Commercial Truck Financing

Starting Your Journey with Semi-Truck Financing: A Guide

When you’re stepping into the world of purchasing a semi-truck for the first time, you’ll be facing a series of critical decisions. Questions will arise: Which commercial truck suits your needs? Should you opt for a new or used one? What specifications are essential for your rig? Are you in the market for a single truck or an entire fleet? And where should you make this significant purchase?

Yet another crucial question lingers: How will you fund this endeavor?

Even if you’re considering a used tractor-trailer, the cost is likely more substantial than your immediate funds can cover. Thus, contemplating the prerequisites for securing financing for a semi-truck becomes necessary.

Securing financing for a commercial truck shares some commonalities with other loan processes, with a good credit score being advantageous. However, several key distinctions demand your attention when you embark on the journey of selecting the right lender and completing your loan application.

Interest Rates & Down Payments for Commercial Truck Loans: One of the primary misconceptions made by first-time semi-truck buyers: assuming that the loan process mirrors that of obtaining a mortgage or personal auto loan.

Primarily, it’s crucial to remember that you’re not procuring an 18-wheeler for personal transportation but rather to sustain and grow your business. Consequently, lenders tend to impose more stringent criteria when qualifying applicants for commercial vehicle loans.

• A substantial down payment, often around 20% upfront, is expected.
• Interest rates tend to be higher, typically ranging between 6% and 10%.

Your objective is to minimize the lender’s perceived risk as much as possible. Demonstrating driving experience, an established revenue stream, alongside a good credit score, strengthens your case. In cases of low credit scores, a co-signer may be required. Diversifying your credit profile with various types of credit, such as installment credit, and maintaining a credit history spanning seven to ten years are also ideal. Note that establishing an LLC or corporation at least 2-3 years before applying can significantly enhance your loan approval chances.

Experience Matters – for You and Your Seller: Experience plays a pivotal role in financing your truck purchase. We advise aspiring truck owners to accumulate at least three years of total driving experience, with a minimum of two years as an owner/operator. Experienced drivers are favored by lenders, as it signifies immediate profit-generating potential for your truck. Additionally, purchasing your truck from a reputable and well-established seller, such as First Capital, can enhance your financing prospects.

Semi-Truck Leasing vs. Purchasing: For those lacking experience or substantial capital, securing financing for a semi-truck can be challenging. Commercial truck leasing can be an appealing alternative. For instance, Success Leasing offers semi-truck leasing arrangements under the authority of Prime, Inc., enabling you to start earning by agreeing to weekly lease payments. If you opt for leasing, prioritize trucks in good condition, less than 10 years old, and with fewer than 700,000 miles.

Gather Your Documentation: Having your documents in order demonstrates your readiness for a significant purchase. Be prepared with:

• Current business documents, including LLC or corporate registration, required licenses, and up to 12 months of bank statements, profit and loss statements, and balance sheets.
• Driver credentials, such as your CDL, US Department of Transportation number, and Motor Carrier Number.
• At least one year’s worth of tax returns, providing crucial financial data to your lender.
• Proof of insurance, a prerequisite for financing.

Select a Quality Semi-Truck: Remember, your truck serves as collateral for the loan. Your lender will assess its condition and quality when determining your financing approval. Prioritize trucks less than a decade old, with fewer than 700,000 miles, as older trucks tend to experience more breakdowns and incur higher ownership costs.

Prequalify to Expedite the Process: Consider applying for pre-approval to expedite the financing process. At Pedigree, this is a straightforward online procedure, streamlining your financing journey.

We can also finance an array of semi-trailers, including flatbeds, reefers, and tankers.