The trucking industry employs more than 7 million people, including many owner-operators, and moves around 70% of all US freight. Semi-trucks are also the key to success for transportation small businesses. But the problem is, these essential commercial vehicles are far from cheap: the average semi-truck can set small businesses back by more than $80,000.

That’s a lot more than most small businesses can afford and the expense can seriously slow down your company’s growth, and financing options can be limited depending on companies’ credit histories, making it hard to get funding from leasing companies or banks.

That’s where semi truck loans come in. Trucking companies can affordably expand their fleets by getting asset-based truck loans from leasing companies where the semi-truck itself is the collateral. This means that companies can get a truck loan regardless of their credit histories. Although if you don’t have bad credit you’ll get a lower loan payment.

Semi Truck Loans for Bad Credit

If you don’t have the working capital to buy a new semi-truck out of pocket, which can cost as much as $100,000, you’re going to have to take out a truck loan. But small businesses can have limited financing options and often can’t get small business loans from a bank or leasing companies or finance from sellers of trucks and trailers if they have a bad credit score.

Small businesses with bad credit can still get a truck loan from truck financing companies and online lenders through semi-truck financing. That’s true even if they couldn’t finance the vehicle with traditional leasing companies. Because the truck itself serves as the collateral, truck financing companies have lower requirements for semi-truck loans regarding companies’ credit histories. After all, the vehicle has the same value if you have a bad credit score or stellar credit.

Requirements to Finance a Truck

So if you can get semi truck loans with bad credit, what are the requirements for a truck loan?

Well, since the vehicle is the collateral, leasing companies and truck financing companies will want to know what commercial trucks you are going to buy using the semi-truck loan. They want to know that you are buying from a reputable vendor and how well your new vehicle will serve as collateral. An older vehicle or the wrong kind of truck could fail to qualify for a semi-truck loan, could increase your loan payment, and could limit your financing options.

For instance, long-haul trucks and trailers are subjected to more wear-and-tear, so the risk for commercial vehicle leasing and finance companies is higher – so your monthly payment will be, too.

Online lenders also have some standards regarding the small businesses applying for a truck loan. While a bad credit score might not matter to them, they will want to look at applicants’ credit histories for warning signs of default. For instance, they might want to make sure you do not have any tax liens, delinquencies, or repossessions.

Truck loan companies will also want to know how long you have been business, what kind of commercial truck insurance you will have for the semi-truck, and whether you have a commercial vehicle license. If you have been in business for a long time, there are other strategies you can use to get a small business loan as an established business.

You will also have to come up with a down payment and have some cash reserves so you can reassure the commercial truck financing companies that you will be able to make your monthly payments. And while you can qualify for semi-truck financing with bad credit, you can get better loan payment rates with higher credit scores.

Loan Payment Rates

What semi-truck financing rates can you expect to pay? Loan payment rates can depend on company credit histories and financing options, plus the amount of money you’re willing to pay upfront to finance a truck.

If your commercial truck is the right type and condition and you are an ideal borrower, you can get a truck loan for the entire value of the semi-truck. But you may well have to make an upfront loan payment or down payment to the lender or leasing companies. The average down payment is 15% of the value of semi-truck, though it can be as little as 0% and as high as 25%.

Annual interest rates on commercial truck loans are between 5% and 30%. That’s a pretty wide range and can make a big difference in the size of your monthly payment when you finance a truck. Some truck financing companies offer terms as long as 10 years, but most offer terms of 1, 3, or 5 years.