber of equipment because you’re not fronting the entire cost all at once. Not only does this make it easier to keep up with the bigger plays in your industry, but it also preserves your cash flow to use for other opportunities that pop up.

You don’t have to use equipment financing, either. You’re free to use whichever financing option fits your business and schedule.

Commercial Vehicle Financing Vs. Leasing: Which One Is Better For You?

Deciding whether to go the route of commercial vehicle financing or leasing is a lot like deciding whether to rent or buy a home. You’ll want to weigh each choice carefully before making a decision.

Type Pros Cons
Commercial Truck Financing Commercial vehicle financing leads to ownership: Your monthly payments go towards equity in an asset. Once the vehicle is paid off, you can use it, sell it, or even trade it for a new one. The benefits of owning your own vehicle tend to accumulate as time goes on. If your business has had difficulty with cash flow or you have bad credit, it can be difficult and more costly to secure a loan.

Additionally, vehicles quickly depreciate in value over time.

Leasing a Commercial Truck Leasing a commercial vehicle involves borrowing the vehicle in return for making consistent monthly payments. Most commercial vehicle leases are between one to three years but can be longer depending on the company.

Commercial vehicle leasing is flexible and involves less commitment than financing. Although you may need to pay fees, there are fewer upfront costs, and monthly payments are typically lower.

Commercial vehicle leasing involves greater restrictions on usage because the vehicle is not legally yours.

Additionally, all the payments you make won’t be going towards owning anything. Once the lease is over, you will need to return the vehicle and look for new equipment.

In other words, leasing could be a more realistic decision in a tight spot but isn’t the best when it comes to long-term goals.

How to Get Commercial Vehicle Financing for Your Small Business

There are several options when it comes to semi-truck and commercial vehicle financing. Most business owners turn to banks or online lenders for vehicle loans, but non-bank options have gained immense popularity in the last decade.

Type of Lender Description
Banks and Credit Unions Most local banks won’t offer commercial truck financing, as the trucking industry is very niche, and they tend to view it as high-risk.

There are some national banks that offer solutions for commercial trucks. However, these loan products can be difficult to qualify for.

Non-Bank Lenders Online lenders are generally more flexible and less strict when it comes to truck loan requirements. The application process is typically faster and more straightforward as well. Many businesses that have been unable to qualify for a bank loan have found success with online lenders.

Online lenders typically charge higher interest rates than banks for business loans, but it’s still possible to shop around for the best rates. National, for example, is a marketplace of online lenders where businesses can access financing options to help them purchase a commercial truck. Instead of selecting the only rate available, you can compare various options.

Commercial Vehicle Financing Options

There are a variety of different financing solutions you can use to achieve your goals. Let’s explore a few of the top choices.

Type of Financing Description
Term Loans Term loans are provided in a one-time lump sum that’s repaid over a predetermined schedule. Repayment can be short or long term, and borrowers can use the funds for any business purpose, including commercial vehicle purchases.
Equipment Financing Equipment financing breaks down the cost of an equipment purchase over a longer schedule. Borrowers can finance one or multiple vehicles at one time, and they may qualify for tax benefits, like Section 179.
Revenue-Based Financing While not a loan, revenue-based financing provides a lump sum similar to business term loans. However, the amount is repaid over a much shorter schedule, and the payments are automatically deducted from your business’s sales.
SBA Loans Small Business Administration (SBA) loans are similar to term loans but come with some of the lowest interest rates available. You can borrow up to $5 million through the SBA and use the funds for any of the approved business purposes.

If your business deals with invoices and A/R, you could also leverage an accounts receivable financing solution to purchase your commercial vehicles. Reach out to the expert Business Finance Advisors at National Business Capital for more information on which financing solution works best for your unique circumstances.

Commercial Vehicle Financing Qualifications

Qualifying for a commercial vehicle loan can be easier than qualifying for a traditional business loan, particularly because this type of financing is secured by the vehicle as collateral.

Nonetheless, lenders will need to review several factors before approving your eligibility.

These are some of the factors that lenders may look at when considering your application. However, all lenders look at different criteria—they may not consider everything below.

  • Vehicle condition: Lenders will review the make, model, serial number, mileage, history, pictures of the semi-truck, and more to verify it’s in good condition. Some lenders might only approve new vehicles.
  • Type of vendor: Finance companies prefer borrowers buy from a reputable vendor, as opposed to a private party.
  • Credit scores: Most lenders will review your business credit score as well as your own personal credit history. You can normally find an option regardless of your credit score, even with bad credit. Lenders will also weigh tax liens and late child support payments.
  • Proof of down payment: Finance companies will need to know you have enough cash available to pay for the down payment as well as meet other expenses – including fees, insurance costs, and more.
  • Time in business: Most lenders will want to see that you’ve been in business for at least two years. If you’re just starting out, you may have more difficulty securing a financing option. On the other hand, sound business finances along with a good credit score can help.
  • Vehicle insurance: Should your vehicle become damaged, finance companies need to know their collateral’s value is protected.
  • Other documents: Lenders may ask you to provide proof of business, tax returns, balance sheets, bank statements, as well as additional personal and business documents.

Keep in mind that different lenders look at different criteria, and you may be able to find a great option even if you don’t meet the mark in one category.

However, the commercial vehicle financing terms and rates you qualify for will be affected.

How to Apply for Commercial Truck Financing

Commercial truck financing is ultimately an investment. Although it may cost you a little extra now, securing your own equipment can give your business the boost it needs to achieve new levels of expansion.

If you’re curious about the rates and terms you qualify for, National Business Capital can help. Here’s a quick look at our streamlined application process.

  1. Apply Securely Within Minutes – Move through our streamlined application within minutes and upload your business documents with zero risk.
  2. Review Your Offers – Compare your offers with expert advice from our team and select the best one for your specific circumstances.
  3. Receive Your Money – Seize an immediate opportunity to grow your business or tackle a new challenge with confidence.

Our Business Finance Advisors are happy to discuss what you’re eligible for and your unique requirements. Contact us for a free consultation.

If you’re ready to move forward, apply now and receive your funds the same day!

Frequently Asked Questions

What types of commercial vehicles are eligible for financing?

Nearly any commercial vehicle used for business purposes is eligible for financing. Some lenders work with specific subsets of vehicles, while others can finance nearly anything, so it’s important that you shop around and submit applications to multiple lenders. This way, you can compare approvals and finalize a contract with the best offer.

What is the typical interest rate for commercial vehicle loans?

There’s no blanket answer. The interest rate depends on the type of financing you’re choosing, the lender you’re working with, and the financial background of your business, among many others.

If you’re looking to secure the lowest interest rate, come prepared with the strongest financial information possible. You should have proactively strengthened your credit score, ensured regular deposits entered your business bank accounts, and offer collateral to lower the lender’s risk.

Remember – The cost of capital matters little if your investment yields revenue to offset your interest payments.

How long does the loan approval process usually take?

The length of the approval process depends on the type of lender you’re working with and the financing you’re seeking. For example, banks and credit unions take longer to process your application than non-bank lenders, and equipment financing generally takes longer than revenue-based financing.

If you’re looking for the fastest financing, make sure to speak with your lender about your timeline. At National Business Capital, our Business Finance Advisors ask this question in the very beginning, so we can make sure that you’re given options that work for your specific timeline.

Joe Blog Bio
About the Author

Joe Camberato

Joe Camberato is the CEO and Founder of National Business Capital. Beginning in 2007 out of a spare bedroom, Joe and his team have financed $2+ billion through more than 27,000 transactions for businesses nationwide. He’s made it his calling to deliver the educational and financial resources businesses need to thrive.

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