How To Get Commercial Truck Financing

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When businesses grow, some need to buy more trucks to accommodate demand. When trucks break down, they must get repaired, or the company needs to buy a replacement. This combination has some small business owners using commercial truck loans to expand their fleets. Business owners have several choices for commercial truck financing.

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What Does Commercial Truck Financing Mean?

Business owners use financing to buy or repair a truck. The truck then becomes collateral for the loan. If you don’t make payments, the lender can seize your truck. Longer loan terms decrease monthly payments but leave you in debt longer. Shorter loan terms accelerate equity growth but increase monthly payments. 

Types of Truck Loans

Small business owners can select from two types of truck loans. We have the details on each type of truck loan below.

Equipment Leases

Leasing trucks cost less money than financing a truck. However, leases do not give you ownership of the vehicle, and the contract may come with restrictions. Small business owners may pay extra for exceeding mileage caps on leased trucks. 

Leasing a truck is like paying rent. Renting a property helps you move out sooner, but the monthly payments never go away unless you own the property. Each monthly lease payment does not build equity in the asset. Leasing is a great way to save money in the short term.

Some business owners operate seasonal companies. Christmas ornaments gain demand as the holidays approach. A company selling shipping Christmas ornaments may lease trucks for a few months to accommodate higher demand. They may not want to own these trucks and make monthly loan payments during slow seasons. 

Equipment Loans

Equipment loans give you full ownership of the truck. You’ll pay more in the short term, but you’ll save money in the long term compared to getting a lease. 

Equipment loans also come with lower insurance rates than equipment leases. You’ll pay less in insurance now and eliminate monthly loan payments in the future. Equipment loans are great for businesses that will use the new truck for years to come. The cost savings add up significantly if you use the truck for many years.

Small Business Loans Made Easy

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Read this review about Lendio, a small business loan online marketplace to access a network of lenders with one simple application.
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Business term loans are a stable way to get funding to grow your business and improve your credit. Read how to get one through Lendio.

Factors To Consider Before Financing Your Commercial Truck

Getting a commercial truck loan is a significant investment. You’ll have the loan for several years, and you may have the vehicle for over a decade. We’ve outlined some factors to consider before financing your commercial truck.

New vs. Used Trucks

It’s no secret why people opt for used trucks: they’re cheaper. Trucks with mileage have more wear and tear, making them less desirable. While you can initially save money on a used truck, that truck may need expensive repairs in the future. In addition, some used trucks are more trouble than they’re worth. You can save on a used truck, but you have a greater risk with the used truck.

New trucks cost more but come with more certainties. You don’t have to worry about how a previous driver used the truck. Business owners can rely on a new truck for many years if kept in good condition. Small business owners with more funds may opt for a new truck, while startups often resort to used trucks. If you buy several trucks in one moment, you will get more vehicles in your fleet if you opt for used trucks.

Costs Of Commercial Truck Loans  

Commercial trucking loans require monthly payments for several years. Business owners should assess their budgets and determine how much truck they can afford. Setting a budget helps small business owners avoid asking for too much money. Borrowers can also set longer terms to decrease monthly payments. 

Fees and Interest Rates

Fees and interest rates add up, and they vary by the lender. Submitting several loan applications will lead to the most attractive financing. Lenders offer lower rates to less risky buyers. A strong balance sheet, higher down payment, and good credit score can help you secure a lower rate. 

Some small business owners strengthen their credit score and other areas before approaching lenders. You can also ask a lender for a refinance in the future after improving your credit.

Repayment Terms

Repayment terms influence how much you’ll pay each month. Adding more years to the loan’s term minimizes your monthly payments. Extended loans lead to higher interest payments in the long term, but many small business owners care about reducing current expenses. Lenders will also be more inclined to work with business owners who want lengthier loans. Lower monthly payments reduce the risk of default.

Truck Insurance

Truck insurance costs more money for a lease than a purchase. Insurance costs will also increase if you buy a used truck or have low credit. Consider how these costs will affect your monthly budget before accepting a loan. Some small business owners extend the loan’s term to provide room in the budget for truck insurance. 

How Do You Finance A Commercial Truck?

Financing a commercial truck requires planning and assessing your choices. We’ll discuss the steps to take for your commercial truck loan.

1. Determine Your Down Payment

Small business owners should approach every loan with a maximum down payment. This budget prevents you from overspending and becoming financially vulnerable to surprise expenses.

2. Find The Truck You Want

After you determine your down payment, the next step is finding a truck that you want. The down payment maximum sets a parameter for your selection. You cannot select a truck that would exceed your maximum down payment. 

3. Compare Loans

Once you settle on an ideal truck, start comparing loans and submitting applications. Browsing through your choices instead of jumping at the first offer can help you get attractive rates and terms. 

4. Gather Paperwork and Requirements

Each lender has different requirements, but they also share similarities. Lenders will request financial documents, statements, and other information to help them assess the risk of giving you a loan. Keeping all of your paperwork together will streamline the process for each loan application.

Where Can I Get Commercial Truck Financing

Commercial truck financing helps businesses get trucks for their fleets. Various lenders can provide the money, but it’s best to compare your options. Borrowers should look at online reviews and review each lender’s terms. You can fund your truck lease or purchase through these financial institutions.

Truck Financing Companies

Truck financing companies offer specialized support for borrowers seeking trucks. You may find lower interest rates and down payment requirements than traditional lenders. 

Banks

National banks have loans specifically for commercial trucks and other vehicles. However, you may have difficulty finding a local bank that offers commercial truck financing. You can get longer terms with banks, but you’ll also need a higher credit score and down payment to get a loan. 

Online Lenders

Online lenders simplify financing. Instead of visiting a local branch, you can fill out a form and receive approval for your loan request. The straightforward application process, quicker access to funds, and less stringent requirements make them a popular choice among small business owners.

Online lenders like Lendio are helping small business owners secure more loans. Lendio is a small business lending marketplace that submits your application to over 75 lenders nationwide. This syndication increases your likelihood of getting approved for a loan. Lendio will even provide a lending expert to guide you through the process. If you want to get started with your small business loan application, visit Lendio’s website and fill out their simple online form today.

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