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Commercial Truck and Trailer Financing

If your trucking company is looking for a commercial truck, but you need financing too, follow our steps below and you'll uncover the best rates and terms.

Rachel Dayan
Rachel Dayan
September 27, 2020

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Ever considered opening your commercial truck and trailer business but disregarded it due to insufficient financing? Financing is the major issue that discourages people from opening their businesses. But you longer have to kill your dreams because it is not a problem anymore. 

There are numerous financing options available for your commercial truck and trailer business. And this article will clarify all your obscurities. 

Understanding Commercial Truck and Trailer Financing

People often confuse commercial truck and trailer financing with acquiring a normal loan for personal vehicles. But these two are not similar in any case. Banks often provide you a loan for personal vehicles easily, but getting finance for commercial trucks and trailers is a lengthy task. 

Unlike personal automobile loans, financing for commercial trailers and trucks comprehends high default risk for the financial institutions, resulting in a reluctant financing behavior.  

Prepare for Acquiring Loan

Go prepared! If you apply for a loan for your commercial truck and trailer business, you will need a proper business plan with all prospective financial statements and budgets. You can't just ask for a loan, and the banks and other loan providers hand you over the money. It is not as easy as it seems. 

They need to know how credible and capable your commercial truck and trailer business is. Does it have enough potential in it? Can we get back our money? These are the questions the lender will often ponder, and a good business plan will clarify these ambiguities. 

The followings are some major points you can include in your business plan:

Check Your Credit Rating

Your credit rating will determine how trustworthy you are. If you want to acquire a loan and get financed for your commercial truck and trailer business by a bank, you will have a good credit rating. Commercial trucks and trailers require comparatively massive initial investment than other small businesses. 

The average running cost of a new truck is around $125,000 to $150,000, which is indeed why banks are reluctant to finance such amateur businesses. Therefore, unless you think of buying a semi-truck, do not go to banks asking to finance your commercial truck business if you do not have a good credit rating. 

Decide Between Buying v/s Leasing Trucks and Trailers 

You have two financing options to consider for trucks and trailers. You can either buy it or lease it. Banks often offer both financing options if you are a trustworthy creditor with a good credit rating. Banks can entertain you with equipment financing and other leasing options. 

Equipment Financing

As its name implies, Equipment financing is a financing option specifically accessible for buying equipment, including semi and commercial trucks and trailers. The equipment is served as a loan collateral with terms and amounts directly related to equipment's cost and estimated lifespan through this financing.

However, banks may require a high amount of down-payment, and you will most likely get rejected if you do not have enough money to entertain them. 

Opt Microfinance Bank

If other banks disregard your finance request, go to a microfinance bank. Check which microfinance bank is most likely to offer credit for your commercial trailer and truck business. Go equipped with a complete business plan to reduce rejection chances. But remember, like all other banks, microfinance banks also require a down-payment.

Search for Business Loan Providers

Besides banks, several business loan providers fund small to medium businesses. Search for some top business loan providing companies around you and visit them with your proper business plan. Inquire about what they can offer to fund your commercial truck and trailer business. 

These companies will most likely charge interest rates higher than banks, but you should negotiate it to the lowest possible rate. 

Search for Online Lender

Banks require stellar credit and a heavy amount of down payment and do not worry if you lack both because you still have the option of looking for trucking lenders online. Online lenders often charge rates higher than the banks and provide loans for shorter terms, but they have fewer requirements than the banks. Their process is more straightforward and has funding times faster than banks.

Therefore, if your credit rating and empty pocket for down payment do not let you qualify for commercial truck financing from banks, considering online lenders is one of the best options available for you. Some famous online lenders in the US are:

But make sure you vet these lenders to know if they can entertain you with the type of product you demand or offer you an affordable truck loan.

Commercial Truck Financing Companies

Under the umbrella of online lenders and business loan providers, commercial truck financing companies are loan providers that solely focus on funding trucks, trailers, and other commercial vehicles. These lenders have a broad knowledge of the industry and faster loan process with interest rates and down payment lower than the online lenders and loan providing businesses.

Issue Bonds

Have you tried all options? No banks, no lenders, or commercial truck financing companies agreed to finance you? Do not worry because you still have one last option available, issue bonds. 

Through bonds, you can finance your commercial truck and trailer business by acquiring loans from general investors. Bond has a face value: the amount it is issued on, an interest rate, and the total loan term. It operates the same as other loans, but the only difference is that the total loan's principal amount is spread into smaller chunks. 

Bonds are often the most challenging financing option available for a commercial truck and trailer business. Countries have strict laws associated with this because it has the general public's investment. But there is no cost in trying your luck!

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