10’000 Hours/Getty Images.
Key takeaways
- A semi-truck loan is worth considering if you can’t afford to pay the full cost of a semi truck upfront
- Some semi-truck financing companies are willing to work with brand new startups or businesses that have been in operation for at least six months
- Semi-truck loans are secured by the truck itself, so financing can be easier to secure, even with bad credit 
-  
A semi-truck loan is an equipment loan that functions like a car loan. It helps businesses buy expensive equipment and pay it off over time. You may need a semi-truck loan if you can’t pay for a semi truck outright or if you need to keep cash on reserve in case of emergencies.
Paying the $50,000 to $180,000 it would take to buy a semi truck is a hefty sum to take away from your business. You could use that capital to fund other necessary purchases or to keep a positive cash flow.
Explore the top reasons to consider getting semi-truck financing and the pros and cons to this type of loan.
When to consider semi-truck financing
While there are several types of business loans that can be used for any purpose, including semi trucks, there are times when getting semi-truck financing makes more sense.
Here are a few instances where you might consider semi-truck financing instead of a traditional business loan.
You’re starting a trucking business
Most business loans require you to be in business for two years in order to get approved for funding. But semi-truck financing companies are more lenient, often accepting brand-new startups or businesses with six months in the market. You may be able to get a semi-truck loan that will help you purchase your semi truck and get your business off the ground.
You can’t pay for a semi truck in cash
If you don’t have the cash on hand to purchase a semi truck, a semi-truck loan could help. If you’re approved, the lender will give you the price of the truck so that you can make the purchase. You won’t need to wait to build up the cash reserves to purchase the semi truck on your own. Instead, you can use revenue generated from using the truck to pay back the loan.
You need capital on hand for other business expenses
Perhaps you have the capital to purchase a semi truck but doing so would deplete your business savings. You may need that savings for other business expenses or to keep a contingency fund available. In this case, you may want to use semi-truck financing to fund the purchase of your truck while keeping cash on hand for operational or unexpected business expenses.
You don’t have assets
Many lenders require you to put up business assets to back a business loan. But what happens if you don’t have any valuable assets? Equipment loans like semi-truck loans allow you to receive funding while backing the loan with the semi truck you’re purchasing. The semi truck serves as the built-in collateral for the loan, so there’s no need for additional collateral.
You have bad credit
Bad credit makes it hard to get any type of financing because the lender sees you as a higher risk. Fortunately, a semi-truck loan isn’t an unsecured loan because the truck itself is collateral.
If you default on the loan, the lender can seize this collateral, which lowers the risk of lending to subprime borrowers. As a result, a bad credit business loan for a semi-truck can be easier to secure than other types of financing when you have a low credit score.
Compare semi-truck loans
Before applying for semi-truck financing, compare several lenders to find the most affordable option. Here’s a quick look at some top lenders offering equipment or semi-truck loans.
| Lender | Description |
|---|---|
| SMB Compass | SMB Compass’s equipment loans start at 5.99 percent interest and are open to companies that have been in business for at least one year. The loan can usually be funded in 24 to 48 hours. If you’re running a full-fledged trucking operation, it also offers loans tailored to transportation companies. |
| Triton Capital | Triton Capital’s equipment loans go up to $250,000, with rates starting at 5.99 percent. Funding usually only takes 1 to 2 business days. Startups are eligible to apply. |
| National Funding | This lender’s commercial truck financing caps at $150,000. To qualify, you must have been in business for at least six months and have fair-to-excellent credit. Funding can happen as quickly as 24 hours. |
| Funding Circle | Funding Circle offers a term loan that can be funded in two days for up to $500,000. Your company must have been in business for at least two years to qualify. |
| Taycor Financial | Taycor Financial offers equipment loans from $500 to $2 million. It accepts businesses with low revenue and just three months in business. |
Pros and cons of semi-truck financing
Here’s a brief look at the pros and cons of semi-truck financing.
Pros
- Fast funding: Many semi-truck loans can be funded within a few days, though some banks may take longer to disburse funding.
- Tax benefits: You can write off the purchase of the equipment under section 179 tax deduction.
- Helps maintain cash flow: You can keep the thousands of dollars that it would have taken to buy the equipment and use it for other business expenses.
- Accessible to many types of borrowers: Semi-truck lenders tend to have lenient eligibility requirements, accepting startups or business owners with bad credit.
Cons
- High purchase cost: Buying a semi truck can cost $50,000 to $180,000, a hefty business purchase.
- Higher fees and interest: Semi-truck loans may charge high interest and fees that make the total price of the equipment soar. Online lenders tend to charge higher interest than traditional banks.
- Requires down payment: While some lenders offer 100 percent financing, most will require you to put down 10 percent to 20 percent of the semi truck’s cost.
- Uses the semi truck as collateral: Since the semi truck backs the loan, the lender can seize the truck if you fail to make repayments.
Alternatives to semi-truck financing
While a semi-truck loan might fit your company, you shouldn’t apply for one until you’ve evaluated all your options. Alternatives to semi-truck financing include:
- Term loans: These loans offer you a lump sum that you pay back over a fixed term, such as five years, with interest. These loans can be secured or unsecured.
- Equipment loans: Equipment loans are term loans that use the equipment you’re purchasing as collateral for the loan. You can use this option if a lender doesn’t specifically offer a semi-truck loan.
- Equipment lines of credit: A line of credit offers revolving funds that replenish as you pay back the loan. You can use this to fund the purchase of equipment as well as equipment repairs.
- Small Business Administration (SBA) loans: SBA loans are partially guaranteed by the U.S. Small Business Administration. They’re designed to help small businesses that don’t qualify for conventional financing. Specifically, SBA 504 loans are used to buy fixed assets like semi trucks.
- Equipment leasing: Equipment leasing essentially allows you to rent a semi truck that you can use over the life of the lease. Leases don’t typically require a down payment, and they may include truck maintenance in the lease.
Bottom line
A semi-truck loan makes sense for your business if you need a semi truck and can’t pay for the truck in cash. You may need those funds to run other business operations or keep it available for emergency needs.
Just make sure you have a plan to manage the semi-truck loan efficiently. Before you lock in financing with one company, compare your options, weighing interest rates and fees to ensure you don’t overpay.
