Key takeaways
- Semi trucks can cost from $70,000 to $200,000, making it hard for some businesses to purchase one without a loan
- The costs of a semi-truck loan include interest, fees, length of repayment and the down payment for the truck.
- Semi-truck financing interest rates often range from 6 percent to 35 percent
Many businesses need a semi truck to keep their business running smoothly, whether you’re a commercial shipping company, buying a semi truck so you can take on jobs for other companies or buying a truck to move your own business’s goods. But paying cash for a semi truck can be incredibly expensive.
If you don’t have tens of thousands of dollars on hand to purchase one, you could use semi-truck financing to help you afford the expense. While semi-truck financing can help you stretch the cost over the life of the loan, the loan will cost you money in interest, fees, a down payment and more. Here’s a look at the costs of a semi-truck loan.
Semi-truck financing costs
Getting a semi-truck loan involves paying upfront for the down payment as well as paying interest over the loan term you choose. When comparing loans, look at the total costs in the loan agreement to get a full understanding of how much you’ll pay.
Semi-truck purchase
The biggest expense with semi-truck financing is the actual cost of the semi truck. On the low end, you can expect to spend about $70,000 for a new semi truck. You could spend $155,000 to $200,000 or more to get a high-end model from a well-known brand.
Like any vehicle, semi trucks are made by different companies, and you can purchase standard or high-end models. There are also used semi trucks available for purchase.
Buying a used semi-truck can help you save money, but you’ll need to do your due diligence to ensure the truck is in good shape and has been properly maintained. You can find used trucks for about half the price of new ones, depending on their age.
Lease vs. own
Another consideration for people who need a semi truck is whether they should lease or own their vehicle.
Semi-truck loans are a type of equipment loan used to purchase a commercial vehicle. The benefit of semi-truck financing is that you own the vehicle outright at the end of the loan. If you no longer need your truck or want to upgrade, you can sell the truck to recoup some of your investment. But there’s a chance the loan could outlast the life of your semi truck.
Leasing involves renting a truck from another company. You’ll pay a monthly fee to use the vehicle. Usually, that fee will be less than an equipment loan’s monthly payment. You also may not be responsible for the full maintenance of the truck. But depending on the type of semi-truck lease, you’ll have to give the truck back once the lease ends and you don’t build any equity in the vehicle.
How much is a semi-truck monthly payment?
The cost of your monthly semi-truck payment will depend on the terms of your loan, such as how much interest you’ll pay and for how long. You can use a business loan calculator to estimate how much your monthly payment will be.
Look at a few examples of how much you might pay for a semi truck with financing:
|
Loan amount |
Interest rate |
Loan term |
Monthly payment |
Total interest |
|
$70,000 |
10.00% |
5 years |
$1,487.29 |
$19,237.59 |
|
$100,000 |
10.00% |
5 years |
$2,124.70 |
$27,482.27 |
|
$150,000 |
10.00% |
5 years |
$3,187.06 |
$41,223.40 |
|
$200,000 |
10.00% |
5 years |
$4,249.41 |
$54,964.54 |
How much is a semi-truck lease payment?
Leasing a new truck can cost between $1,400 and $2,500 a month, while leasing used trucks costs about half that much. The good news is most semi-truck leases don’t require a down payment, so you can get in a truck faster with little to no money upfront.
Leases may also come with mileage limits. You’ll pay a per-mile fee if you exceed the limit, which is often around 12,000 to 15,000 miles a year.
Interest
Semi-truck financing average interest rates range from 5 percent to 35 percent. That said, the interest rate may exceed 35 percent, depending on your credit score, time in business and the lender you select.
Some semi-truck loans have factor rates instead of interest rates. While interest rates are expressed as a percentage, factor rates are expressed as a decimal. Factor rates are charged upfront, so early repayment will not impact the amount you owe. For example, a loan of $10,000 with a 1.25 factor rate would result in a total repayment amount of $12,500. Factor rates are more common in alternative lending.
Fees
Like many loans, semi-truck financing often comes with fees. These fees may seem small, but the more fees added to a loan, the bigger the impact on your business’s bottom line. Here’s a look at some common business loan fees to watch out for.
| Origination fee | A fee charged when the lender disburses the loan funds, usually 0.5% to 8% of the loan amount. |
| Appraisal fee | The cost to appraise the truck or other collateral and make sure it is sufficient to secure the loan. |
| Underwriting fee | This fee covers the cost of determining whether to approve your loan. |
| Early prepayment fee | Some lenders charge a penalty if you pay off your loan early. You may still save money on interest even with the fee. |
| Sales tax | This is a tax charged by your local government and will depend on where you live. |
| Registration fee | This is a fee paid to register your vehicle in your home state. This can range from a few hundred to a bit over $1,000. |
Down payment
When you get a loan to buy a semi truck, many lenders require a down payment of 10 percent to 20 percent. This is an amount that you pay upfront when buying a truck. For example, if you’re purchasing a $100,000 vehicle, you might offer a 20 percent down payment, or $20,000, and borrow $80,000 to pay for the rest.
Higher down payments can make it easier to qualify for a loan and help reduce the cost of borrowing. Of course, higher down payments also mean you need more cash upfront.
You may not be able to finance a semi truck with a lower down payment, such as $1,000, unless you work with an online or direct semi-truck lender. If you’re looking for an option with little money upfront, you could consider leasing a semi truck since many leases don’t require a down payment.
Bankrate insight
Factors that affect semi-truck financing costs
Some factors influence the cost of semi-truck financing, increasing or decreasing the cost depending on your what you choose.
Age of semi truck
If you’re buying a used semi truck, the vehicle’s age can greatly impact its price. Generally, older trucks will cost less than newer ones. But older vehicles are more likely to have maintenance and repair issues and won’t last as long. Additionally, many lenders only offer loans on trucks that are less than ten years old.
In addition to their lower price, used trucks have the benefit of losing less value soon after purchase than new vehicles, which depreciate quickly. They also cost less to insure, and there may be more data on whether they’re reliable.
Creditworthiness
As with any loan, your credit score will impact your ability to finance a truck and what rates and terms the lender offers you.
If you have strong credit, you’ll have little trouble finding a lender and can secure the lowest rates, as low as 6 percent. Business owners with lower credit scores will have to pay more: Interest rates can reach 35 percent or higher to finance a truck. Semi-truck financing for startups can also have higher costs since new businesses haven’t had enough time to build business credit.
Bad credit business loans also come with higher interest rates and loan fees. In addition to your credit score, lenders will also evaluate how much revenue you bring in and any debt obligations. If you have strong revenue, you may be able to get approved for a business loan even with subpar credit.
Can you finance a semi truck with bad credit?
Yes, it’s possible to finance a semi truck, even if you have bad credit. One of the primary reasons for this is that semi-truck financing is a type of secured loan. The truck you purchase serves as collateral for the loan, reducing the lender’s risk. If you default on the loan, the lender can repossess the truck to recoup its losses.
To finance a semi truck with bad credit, use these tips:
| Offer a larger down payment | The more cash you put down, the less risk the lender takes, making qualifying easier. |
| Offer more collateral | If you have other assets, you can offer those as collateral in addition to the truck. |
| Get a co-signer | If someone with good credit offers to cosign on your loan, having a co-signer can help improve your application’s chances. |
| Buy from a dealer | Dealers are usually more willing to work with people that have bad credit than lenders. |
| Use an online or direct lender | Online lenders often lower credit score requirements, and some direct lenders will work with any credit type. Direct lenders are online lenders that specialize in semi-truck loans. |
Loan term
The term of your semi truck loan will impact how much the loan costs. Typical semi-truck loans last anywhere from one to five years, but it’s possible to find lenders offering term lengths of seven years or longer.
Shorter terms mean higher monthly payments but will be cheaper in the long run because there’s less time for interest to accrue. Conversely, long terms mean lower monthly payments, which can make the loan more manageable, but the tradeoff is higher overall costs because you’re paying for the loan over a longer time.
Banks and traditional lenders often offer long-term loans up to 10 years, while online lenders tend to offer shorter terms, such as five years.
Bottom line
The best semi-truck loan offers a convenient way to buy a necessity for your business while preserving cash flow. Consider your options, such as buying a used truck or leasing, to see if one of those lower-cost options makes more sense.
Understand all your costs before signing on the dotted line, including how much the loan will cost you overall, the interest rate and any fees charged. Then, take the time to shop around and compare lenders to make sure you get the best possible deal.
Frequently asked questions
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