Introduction
Wondering how long you can finance a semi truck? Many lenders allow you to finance a semi truck between 12 and 84 months depending on the vehicle’s price, loan term, and other conditions we will unveil later in this page.
In this article, we will discuss what it means to finance a semi truck and further discuss how long you can go with it.
We will also cover the eligibility requirements, the best place to finance your semi truck, things to consider before financing your semi truck, and other queries related to semi truck financing.
What Does It Mean To Finance a Semi Truck?
Car financing is a more popular type of financing than semi truck financing. Financing a car means acquiring a loan to purchase a new or used car while you agree to pay back the money and the accrued interests within an agreed time.
Similarly, to finance a semi truck means borrowing a certain amount of money from a financial institution to purchase a semi truck to boost your business.
Factors To Consider Before Financing A Semi Truck
These are terms you must understand and consider:
Interest Rate
Interest rate is arguably the first thing to consider when shopping for an institution to finance your semi truck.
Interest rates differ from one institution to the other. Hence, find the one with the most generous offer.
Service Charges
Service charges are another significant factor to consider when financing your semi truck. Financing a semi truck isn’t just about loaning and paying back a certain amount.
Instead, it entails paying back the actual amount, accrued interest, and other added costs such as establishment fees, discharge fees, and late repayment fees (if applicable)
Choose a lender that makes all their charges open to all customers. Avoid platforms with hidden charges.
Repayment Rate /Mode
The repayment rate is a crucial factor that will help you determine which truck to choose and how long you can finance a semi truck.
You must know how much money you can repay monthly to determine the truck that suits your budget.
The truck’s value, annual percentage rate (APR), credit, and loan term often determine the monthly payment rate.
Credit Score
You can’t overlook the importance of credit score in your hopes of financing your semi truck.
You must have a good credit history and a convincing credit score that will influence the lender’s decisions.
A high credit score will attract affordable interest rates, while a low credit score will affect your chances.
The lender might reject your application due to a poor credit rating. According to Experian’s report, only 38% of applicants with below 660 credit scores obtained a car loan in the third quarter of 2019.
What’s the lowest credit score to obtain a semi truck loan? There’s no universal score as it differs from one lending platform to another.
Some financial institutions require a minimum 620 FICO score, while others demand 540 and above.
Meanwhile, some financial institutions set their minimum credit score based on your desired truck. New trucks demand higher credit scores than used or leased trucks.
Down Payment
You must consider the down payment before financing a semi truck. The financial institution will determine the down payment for the vehicle you intend to purchase.
What’s a down payment on semi trucks? A down payment is an amount you pay or deposit before financing the semi truck.
It is a strategy lenders deploy to reduce the loan you need to purchase your semi truck.
Loan Term
How long would it take to repay your loan, interest, and other related charges? Here’s a crucial question to answer before financing your vehicle.
The loan term is the days or years it will take you to settle all your debts to become the truck’s substantial and registered owner.
Your repayment plan, the truck’s value, and some factors above often determine the loan term. For instance, you will settle the loan faster if your monthly repayment is high.
Further information on How Long You Can Finance a Semi Truck
There’s no universal length to which you can finance a semi truck because financial institutions have varying time frames for different loans.
You can finance a semi truck for 12, 36, or 84 months, depending on the type of loan, the vehicle’s value, and the lender’s loan policies.
Why Should You Finance A Semi Truck?
It guarantees a fast and easy way to own a Semi truck:
With truck financing, no need to wait until you save sufficient money before purchasing your desired vehicle.
Find a suitable lender, prepare all the necessary documents, sign the paperwork, and you will get your desired truck in one or two weeks.
It Ensures Tax Deduction:
Financing a semi truck will reduce the tax rate if the vehicle depreciates before paying back the loan.
Positive Impacts On Your Credit Score:
Taking a car loan and paying it back in time will boost your credit score in the long run.
You can be sure your credit score will increase if you finance a semi truck and fulfill the contractual agreement.
Easy Payment:
Finance a semi truck because it guarantees an easy and stress-free monthly repayment method.
Whether it’s Hire Purchase (HP) or Personal Contract Purchase (PCP) agreement, you won’t be under intense pressure to repay, depending on the loan term.
Documents You Need To Finance a Semi Truck (Eligibility)
You must possess the following criteria and meet the requirements below to finance your semi truck.
A Laudable Credit History
Your hope of financing a truck depends on your credit score and previous credit records. No financial institution wants to partner with someone who doesn’t repay his loans in time.
Your credit history should feature on-time car payments or a laudable mortgage payments history to boost your eligibility status.
Valid Commercial Driver’s License
Here’s another document that could make or mar your hopes to finance a semi truck. All institutions demand a valid commercial driver’s License from all loan applicants.
Meanwhile, many institutions request that applicants have at least three years of verified driving experience before financing a semi truck.
Bank statements and/or tax returns:
These documents help financial institutions know more about your financial status, business, and previous expenditure.
Other documents needed to finance a semi truck include:
- Bill of sale containing the vehicle’s information.
- Cell Phone contact
- Proof of insurance
- Co-signer Statement
- Articles of Incorporation & Corporate Resolution
- LLC Agreement & Operating Agreement.
Note that the last three documents depend on your relationship with your employers or organization.
How To Apply For A Semi Truck Financing?
Below is the step-by-step guide to financing a semi truck without any stress:
1. Confirm Your Eligibility Status:
You can finance your semi truck via multiple options such as truck dealership loan or a bank small business loan.
Hence, the first step involves considering the options and their requirements, confirming your eligibility, and selecting the best.
2. Get All The Required Documents And Paperwork
Ensure you have all the documents and qualifications at this stage. Proof of Insurance, a valid driver’s license, and other documents mentioned earlier must be readily available before proceeding to the next phase.
3. Find a Suitable Lender:
The next step involves finding the right financial institution where you can acquire the semi truck loan plans you chose in step one.
Ensure you observe the factors above while shopping for the best lenders.
4. Find Your Desired Truck:
Searching for the right truck that meets the lender’s qualifications and your business needs can be difficult. Therefore, avoid any distractions while looking for the right choice.
Negotiate the price of your chosen vehicle, and obtain a written purchase quote from the dealer.
The quote must contain the truck’s price and other details like Title and Vehicle Registration, Guarantee of Title, Vehicle picture, and the Original signed credit application.
5. Obtain Proof of Insurance
The Proof of Insurance is a card given to you by your insurance company. It contains your policy number, your details, and the vehicle’s information.
Provide a Proof of Insurance document to fast-track the financing procedures.
You need Primary liability coverage and physical damage coverage insurance if the truck is your only asset.
6. Submit Your Documents
Here is the last stage of the process. Submit all the documents to the financial institution and wait for their approval.
You will get your semi truck in three or five working days if everything goes as planned.
Best Semi Truck Financing Options
1. Wells Fargo Truck Loans:
Wells Fargo comes first on the list as they are known for diverse semi truck financing programs. Find more about them and pick the right option for you.
2. U.S. Bank Commercial Truck Loans:
The U.S. Bank offers commercial truck loans as part of its equipment financing program. They are known for fast approval and little to no down payment.
3. Bank of America Commercial Truck Loans:
The Bank of America truck loans are one of the best options for people interested in cheap and affordable truck loans.
4. Balboa Capital:
They are known for their same-day funding. However, you need a successful business that generates $100,000 annual revenue and a 620 FICO credit score to get approval.
5. First Capital Business Finance:
They are recommended to startup trucking companies due to their highly flexible requirements and easy-to-use semi truck financing programs.
What Happens When You Can’t Repay Your Semi Truck Financing?
Missing a semi truck loan payment is the last thing you would want for yourself due to its damaging effect on your credit score.
Your credit score will reduce drastically every month you miss a payment. You will eventually lose the ownership right if you don’t fulfill the contractual agreement.
You can’t borrow money in the future due to poor credit history. Finally, the lenders might take legal steps which won’t turn out well for you.
Wrapping Up
It is advisable to ask the lender all you should know about their services, including how long you can finance a semi truck, before applying for financing.
