How to Finance Your Semi Truck Purchase

There is no hiding the fact that owning your own semi truck is an expensive investment. Of course, there are several reasons the investment is worthwhile, but most people don’t have the money outright to make the purchase. Private owners and fleet managers tend to use financing options to fund the purchase and pay the loan back over time.

Overview

Purchasing a semi truck is different than purchasing a personal vehicle. Businesses and private owners utilize commercial truck loans which are specifically designed for purchasing work-related vehicles. 

It can be tempting to go straight to your bank’s loan officer, but many banks won’t loan to truck operators due to the risk and expense involved. Instead, you should seek lenders who specialize in lending for the trucking industry. You can finance a new or used truck and even borrow to make repairs or upgrades to an existing truck.

Loan Types and Terms

When you borrow money to purchase a semi, the truck itself will be used as collateral. The loan terms and amount will reflect the cost and lifespan of the loan. Since the truck is used as collateral, it can be repossessed if the agreed payments are not met. 

Lenders will generally include an annual interest rate that ranges from 5 to 30% on top of the total loan amount. The rate will depend on the borrower’s credit, business profits, truck type, and truck condition. Interest rates are typically fixed, so you can expect the same rate over the lifespan of the loan. 

Determining Total Cost

Before you commit to the loan, it’s important to calculate the total cost of ownership. You should factor in the interest rate, appraisal fees, business operating costs, and credit check costs. Take a look at the loan terms carefully before you agree to anything. 

Know Your Options

Although there are several options available for truck financing, it can be difficult for small businesses to qualify for the loans they need. It can be worthwhile to work with a specialized lender, even online, but know that they tend to have higher rates and shorter loan terms. This might seem alarming, but the advantage of working with these lenders is fewer requirements for approval, simple application processes, and quick access to your funds. 

Financing your semi truck is a great option whether you are a new owner or an experienced business operator. Our team at GATR Truck Center is here to help you through the buying process. We have five locations throughout Minnesota and Iowa, including Des Moines, IA, and Elk River, MN. We proudly offer financing, service, and parts.