Buying A Semi? Here Are Your Best Semi Truck Financing Options
Over 3.5 million Americans work as truck drivers. They are, themselves, just a fraction of the over 8 million individuals who work in the trucking industry in various roles. At the heart of this enormous, sprawling industry is a machine that enables those businesses to haul containers full of products between deepwater ports, rail hubs, warehouses, and retail outlets: the semi-truck.
There’s no trucking without the trucks themselves. When you’re financing a semi, you’re acquiring a vehicle that will experience heavy usage and considerable stress over the course of its operational lifetime; it’s not a purchase you want to skimp on. Luckily, with the right financing, you won’t have to.
Read more below to learn why we chose these options.
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Best Options For Semi Truck Financing
Your best options for semi truck financing will be lenders and lessors who can cover the costs of the vehicle with good rates and favorable repayment terms. Options like: Wells Fargo, eLease, Crest Capital, SmartBiz, and BlueVine.
1. Wells Fargo
Wells Fargo Equipment Financing
Wells Fargo probably doesn’t need any introduction; they’re one of America’s biggest banks with thousands of branches scattered throughout the country. Like most large banks, Wells Fargo offers equipment financing in the form of both equipment loans and leases. So why single out Wells Fargo?
As big banks go, Wells Fargo is more accessible than most, with relatively modest qualifications for prospective borrowers. To be considered, you’ll need at least a 640 credit rating and have been in business for at least three years. You’ll also have a wide variety of financing options; Wells Fargo offers both loans and a wide variety of leases available with terms ranging from 12 – 84 months. While they don’t disclose rates upfront, you’ll typically find better rates with banks than you will with online lenders.
- Deep pockets: If you’re looking to finance a more expensive rig, you won’t have to worry about hitting any kind of institutional cap.
- Big bank rates: Big bank rates usually start pretty close to prime, which is something you’re not likely to see in the online lending market.
- In-person service: If you like doing business face-to-face, you can apply for financing at one of Wells Fargo’s thousands of branches.
- Speed: Big banks tend not to move as quickly as online lenders.
- Banking ecosystem: You may be expected to have a Wells Fargo personal or business account, which can be inconvenient if your accounts currently reside elsewhere.
eLease Equipment Financing
eLease deals exclusively in leases, but keep in mind that leasing doesn’t necessarily mean “renting.” You can buy a semi with a capital lease like the ones offered by eLease. They offer up to $500,000 in financing, which is more than enough to cover the purchase of a semi or two. Leasing terms range between 2 – 5 years, with interest rates between 4 – 35%.
One of the bigger appeals of eLease is that they don’t have any hard and firm borrower guidelines. They claim to be willing to work with new businesses and even businesses that have recently had to file for bankruptcy. This is great news for companies that have suffered financial hardship. Just keep in mind that high-risk financing often comes at a premium.
- Easy borrower qualifications: In fact, there aren’t any definitive ones.
- Will finance used vehicles: If you’re looking at a used truck, eLease can still finance it.
- Transparent: eLease is pretty straightforward about their rates and processes.
- Can be expensive: Loose lending standards come with some costs. While eLease isn’t necessarily expensive, it definitely can be.
- Loans unavailable: If you don’t want to mess around with leases and would prefer a simple loan, you’ll have to look elsewhere.
3. Crest Capital
While online lenders are a relatively new development in lending, some have been around a lot longer than others. In fact, Crest dates back to before the internet era — it’s been financing equipment for over 30 years. In terms of truck financing, Crest offers two options: a Titled Vehicle Finance Agreement, which is a type of lease that essentially functions as a loan substitute, and a TRAC lease, which offers tremendous flexibility for businesses that aren’t sure how long they want to operate the vehicle.
Crest’s qualifications fall close to those of a lenient traditional bank: you’ll need to have been in business for 24 months and have a credit score of at least 650. You can receive financing of up to $500,000, which should be more than enough for any semi you’re looking to buy. Terms range between 24 months and 74 months, with rates beginning at 5%.
- Flexible terms: The two lease types offered by Crest for trucks should cover most circumstances.
- Good reputation: Crest has been around for awhile and has a lot of happy customers.
- Transparent: Crest is pretty upfront about the terms of their products.
- Strict borrower qualifications: With a minimum of 650 to get financing, Crest is getting into bank territory.
- Loans unavailable: If you don’t want to mess around with leases and would prefer a simple loan, you’ll have to look elsewhere.
It may not be the most common way of purchasing a semi, but it is possible to buy one using a 7(a) or 504 SBA loan. For those unfamiliar, an SBA loan is one that is partially guaranteed by the federal Small Business Administration. SBA loans are notable for their generous terms lengths and good rates (at least compared to what newer businesses would normally qualify for). If you want a lot of time to pay off that truck, this may be a path worth considering.
SmartBiz aims to make the complex and intense process of getting an SBA loan a bit easier on businesses by streamlining the processes. To qualify, you’ll need to have been in business for at least two years, have a personal credit score of 650, and a business credit score of at least 150.
- Long repayment terms: If you need a lot of time to pay off your truck, an SBA loan may be the right approach.
- Strong customer support: SmartBiz is known for its excellent customer support, which is a must for guiding you through a complex process like an SBA loan application
- Good rates: SBA loans usually have competitive rates. (If you can get better, you probably don’t need any help getting a loan.)
- Slow: Getting an SBA loan usually takes months, and you’ll probably be sick of paperwork by the end.
- Some additional fees: SmartBiz charges a 2% fee for their services.
For those looking to take a slightly different approach to financing their semi, particularly a used one or one at the lower end of the cost spectrum, consider working with one of BlueVine’s lines of credit.
The important thing to remember here is that you’ll need to pay off your balance pretty quickly to make it a viable option for your business. That said, there are advantages to using a line of credit to purchase your vehicle; rather than lock yourself into a specific model and vendor, you can comparison shop and purchase from anyone you want.
BlueVine’s lines of credit offer up to $250,000 in credit, with term lengths of 6 or 12 months. You’ll be repaying weekly in the former case, and monthly in the latter. APRs range between 15% – 78%, and there’s a 1.6-2.5% fee per draw. If you prefer, BlueVine now allows borrowers to take their funds in a lump sum rather than as a credit line, which may be advantageous if you only plan to use the money for a single truck purchase. For six-month terms, you’ll need to have been in business for six months and have a credit score of 600. For 12 month, the qualifications rise to 2 years and 650, although companies pulling in over $900K in revenue a year can qualify with a 620 credit rating.
- Flexible use of funds: This is working capital rather than equipment financing, so you have more discretion over how you spend the funds.
- Few additional fees: Aside from the draw fee, you won’t have too many unpleasant surprises in terms of fees.
- Newer businesses can qualify: You can get financing from BlueVine if you’ve been around as little as 6 months.
- Fast repayment schedule: With a repayment schedule of a year or less, you probably don’t want to use it for brand new, expensive rigs.
- Not available everywhere: BlueVine can’t offer lines of credit in either of the Dakotas at the moment.
How Semi Truck Financing Works
Semi truck financing works similarly to most other types of equipment financing, although certain products like TRAC leases are specialized for vehicles specifically. As a rule, equipment financing is very specific about what the funds can be used for, while working capital is more lenient. The other side of this is that equipment financing will usually have terms more favorable to purchasing or renting trucks than working capital and be able to use the truck itself as collateral.
Depending on the semi truck you’re looking to acquire, you may determine that a loan, lease, or even a line of credit may be preferable.
Semi Truck Financing Rates & Terms
If you made it through the vendor profiles above, you probably started to notice some patterns. If you’re financing a truck, you’re typically looking at somewhere around five years to fulfill the terms of your loan or lease. If you need longer than that, you may want to consider an SBA loan. If that’s too long, you may want to look at using working capital in the form of a loan or a line of credit.
In terms of rates, you’re probably looking at somewhere between 5-30%. As is usually the case for financing, the better your credit rating is, the easier time you’ll have getting favorable interest rates. It’s also easier to get competitive financing the longer you’ve been in business and the more profitable your company is.
Financers may charge a variety of fees depending, though this varies greatly from one financer to another. Loans typically come with origination fees, which are deducted from the amount of money you receive. Leases may have one-time or monthly administrative fees. Lines of credit may have draw fees. If possible, you’ll want to work with a financer that charges few to no additional fees.
Typical Down Payment Options
Financing often requires some form of down payment when you receive your funds. If you have stellar credit, your lender may waive this requirement entirely.
In the case of equipment loans, you’re usually looking at somewhere around 15% of the cost of the semi truck, meaning the lender will pay for 85% of it. The percentage may be larger or smaller depending on your credit or business history, but it’s unlikely you’ll be asked to pay for more than a third of the truck upfront.
For leases, it’s a little bit different. They typically don’t have a down payment, but you’ll often be expected to make the first month’s payment upfront. If your credit is poor or the lessor is simply risk averse, you may be asked to pay for a second month in advance.
If you’re just using working capital, you won’t have a down payment.
Is Semi Truck Financing Right For You?
If you’re reading this, you’ve probably at least considered that getting a semi truck has the potential of giving you a good return on your investment. Taking on debt isn’t something to be taken lightly; the last thing you need to do be stuck with a truck that isn’t making you money while your debt balloons due to missed payments.
Consider your return on investment. Will the semi truck bring in more money than it costs when you factor in average repair costs and fuel economy? Is the truck central to your operations, or can you farm transportation out to third parties? Do you anticipate owning the semi for 10 years or just using it for three or four? What will its resale value be when you’re done with it?
When you can answer those questions, you’ll know whether semi truck financing is right for you.
How To Get Semi Truck Financing
Hopefully you now have a better idea of whether or not you want to get semi truck financing. If you do, you may be wondering what the next steps are. We’ve given you some potential financers, but there are many more equipment financers to consider. Alternately, if you don’t think equipment financing fits your needs, you may want to look at working capital loans or lines of credit.
When you have a sense of how you want to go about getting financing, you’ll want to optimize your application and borrower profile. There are a number of different ways to go about making your application more appealing to lenders.
Semi Truck Financing FAQs
In Summary: Best Options For Semi Truck Financing
- Wells Fargo Equipment Financing: Best for borrowers financing expensive vehicles or who are looking for the best rates.
- eLease Equipment Financing: Best for businesses with bad credit or who have recently had a bankruptcy.
- Crest Capital: Best for businesses that want to work with a traditional equipment financer that isn't a bank.
- SmartBiz: Best for businesses that want a long-term loan for their truck.
- BlueVine: Best for businesses looking for fast, versatile financing with a quick repayment schedule.