FreightWaves Ratings cuts through the noise of freight technology product reviews to make you a smarter buyer

How Does Commercial Truck Financing Work?

Commercial trucks are expensive to buy outright. However, for some business owners, they’re necessary. Luckily, there are ways to get them financed so that you don’t need to spend a ton of cash up front.

Truck finance isn’t nearly as complex as it might appear. Read on for some tips on how to set up truck financing.

How Does Commercial Truck Financing Differ? 

Commercial truck financing is similar to many other kinds of financing. Truck financing involves a business owner or operator that uses their truck as collateral for a loan on that truck. The lender, in this case, holds the title of the truck until it is paid off. If a business fails to meet their obligations to pay back the loan, the truck can be repossessed.

What is Required to Finance a Commercial Vehicle? 

When you’re applying for truck financing, lenders will examine three key details about your business. 

Credit Score

A good credit score will give a business a better chance of qualifying for a loan. A credit score of 600 or higher is ideal.

Time Spent in Business

Lenders are hesitant to loan money to new businesses. They prefer to work with a business that has been around for at least a few years. 

Your Collateral

Lenders will consider the quality and condition of the commercial vehicle that needs financing. Better vehicles offer better collateral, which will give you a greater chance at getting a reasonable loan.  

Can I Get No-Money-Down Commercial Truck Financing? 

Yes, you may qualify for truck financing without a down payment if you have a good credit history. Your record must be free from delinquencies or any other negative marks. Be sure to ask your lender if they offer this option. 

Can I Refinance a Commercial Truck Loan? 

You can refinance a commercial truck loan. Doing so will likely reduce your monthly payments or your interest rate. However, refinancing does require you to apply for a new loan — either from the original lender or a different one.   

Credit is a major factor in truck financing. It is unlikely that you will qualify for a loan with bad credit. However, that does not mean it is impossible. Lenders will consider your time in business and existing collateral, as well. 

How to Get a Commercial Auto Loan 

Getting a commercial auto loan is easier than you might think. All it really takes is some proper planning before you apply. When you want to know how to get a commercial truck financing, follow these five steps. 

Step #1:  Consider Your Eligibility as a Borrower

Lenders will look at your credit score, time in business, and collateral before granting you a loan. Before you apply, you should find out what your credit score is and work to improve it if necessary. You should also consider whether there are any other outstanding issues that may harm your eligibility. These include payment history, repossessions, and/or past records of bankruptcy.  

Step #2:  Prepare Your Documents

Before you apply for truck financing, you will likely need to provide the following documents to a lender: 

  • Documents proving that your registered business exists
  • Current and past bank statements (at least a year’s worth)
  • Business tax returns (for at least the last three years)
  • Current business balance sheets
  • Business licenses and/or required certifications
  • Your commercial driver’s license (CDL)
  • U.S. Department of Transportation number
  • Motor carrier number

Once these have been provided, you’ll want to consider your vehicle options.

Step #3: Select a Commercial Vehicle

Next, you will need to decide which type of commercial vehicle you want to finance. It is best to select a truck that is under ten years old. This will allow you to avoid excessive maintenance and higher payments. Newer trucks may have higher price tags upfront, but they are often cheaper to operate in the long run. 

Step #4: Select Insurance for the Vehicle

Commercial vehicles like semi trucks have different insurance requirements than regular vehicles do. Commercial vehicles endure much more wear and tear, making insurance extremely important. 

Insurance on commercial vehicles typically includes additional features as well, such as coverage for loading and unloading liability. While this kind of insurance can be expensive, it is tax-deductible. 

Step #5: Submit the Documents and Application 

Once the other four steps are complete, all you have to do is submit the documents and your application. The lender will review them and walk you through the rest of the process.

Buying vs. Leasing

Buying and leasing are two very different options for commercial truck financing. Which one will be right for you? Let’s take a look at the benefits of each.

Should You Buy a Commercial Truck? 

The best part about buying a commercial truck with a loan is that it will give you full ownership of the truck once it is paid off. 

Buying is also a more straightforward process. You borrow money for the truck and make monthly payments toward the principal and the interest. 

Buying is often cheaper than leasing. Over time, you will pay much less in total for the truck when you purchase it, and you will own the truck at the end of the loan.   

Should You Lease a Commercial Truck? 

Leasing is also a great option. The credit requirements are often lower for leasing a truck than they are for buying one. The monthly payments and down payments are also lower in most cases. 

However, with leasing, you will typically spend more in total for a truck without ever actually owning it. You are paying solely to use the truck. However, with most leasing options, you will be granted the ability to purchase the truck at the end of your lease — with depreciation taken into account. 

Commercial Truck Financing Made Easy 

Without experience, it can be hard to know how to get commercial truck financing. With proper planning and consideration, the five steps for getting a commercial auto loan can be done with ease. TAFS makes financing a commercial truck or trailer easy, plus beneficial cash flow solutions like fuel discounts and invoice factoring.

We are excited to announce the launch of, a revolutionary resource designed to transform how consumers choose auto-shipping companies. Check it out today!

TAFS is More than Freight Factoring

As one of the industry leaders, TAFS assists trucking companies to increase cash flow with some of the lowest factoring rates in the industry and a 1-hour advance option.