The Ultimate Guide To Truck Financing: The Best 10 Lenders And How To Apply

Camino Financial05 Aug 2019
Truck financing is the best way to own your first semi-truck or expand your fleet. We've meticulously researched and compiled a list of the best lenders, ensuring you make an informed choice tailored to your needs. Moreover, we'll walk you through the application process, providing valuable insights every step of the way. Dive into this ultimate guide, and steer your way to successful financing.

The 10 Best Truck Financing Options

Camino Financial

Camino Financial's logo

Online loan

Camino Financial can be an excellent alternative for buying a truck. While we don't offer commercial truck loans per se, you can use our loans to buy the truck your business needs.
We offer affordable access to the capital you need.
We know how hard it is for minorities to access capital, and we are here to help you take your business to the next level.
  • Amount: $5,100 to $35,000
  • Interest rates: Depending on your credit score and application
  • Terms: 24 to 36 month
  • Payment: monthly, fixed
  • Speed: 10 to 12 days, sometimes less
  • Down payment: NONE
  • Requirements:
    • Time in business: 9 months
    • Min credit score: 580, we also accept applicants with no previous credit history
    • Monthly gross sales: $2,500
    • You can apply with an ITIN if you don't have an SSN
Benefits:
  • We offer commercial truck financing with no down payment required.
  • You'll receive funding in a few days, and our application process is quick and easy.
  • You can renew your loan after 12 timely payments.
Apply For A Business Loan!

Truck Lenders USA

Truck Lenders USA logo

Commercial truck loan

Truck Lenders USA is a financial services company that specializes in providing financing for commercial truck purchases and leases. They offer loan and lease financing options for a variety of new and used trucks.
  • Amount: $15,000 to $250,000
  • Interest rates: not disclosed
  • Terms: 24 to 60 months
  • Down payment: not disclosed
  • Requirements:
    • Time in business: 2 years
    • Min credit score:675
    • They do not accept ITINs.

Bank Of America Equipment Loans

bank of america logo

Bank loan

Bank of America offers equipment loans to businesses, allowing them to finance or refinance new or used equipment, like large trucks. They also offer another loan for smaller commercial vehicles.
  • Amount: $25,000 to $750,000
  • Interest rates: starting at 6.75% (APR)
  • Terms: up to 5 years
  • Requirements:
    • Time in business: 2 years
    • Min credit score: not disclosed
    • Annual gross sales: $250,000
    • Vehicles must weigh more than 2.5 tons to qualify

Commercial Fleet Financing

Commercial Fleet Financing logo

Commercial truck loan

Commercial Fleet Financing (CFF) is a financing company that specializes in providing loans and lease financing options to businesses in the transportation industry.
  • Amount: not disclosed (possibly $20,000 to $500,000)
  • Interest rates: not disclosed
  • Terms: 36 and 108 months
  • Speed: They can fund within 24 hours.
  • Down payment: not disclosed (possibly 10% to 20%)
  • Requirements:
    • Time in business: 2 years
    • Min credit score: 640
    • You don't have to provide a personal guarantee.
    • They do not accept ITINs in place of SSNs.

Wells Fargo Commercial Vehicle Financing

wells fargo logo

Bank loan

Wells Fargo is one of the largest and oldest financial institutions in the United States. Their commercial vehicle financing is a great fit for businesses looking to purchase or lease commercial vehicles, such as trucks, vans, and other fleet vehicles.
  • Amount: starting at $100,000
  • Interest rates: not disclosed
  • Terms: 12 to 84 months
  • Down payment: not disclosed
  • Requirements:
    • Time in business: 1 year
    • Min credit score: 600
    • Annual gross sales: $100,000
    • Have a Social Security Number

CAG Truck Capital

CAG Truck Capital logo

Commercial truck loan

CAG Truck Capital is a commercial finance company specializing in the trucking industry. They offer financing solutions for truckers, particularly focusing on engine overhaul financing and trucking business loans. There offer little to no details online about loan amounts, terms, and requirements.
  • Amount: not disclosed (possibly $20,000 to $200,000)
  • Interest rates: not disclosed
  • Terms: not disclosed
  • Down payment:
    • High-risk applicants (like a business owner with bankruptcies, bad credit, or current tax liens) need a 35% down payment.
    • Other applicants need only a 10% down.
  • Requirements:
    • Min credit score: 600

US Bank

US Bank logo

Bank loan

U.S. Bank, one of the major banks in the United States, offers a variety of loan products, one of which is the equipment loan. This type of loan can help businesses finance the purchase of machinery, vehicles, technology, and other types of equipment essential for their operations.
  • Amount: Up to $1,000,000
  • Interest rates: starting at 7.49% (APR)
  • Terms: 24 to 60 months
  • Down payment: none
  • Requirements:
    • Time in business: 2 years

Small Business Administration (SBA)

SBA logo

Government-backed loan

The Small Business Administration backs these loans to offer low interest rates. The SBA 7(a) loan program is one of the most popular options. You can use them to purchase equipment (like vehicles), land, or acquire a business. They have very stringent requirements.
  • Amount: up to $5 million
  • Interest rates: 10.5% to 13%
  • Terms: of up to 10 years
  • Speed: The whole process can take up to several weeks or months.
  • Down payment: 10 to 20%
  • Requirements:
    • Min credit score: 680
    • You can't have foreclosures, defaults on previous government loans, or bankruptcies.
    • You must have a Social Security number to receive an SBA loan. They do not accept ITINs.
#DidYouKnow APR is different from interest rates. The APR includes both the interests and other fees (like origination).

National Funding

national funding logo

Online loans

National Funding offer equipment financing loans and offer a 7% discount for paying your loan off early. They also offer an equipment lease loan (if you want one, you must have an invoice from a vendor).
  • Amount: up to $150,000
  • Interest rates: They don’t disclose their APR until you apply, as it varies based on several factors. Origination fee of 1% to 3% of the borrowing amount and a one-time fee of between 17-36% of the borrowing amount.
  • Terms: 4 months to 2 years
  • Payment: daily or weekly
  • Down payment: none
  • Requirements:
    • Time in business: 6 months
    • Min credit score: 650
    • Annual gross sales: $250,000
    • They do not accept ITINs instead of Social Security numbers

First Capital Business Finance

First Capital Business Finance logo

Heavy equipment loans

This institution offers programs for purchasing or leasing. These programs provide multiple benefits through First Capital's nationwide dealer network of over 3,000 dealers.
  • Amount: up to $150,000
  • Interest rates: not disclosed
  • Terms: 12 to 72 months
  • Speed: 48 hours if you submit all necessary documentation
  • Down payment: 10%
  • Requirements:
    • Min credit score: 540
    • They have mileage and vehicle restrictions
#DidYouKnow The problem with most of these semi-truck financing options is that they don’t accept ITIN nor work with applicants with no previous credit history. Camino Financial does. Apply For A Camino Financial Loan!

How To Get A Loan To Buy A Semi-Truck?

Tips To Help You Choose A Lender

  • Shop Around. Don't settle for the first offer you come across. Compare terms, interest rates, and fees from various lenders.
  • Understand The Terms. Look at the interest rate, whether it's fixed or variable, the loan term, monthly payment, and any associated fees. Be wary of any hidden charges.
  • Choose The Right Type Of Loan. There are various types of truck business loans, such as equipment financing, business line of credit, or term loans. The best fit depends on your specific needs.
  • Evaluate The Lender's Reputation. Read reviews, check with the Better Business Bureau, and seek feedback from other small business owners about their experiences with potential lenders.
  • Consider Flexibility. Look for loans that might allow for early repayments without penalties, or offer flexibility in payment terms during business downturns.
  • Don't Overextend. Borrow only what you need and ensure that you can comfortably handle the monthly repayments. Overextending can lead to financial strain down the road.

Most Common Requirements

  • Down Payment. While the exact percentage can vary depending on the lender and your financial health, generally, you can expect a down payment of 20% of the truck's price.
  • Credit Score. The higher your score, the better your chances of getting favorable terms. Most lenders will want you to have a score of 680 or above.
  • Time In Business. Typically, businesses operating for two years or more have an easier time securing financing.
  • Annual Revenue. Lenders set a minimum annual revenue threshold (usually $100,000), ensuring that your business pulls in enough to comfortably repay the loan.
  • Collateral Or Personal Guarantee. Usually, the truck itself you're buying serves as a collateral, but if you have a low credit score, some lenders might want extra assurances, like a personal guarantee or collateral.
  • Information On The Vehicle. Examples are its age (less than ten years) or mileage (fewer than 700,000 miles).
  • Your Commercial Driver's License
#DidYouKnow Some lenders require a loan co-signer for applicants with lower scores.
With many variables, lenders evaluate each application to decide what interest rate to charge. Individuals with lower credit scores, no credit history, or less driving experience pay more to get a loan. Additionally, most lenders require comprehensive insurance coverage on any financed vehicle, so ensure you cover it before applying. You should also keep proof of ownership in case your lender requests it.
#CaminoTip Camino Financial takes a different approach by having more lenient requirements. We don’t require collateral or a deposit.

6 Steps To Apply For A Commercial Truck Loan

  1. Find A Truck. Dive deep into what type of truck suits your business or personal needs. Look into factors like the truck's age, mileage, maintenance history, and any warranties it might come with.
  2. Decide How Much Down Payment You Can Afford. Start by assessing your financial health. Be realistic and don't stretch yourself too thin. Remember, larger down payments might mean smaller monthly installments, but they also mean a substantial immediate outflow.
  3. Gather Your Documents. Have some documentation ready beforehand, including your driver’s license, proof of insurance, and proof of income, among other information.
  4. Fill Out The Application. Applications are usually very intuitive. You just need to share basic information about yourself and your business. Be sure to complete all required fields and provide accurate information.
  5. Complete The Process. Here you need to submit your business documents, information on your cash flow (sometimes through bank verification apps like Plaid), and other information the lender might require.
  6. Wait For Approval. Now, all you can do is wait for the lender to get back to you with a decision. If approved, you'll receive an offer. After you accept it, they'll deposit the funds in your bank account.
Apply For A Business Loan!

What Are Commercial Truck Loans?

They are financial products created specifically to purchase a vehicle for business purposes, like trucks and semi-trucks. It works similarly to other types of financing. It involves taking out a loan against the truck you are purchasing to cover all or part of the cost of the purchase.

How Do They Work?

Trucking business loans, like other vehicle or equipment loans, operate based on a contractual agreement between the borrower and the lender. The price of the truck determines the loan amount and conditions. Semi-trucks that qualify for financing can be either new or secondhand. They are self-secured loans, meaning the vehicle is the loan's collateral. The lender uses your creditworthiness, history, and collateral from the truck itself (or other assets) to determine whether they will approve your loan application.

Pros And Cons Of Truck Financing

Pros:
  • Ownership. Unlike leasing, when you finance a semi-truck, it’s yours.
  • Tax Benefits. Talk to your accountant, but in many cases, the interest on your truck loan is tax-deductible. Plus, you can often benefit from depreciation, reducing your taxable income.
  • Customization Freedom. When you're financing, you call the shots. Customize your truck to suit your business or personal style.
  • Potential For Long-term Cost Efficiency. If you maintain your truck well, once you've paid off the loan, you own a valuable asset without monthly payments. That's a clear road ahead for profit.
Cons:
  • Upfront Costs. Down payments can be hefty. Not everyone has a chunk of change lying around to initiate a finance deal. It can be a barrier for those just starting.
  • Interest Over Time. The longer the loan term, the more interest you might end up paying. Sure, the truck is yours at the end, but at what extra cost?
  • Maintenance Is On You. Unlike some lease agreements where maintenance is part of the deal, with financing, the responsibility to keep the truck in tip-top shape falls squarely on you.
  • Risk Of Depreciation. The value of a new truck starts declining the moment it hits the road. If you decide to sell before you've paid it off, you might owe more than the truck is worth.

Types Of Semi-Truck Financing

Commercial Truck Loans

This is a loan specifically for buying trucks. You borrow a set amount, and make monthly payments over an agreed period. The truck often serves as collateral. Once you've made all your payments, you own the truck outright.

Equipment Financing

Equipment financing allows businesses to purchase any type of machinery. It's suitable for both new and used trucks, with the truck typically serving as collateral. You borrow against the value of the truck, making it an asset-centric financing approach.

Business Term Loan

This is a business loan that owner-operators can use for most business expenses. They offer a lump sum of money with a fixed interest rate and a set repayment period. You can get them from:
  • Banks are traditional institutions that offer secured or unsecured financing through loans, lines of credit, and mortgages.
  • Direct lenders are financial organizations that specialize in providing customers with approved loans without needing a bank's involvement.
  • Alternative lenders provide financing options such as peer-to-peer lending, online loans, merchant cash advances (MCAs), etc.

Average Truck Loan Rates And Terms

Commercial truck loan rates range anywhere from 5% to 99%. Applicants with the strongest credit (660+) and business profiles are the ones who tend to pay lower rates. The trucking industry can have high failure rates. As a result, truck lenders can sometimes have higher interest rates. Compare commercial rates with personal automotive loans, which often have interests below 5%. On average, truck loan repayment terms last from 12 months to 7 years, depending on your business and credit history.
#DidYouKnow Typically banks do not lend to most trucking businesses. Plus, they have stringent requirements and usually require an excellent credit score.

Should You Get A Commercial Truck Loan For Your Transportation Business?

Loans for commercial trucks can help your transportation business expand and grow. It is an effective way to ensure that your transportation business has the resources it needs to succeed. With access to larger or newer vehicles, you can take on more orders and transport goods further distances with greater efficiency than ever before.
This helps to increase profits and create a competitive edge in the marketplace.
Financing can also help by offering flexible payment terms that the lender can tailor to your specific needs compared to paying a vehicle upfront. Using a loan instead of your business savings helps reduce operating expenses and keep your business running smoothly.

When You Should Get A Loan To Buy A Truck

  • If You Don't Want To Spend Your Savings. Spending your own capital could derail other vital aspects of your business. A loan is a smart way to maintain cash flow and ensure you don't stretch your resources too thin.
  • If You Want To Access Tax Deductions. Every year, as your truck loses a bit of its value, you can claim that loss on your taxes.
  • If You Want To Be The Owner Of The Vehicle. Renting or leasing might seem tempting. But if you're the type who believes in building assets, financing is your best pal. The truck is more than an investment; it's a testament to your hard work and vision.
  • If You Want Payment Flexibility. Whether it's choosing between a fixed or variable interest rate, or even customizing the repayment duration, financing gives you a personalized solution. This way, you're in control, ensuring that repayments align with your business's growth projections.
  • If You Want To Boost Your Business Credit. When you finance a semi-truck and consistently make on-time payments, you're sending out positive signals to the credit world.

Alternatives To Semi-Truck Business Loans

Business Line Of Credit

Unlike traditional loans, where you receive a lump sum upfront, a line of credit allows you to draw funds as you need them. Think of it like a credit card for your business–only draw what you need, and pay interest on that amount. It's flexible, and often faster to secure than a typical business loan.

Invoice Factoring

Invoice factoring is a clever way to get cash now by selling your unpaid invoices to a third-party company. These companies, or 'factors', give you an immediate cash advance (usually a percentage of the invoice) and then collect the full payment from your customer. While there's a fee involved, it can be a game-changer for managing cash flow.

Venture Capital Or Angel Investors

These are individuals or firms ready to invest money in exchange for equity in your company. They're not just giving you money; they're buying a piece of your business. It's a significant decision, but if you've got a solid business plan and are willing to share the ride (pun intended), it could be a win-win.

Grants

These are funds provided by institutions, governments, or corporations that you don't need to pay back. While they're not easy to secure and often have specific criteria, it's essentially free money.

Leasing

Leasing is like renting a truck for an extended period. The benefit is that leased vehicles are ultimately not your responsibility should they need repairs. At the end of the lease, you might have the option to buy the truck you've been using or switch to a newer model. However, the leasing company stipulates how many miles you can drive the trucks, and there can be conditions for reparations, like when and where. Ultimately, leasing gives you far more limited control over your trucks (and consequently your business) than owning your vehicles.

Is It Better To Lease Or Buy A Commercial Truck?

The decision to lease or buy commercial trucks hinges on your business's financial priorities, operational needs, and long-term goals. If you're aiming for long-term utility and asset accumulation, buying could be the better choice. But if you want flexibility and constant access to newer models without the hassles of ownership, leasing might be the way to go. Always align your decision with your business's unique needs and growth trajectory

It's Time To Apply For The Commercial Truck Financing You Need

There are many semi-truck financing options. The one you choose depends on your specific needs. At Camino Financial, we think that financing a semi-truck should be easy. That's why we have a straightforward application process. We offer financing products that you can use as equipment loans. You'll have a fixed monthly payment scheme with us, and we'll help you increase your business credit. Apply For A Business Loan!  

FAQs

How can I finance a semi-truck?

You can approach financing a semi-truck in several ways. Traditional banks or credit unions are common places to start, but there are also specialized commercial vehicle lenders who focus specifically on the nuances of financing commercial vehicles.

What banks process commercial truck loans?

Community and regional banks and alternative online lenders offer commercial truck loans. Examples are:
  • Wells Fargo
  • US Bank
  • Bank of America
Usually, traditional banks charge less to process loans than online lenders. However alternative lenders process loans much more quickly and may have fewer requirements.

Can you finance a semi-truck with bad credit?

Yes, you can finance a semi-truck with bad credit. However, the process may be more complex and costly than if you have excellent credit. Lenders will likely require higher interest rates or a more significant down payment when they don’t trust the borrower to make timely payments.

Are trucks considered business equipment?

Yes, commercial vehicles are equipment because you use them to help with the needs of a business. For example, you can use them to take employees to destinations or transport goods to customers or between locations. Other vehicles may carry heavy cargo and require specialized training and skills. This means that you have the option of using most small business loans to purchase a commercial vehicle.

What are commercial truck title loans?

Commercial truck title loans are a type of secured loan where the borrower uses the title of their commercial truck as collateral.
 

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