Commerical Truck Financing_ All you need to know
                     Commercial Truck Financing: Financing
Options you can avail
"As of Nov 03, 2020, the average salary of owner operators is $224,499 - as reported by Indeed." 
Appealing right? You can earn bigger bucks if you own a fleet of trucks! Getting a grasp of commercial 
truck financing, however, is not as delightful as the income itself. Thus, if your ambitions are relentlessly 
urging you to dip your feet in the commercial trucking business, you should sit tight and go through all the 
mechanisms of this business here! 
Buying your first Semi Truck can be overwhelming. From mileage to the engine, to wheelbase, insurance,
financing, credit score, … the list goes on and on! 
Hence, to help you navigate through this whole fiasco of financing options, here is an in-depth guide to 
help you through the initial stages of your first commercial trucking venture. 
Different Options For Financing Your First Semi Truck 
SBA loans  
Simply put, an SBA loan is a loan that Small business administrations can avail of with the US 
government's support. The government itself does not grant the loan; instead, it serves as a bridge 
between the Small business administration and the financing institute. 
This serves as an excellent resource for small business owners as it enables a broader range of loans for 
them than it would have been possible otherwise. This is because the government takes partial 
responsibility for the loan, i.e., the government will be held responsible for the partial payback of the loan 
if any damages occur. This helps financers trust the small businesses more as the risk of loss is lower. 
Now, this may sound like the best option to you, but the catch here is that the SBA loans, especially the 
7a clause, are skeptical of financing vehicles. They call it rolling stocks and make it nearly impossible for 
anyone to avail of a commercial truck financing loan! So, if your credit score is not near perfect, it is best 
to consider other financing options. 
Business Auto Loans 
Business Auto Loans, also known as Commercial Auto Loans, are used by businesses to buy vehicles for
commercial purposes. The loan is offered by multiple lenders (Banks, Private lenders, credit unions) but 
requires extensive documentation. 
Also, vehicles are considered depreciating assets by lenders and are therefore not easy to find fundings 
for. Opt for commercial auto loans only when you need the vehicle long term and are looking to make up 
for the depreciation value in your tax returns! 
On the other hand, finding funding for commercial trucking vehicles such as vocational trucks can be 
tricky business, especially if you're an owner-operator and your business is relatively new! Commercial 
auto loans prefer funding fleets (minimal three trucks) to serve as collateral during the loan. Therefore, 
getting a commercial auto loan for new trucking business ventures can be challenging too! 
Equipment Leasing 
The most sought after and reliable source of funding for commercial truck financing is equipment leasing. 
This is because leasing enables entrepreneurs to have lower capital investment by not requiring any 
down payment.. Moreover, leasing your truck also reduces the risk of overinvesting and the depreciating 
value of the asset. 
However, deciding whether to lease or to buy depends on the number of trucks you'll need! If you're going
to work as an owner-operator, it is in your best interest to buy the Semi Truck. However, if planning on 
owning a fleet, you're better off leasing them as it lowers the monthly payments needed, offers a fixed 
financing rate, and you won't have to worry about the depreciating value of the asset!
Equipment Loans 
Although different lenders offer different packages, typically, 80% of the total cost of equipment can be 
covered by a loan. You can get a loan for your semi-truck if you plan on becoming an owner-operator, or 
owning your vehicle, in general. 
A down payment of 20% or more would be expected of you during the loan's assembling process. After 
the loan is approved, you can get the amount for it in less than two days, and the vehicle is all yours.
The monthly payments for loans, however, are generally more than leasing rates. So, be mindful of that 
before you opt for a loan.
● The application process for equipment leasing and equipment loans 
● How can you maximize your chances of successfully getting a loan
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