A semi-truck loan can help make the cost of a new or used truck manageable. Yet there isn’t a one-size-fits-all approach to funding your truck purchase. If you go with a semi-truck loan, the exact loan and lender you choose will depend on your available capital and credit. Or you might choose alternative financing like a semi-truck lease to lower financing costs.
To help you find the best way to finance a semi-truck, review these options before you start your search.
Lenders want to see that owner-operators and business owners have the ability to repay a semi-truck loan. To determine that, lenders typically look at your personal credit score, along with other financial documents to show your cash flow.
Lenders reserve the best interest rates for borrowers with good credit scores of 670 or higher, effectively lowering the loan cost.
Lenders may opt to check your business credit score if you have an established trucking company. These typically range from 0 to 100, with 80 or above as excellent scores.
Examples of credit score requirements for semi-truck loans include:
Min. credit score
Can I get a semi-truck loan with bad credit?
Yes, many lenders accept lower credit scores for semi-truck loans than other loans, such as a score of 625 or even 550. They can accept bad credit borrowers because the loan is secured by the truck if you default. But you’ll probably find yourself saddled with higher interest rates due to bad credit, which could be anywhere from 25 percent to 35 percent.
Loan amount by loan type
The goal of a semi-truck loan is to finance as much of the purchase cost as possible. But the exact loan amount you can get is based on the type of loan and your creditworthiness.
Here are the typical loan amounts if you finance your truck through these common types of loans:
Securing the loan with the equipment
$15,000 to $500,000, typically up to the full cost of the truck or fleet of trucks
Early repayment, using the line for future purchases or repairs
$5,000 to $250,000
Longer repayment terms or unsecured loans
$5,000 to $500,000+
Businesses that can’t get a conventional loan
Up to $5.5 million
SBA loans have reasonable interest rates capped by the SBA and long repayment terms up to 10 years for equipment. Types of SBA loans that you can use for equipment purchases:
7(a): The most common type that can be used for various purposes, including working capital or equipment.
504: Used for purchasing property or assets and is funded through community-focused lenders called Certified Development Centers (CDCs).
Community Advantage: Offers SBA loans through specialized lenders whose target markets are low-income or minority communities.
Speed of funding
The time to get your semi-truck loan approved and receive the funds varies based on the lender. However, financing through an equipment loan is a straightforward process. Lenders are more likely to approve these loans quickly because they’re guaranteed repayment from your business or by selling the equipment if you default.
If you need fast funding, you can go through online lenders, which provide quick turnarounds on loan applications in as little as 24 hours.
Most lenders require a down payment for a semi-truck loan, typically ranging from 10 percent to 20 percent of the purchase price. If you have fair or bad credit, the lender may require a higher down payment to offset any default risks and to prove that you can repay the loan.
A higher down payment could also lower interest rates since it effectively lowers your borrowing amount.
Some lenders don’t require a down payment for equipment loans. Online lenders and direct lenders that finance loans themselves rather than through partners are more likely to let you buy a semi-truck with no money down. But banks may also offer this perk. One example is U.S. Bank, which offers equipment financing with no down payment required if you finance equipment for 24 to 60 months.
What to do if you can’t afford semi-truck financing
If you don’t qualify for semi-truck financing or don’t want a conventional business loan, you have other options to consider:
Renting a semi-truck works well if you need a truck in the short term — either to cover a short-term project or to start work quickly until you find a permanent solution. Rentals often charge a daily rate and can come with contracts of six to 12 months. You will also need to put down a deposit on the rental.
On the downside, rental truck rates may cost more than long-term leases. Rental costs can also vary seasonally based on demand, meaning that costs could increase if you need to extend your rental.
A semi-truck lease allows you to rent a truck for several years, and you may be able to get a newer truck than if you went with a semi-truck loan. You will need to qualify based on your credit and experience driving.
A semi-truck lease may require a down payment, though you can find leasing companies without this requirement. Some leases may also include maintenance and repairs. If you sign a capital lease, you can buy the truck at the end of the lease.
The main downside is that you won’t own the truck or may have to make a huge balloon payment at the end to own it. Because of the leasing fees or balloon payment, you may pay more than you would with financing a semi-truck.
Can’t commit to a semi-truck loan or rental contract? You could get your transport business on the highway through:
Business grants help you receive funding without having to repay — as long as you meet the application requirements and can win the grant. You typically find grants through the federal, state or local government or some corporations.
Crowdfunding is like fundraising to start your business through personal routes or funding platforms like Kiva. You can raise money without needing to repay or find investors to help you jumpstart your business.
Personal assets like personal savings or home equity are also common options to fund business costs. Keep in mind that you risk losing these personal assets if your business fails.
Financing a semi-truck can come in the form of several different business loans if you meet the requirements for credit and trucking experience. Yet a conventional business loan doesn’t help if you’re tight on working capital or need to work on a new contract quickly.
In these cases, alternative forms of financing can come to the rescue. While a semi-truck loan may offer longer repayment terms and give you a path to ownership, other options like a lease or short-term rental may not require as much initial cost.
Frequently asked questions
Is it better to take out a loan to buy equipment?
It depends on your needs. Financing commercial equipment is beneficial because it doesn’t require as much capital as buying equipment outright. You can make a return on investment before fully paying off the equipment. But some business owners prefer to lease to get newer equipment and upgrade quickly.
How long should you finance a semi-truck?
Many semi-truck loans offer terms from 12 to 60 months. You can find longer term loans, but ultimately you want to match the term with the truck’s expected lifespan. That way you won’t be left paying for a truck you can’t use.
Can I use an SBA loan to buy a truck?
Yes, the SBA provides multiple types of loans to purchase a semi-truck. These include the 7(a) loan used for general purposes or the 504 loan designed specifically for equipment. You can also choose a Community Advantage loan, financed through qualified lenders that serve disadvantaged markets like low-income communities.