Your Quick Guide to Financing a Semi Truck
Before you decide what type of semi truck you’re going to purchase for your business, it’s a good idea to look at semi truck financing options. In the end, the financial benefits of owning a big rig must outweigh the cost of financing, maintenance, and upkeep.
The Payment Terms
The interest rate, length of the loan, and size of the down payment make up the payment terms of your loan and determine the monthly payment amount. Interest rates for semi trucks can be anywhere from 5 to 30%, depending on your credit, the lender, and the type of rig you’re purchasing. It pays to be careful of your credit score to get the best possible option.
Another way to lower the payment is to extend the life of the loan. Semi-trucks last longer than cars, so the maximum length is capped at ten years. A down payment will lower the cost of the loan and your monthly payment, but down payment requirements vary from one lender to the next. You may need 5 or 15% down to get approved.
Other Lender Criteria
Semi-financing is a little more involved than financing a regular car. Lenders will evaluate the type of truck you’re purchasing, including the make and model, mileage, condition, and any repairs that have been made. Your lender will also inquire about the use of the truck. They want to know if you’re able to repay the loan by showcasing your assets and cash flow.
A lender will also consider your truck’s value before approving your loan. If you don’t get quality for the terms requested, you can talk to the lender about making a bigger down payment or purchasing a different truck.
When Financing Doesn’t Make Sense
There are some cases when financing doesn’t make sense. For a semi-truck loan, you really need to look at your return on investment. If you can’t earn enough money to make the payments and cover your other expenses associated with the truck, you probably should step away from the deal. Ideally, you’ll work out the numbers before you apply for financing. Then it’s just a matter of finding the right semi truck at the right price.
Work with a Semi Truck Lender
A traditional bank isn’t familiar with lending money to purchase a semi-truck. Therefore, it can require more time and red tape. The best way to get your financing is to go through the semi-truck dealer or another financing company that specializes in semi financing.