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Financing a Semi-Truck or Trailer Frequently Asked Questions Guide

High-end semi trucks can often cost upwards of $200,000, while even low-end trucks tend to hover near the $100,000 mark. For those interested in starting their own trucking company, the expense of purchasing a tractor-trailer can be a big barrier to entry. Thankfully, financing a semi-truck and financing a trailer are both now easier than ever before, thanks to trailer finance companies such as Finloc.

Nevertheless, there are still a number of important details you need to be aware of when securing financing for a semi-truck. This article will explore the frequently asked questions regarding big rig financing to help you navigate this important first step to becoming an independent trucker.

Trailer & Asset-Based Financing Options

Today, business owners looking to finance either a truck or trailer have numerous options to choose from. At Finloc 2000, we offer financing options such as:

  • Express Leases: Our express leases provide swift approval and documentation for leases under $250,000
  • Vendor Leases: Finloc partners with select equipment manufacturers to offer leasing options to their customers
  • Lease Lines of Credit: Our pre-approved lease lines make it easy to draw from and add schedules with limited additional
  • Equipment Loans: Our equipment loans provide traditional financing for tractors, trailers, and other equipment
  • Capital/Finance Leases: This financing option allows lessees to keep the tax benefit as the asset is recorded on the balance sheet, choosing from fixed or minimal purchase option ($1.00) at the end of the lease
  • Fair Market Value Leases: This type of lease can be as structured as an off-balance sheet and provides lessees with the option to purchase the equipment for its fair market value, renew the lease, or return the equipment at the end of the lease
  • Sale-Leasebacks: This financing option allows lessees to increase their cash position by selling assets to Finloc and then leasing them back from Finloc.

This broad range of financing options enables business owners to choose the financing option that is best suited for their unique business needs. Whether you are looking to secure a traditional equipment loan, create a line of credit for your business, increase your available cash with sales leasebacks, or anything in between, Finloc can help.

Top Frequently Asked Questions About Trailer & Truck Financing

While Finloc strives to make financing a semi-truck or trailer as easy and hassle-free as possible, business owners looking to finance their next equipment purchase still tend to have many questions about the process. To help clear up some common confusion, let's take a look at the top frequently asked questions about trailer and truck financing:

Q: What Are the Requirements for Financing a Semi-Truck?

A: The exact eligibility requirements for financing a semi-truck tend to vary depending on the company you choose to work with. Generally speaking, though, you will need to have a credit score of 600 or higher, the ability to make the minimum down payment, a CDL, and at least three years of business history (though financing options are available for startups as well).

Q: What Credit Score do You Need to Finance a Semi-Truck?

A: To get the best semi-truck financing rates, you will typically need a credit score of 600 or higher. Exact credit score requirements, though, will depend on numerous factors, including the exact equipment you are purchasing and the financing company you are working with.

Q: Is There Such a Thing as No Credit Check Semi-Truck Financing?

A: Most tractor-trailer financing companies will require a credit check before they are willing to issue a loan. In fact, you should be leery of any company that offers no credit check financing since companies that offer this option tend to mitigate their risk by charging high interest rates and requiring large down payments.

Q: Can I Finance a Semi-Truck With Bad Credit?

A: You will likely be able to secure financing for a semi-truck regardless of your credit score. If your credit score is poor, though, you may be required to pay higher interest rates and/or provide a larger down payment.

Q: Can First-Time Owner-Operators Get Approved For Semi-Truck Financing?

A: Semi-truck financing is available for startups and first-time owner-operators. For first-time owner-operators, lenders will typically consider credit score, financial history, and industry driving experience. First-time owner-operators may also be required to pay a higher down payment.

Q: What Interest Rate Can I Get?

A: The interest rate that you will be required to pay on your semi-truck loan depends on numerous factors, including the finance company that you work with, your credit score and financial history, the length of your loan, your business history, and the exact equipment that you are purchasing. At Finloc, we offer industry-leading rates for truck and trailer financing to help business owners secure the equipment they need without shackling themselves to crippling interest rates.

Q: Do You Need a CDL to Purchase a Semi-Truck?

A: A CDL is typically required before you are able to secure financing for a semi-truck. However, this is not a blanket requirement for all financing companies and loan options.

Q: How Much is a New Semi-Truck?

A: The average cost of a new semi-truck is $150,000. High-end semi-trucks can cost upwards of $200,000 when purchased new, while low-end semi-trucks typically cost around $100,000. Despite the fact that it costs more to purchase a new truck, though, most finance companies are more willing to finance a new truck than they are a used one due to the fact that new trucks are less likely to break down before they are paid off.

Q: How Much is a Used Semi-Truck?

A: The average cost of a used semi-truck is $100,000. On the low end, used semi-trucks cost around $35,000. On the high end, used semi-trucks can cost upwards of $180,000.

Q: How Much of a Down Payment Will I Need to Pay?

A: The industry standard for down payments on a semi-truck or trailer is 10% of the equipment's purchase price. However, this requirement will vary from one financing company to another and depending on other factors such as your credit score, business and financial history, and the condition of the equipment you are purchasing.

Q: What Type of Insurance Do I Need For a Semi-Truck?

A: You will be required to carry insurance on any equipment you are financing. That said, though, there are numerous semi-truck insurance options available, including general liability, physical damage insurance, and bobtail insurance.

Q: What is Section 179?

A: Section 179 is a section of the IRS tax code that allows business owners to write off their depreciable assets as an expense. This effectively lowers the upfront cost of purchasing a truck by using the expense to reduce your tax burden.

Q: In-House Semi-Truck Financing: Good or Bad?

A: Many semi-truck manufacturers offer in-house financing options. While in-house financing does indeed streamline purchasing a semi-truck, there are a couple of pitfalls to be aware of. For one, you will likely be able to secure a better rate by shopping around rather than financing your purchase in-house. In-house semi-truck financing also entails several hard credit inquiries that can damage your credit score. At Finloc, meanwhile, we utilize soft credit inquiries to provide rates and terms so that the process doesn't ding your credit.

How Does Financing Work?

At Finloc, we make securing financing for a semi-truck quicker and easier than ever before. To finance your next equipment purchase with Finloc, all you have to do is complete the following steps:

Step #1: Fill Out a Credit Application

This should only take about ten minutes. Finloc is also currently launching online credit application submissions, and this option will be available soon!

Step #2: Submit Your Credit Application

Once your credit application is submitted, Finloc will process your request and inform you of the result. This typically only takes about 24 hours.

Step #3: Arrange the Terms and Conditions of Your Loan

Finloc will reach out to you at this point in the process to discuss your preferred terms and conditions for the loan. Once these terms and conditions are agreed upon, you must sign and submit the required documents.

Step #4: Make Your First Payment

Your contract comes into effect once the first payment is accepted. You are then free to take possession of the equipment you purchase.

Step #5: Funds Are Released

Once all the above steps are completed, the funds are released directly to you or to the vendor you are purchasing from.

This simple process makes it easy for anyone who meets the right requirements to secure financing for semi-trucks, trailers, and other equipment. If you would like to finance your next equipment purchase without all of the red tape and hassle, we at Finloc look forward to being at your service!

Finance Your Next Truck or Trailer With a Loan From Finloc 2000

Since 1994, Finloc has been helping business owners all over the country secure the affordable financing they need to purchase new equipment and grow their businesses. By offering a broad range of flexible financing options, we can work with lessees to provide a solution that meets their budget and equipment needs.

If you want to get started exploring the lease options available to you, be sure to download and submit a credit application today!