Entrepreneurs in many industries use commercial trucks for a variety of purposes. They are large and powerful, making them a great option for moving people, goods, or materials from one place to another. However, the high cost of these assets can cause cash flow problems if you need to fix a vehicle or buy a new one.

Prices range between $90,000. to HTML200,000+. This isn’t something most entrepreneurs can afford. However, if your business relies on these vehicles for critical tasks, it can be costly to operate without them. It is only a matter time before you begin to notice the impact on your profit margin.

This is why financing exists. Instead of paying a large upfront cost, you can divide the cost of your commercial vehicle into affordable monthly payments that fit your budget. This increases your purchasing power and preserves cash flow. However, you need to be cautious about what terms you agree to.

Based on your financial information, each lender will view your business differently. They may offer you different rates, terms, capital amounts, and terms. While some lenders may be able to review your financial information and offer favorable terms, others might decline your application because they consider your operation “risky”. You can only get the best deal for your commercial truck financing if you shop around and contact multiple lenders.

You don’t have to worry. We have everything you need about commercial truck financing options to help business owners make informed decisions that will allow them to grow their business.

What is Commercial Truck Financing?

Commercial truck financing is the borrowing of capital from outside sources to finance the purchase and maintenance of commercial trucks. This is a very specific type of financing and only works for commercial trucks. However, there are other options if you require capital for other purposes.

Leasing a commercial vehicle can be more expensive than financing it. You retain ownership of the vehicle if you finance it. If you lease the truck, you must return it to the leasing company. This is why financing is often a better choice in the long-term, but not for all circumstances.

Once you have decided that commercial truck financing is the right option for you, you can start looking for lenders who offer this type of solution. Although there are many lenders available, most people will start looking for the credit union or bank they do business with. Bank financing can be complicated. There are strict eligibility requirements, limited industries and other factors that play a part in getting approval.

Alternative lenders can be used if you are having difficulty financing your bank. These lenders are more modern and have quicker funding times. They also have a looser eligibility criteria. However, they do have higher interest rates.

It’s important to compare your offers and explore your options so you can make informed decisions about the best terms and rates for your company. To receive multiple offers from multiple lenders, you will need to apply to them all. Make sure to allow enough time to do this step when you plan your commercial truck financing.

Types Of Commercial Truck Financing

There are many subcategories of commercial truck financing. These include term loans, lines-of credit, equipment financing, etc. Depending on your financial situation and the terms that you have agreed to, each option has its own benefits. Therefore, it is important to carefully consider which type you will use to buy your assets. Here are the top commercial truck financing options.

Commercial Truck Term loans

Term loans are paid in one lump sum to the borrower. Your lender will set a repayment schedule and some of your payments will go towards the interest. To ensure that the loan process goes smoothly, the lender will want to know more about your truck.

Commercial Truck Lines of Credit

The best financing option for entrepreneurs in any industry is business lines of credit. After you have established your credit line with the lender, you can draw funds as needed up to a limit. The interest you pay is only on the amount that you draw. You don’t have to worry if you lose any funds. This type of financing has many advantages. However, the interest rates are usually higher than other types of financing.

Commercial Truck Equipment Financing

This is one of the most popular ways entrepreneurs finance commercial truck purchase. You simply need to find the asset you wish to buy and provide that information to a lender. Once your application is approved by the lender, you will receive the money to purchase the equipment from the vendor. Then, you can use the asset to grow your business. After repaying the loan amount, you will retain sole ownership of the asset.

Alternatives for Commercial Truck Financing

To finance the purchase of a truck, you don’t have to use a commercial truck financing option. You may also be able to get the capital you need through revenue-based financing. Here are a few options

Revenue-Based Financing

Revenue-based financing leverages future sales for cash in short term span type=”font-weight 400 ;”>. This category includes accounts receivable factoring and purchase order factoring. Your future sales determine the amount of funding you receive, so expect approvals that reflect your monthly/annual income.

Asset-Based Loan

This type is where you put up a collateral to secure capitalspan styling=”font-weight 400 ;”>. The lender will consider your financial information when determining the rates and terms. However, the asset reduces the lender’s risk of funding your business. This can lead to better terms and higher funding amounts. This type of financing can be secured by real estate, inventory, and other assets.

SBA 7 (a) Loans

SBA loans are one of the most sought-after financing options for entrepreneurs. This option is attractive because of its high funding amount (up to $5 Million) and favorable terms. However, you need to be aware that there are strict eligibility requirements. If your business meets the requirements, the funds can be used for any purpose you choose, such as the purchase of a truck or other vehicles.

How to Select the Best Commercial Truck Financing Options for Your Business

Financing a commercial truck requires that you consider many things. You must first consider what type of truck you require and look into pricing options. Vehicle costs change rapidly, especially in 2023. You’ll need to shop around to find the right price for your business so that you don’t pay more than necessary.

Next, search for lenders that offer commercial truck financing. Compare their programs. They will be very different. Some lenders are only able to provide this type of financing while others can offer a more comprehensive service for all clients. Each type of lender has its own benefits. It is worth speaking with several lenders before you make a decision.

To see your rates, terms, or offered amount, you will need to submit your application with all your frontrunner options. This process can take several months, and sometimes even weeks. National Business Capital makes it easy for entrepreneurs to buy commercial trucks quickly.

National allows you to skip most of the above steps and get multiple competitive offers through one digital application. The 75+ lenders that National has established over the years have allowed our expert Business Finance Advisors to secure customized approvals for your business. This means we can get you approved in half the time it takes to go through each lender individually.

What Else Should I Know?

Although financing a truck commercial is a great way to increase your assets, you will also have to pay the associated costs. You could be left with little cash flow to pursue new opportunities or run your business at its maximum capacity. This can lead to your growth slowing down. Even in the most dire of circumstances, these expenses can cause financial problems and create stress in your life. You can control these expenses and keep your cash flow open for future opportunities with a business credit line.

A business line of credit can help you achieve increased liquidity. This type of financing allows for you to borrow physical cash as needed to pay expenses, hire new staff, buy equipment, stock up inventory, and many other things. This financing is almost like having a financial safety blanket in your back pocket. However, the terms you agree to will affect the benefits.

Before you sign the dotted line, make sure you understand the interest rate, repayment terms and any hidden fees. National Business Capital can help you choose the right lender for your company if you are concerned about making the wrong choice.

Compare Truck Financing Options with National Business Capital

It’s not as simple as you might think. You can do it, but it takes time and effort. National makes it easy to get the money you need to buy a commercial truck. It takes just hours, not weeks, or months like traditional lenders. To make it easier for you to find the right lender, our marketplace brings together 75+ top lenders across the country.

We make it easy for you to get back on the most important thing: your business. To get started, fill out our digital application

FAQs about Commercial Truck Financing

What is the difference between a secured loan and an unsecured loan?

Secured loans are backed by collateral, while unsecured loans don’t require collateral. Technically, unsecured loans can be “backed” by your receivables. This is because lenders consider your future sales when considering your application. Collateral can be anything from financial investments to real estate. When you use equipment financing to finance a commercial truck, your asset is often used as collateral. This means that you don’t need to put any other asset at risk to get the money you need.

What are the interest rates on commercial truck loans?

Rates of interest depend on many factors including the financial information of your company, the lender you are dealing with, and the economic state. You’ll get lower interest rates if you have a substantial income, excellent credit scores, and have been in the business for more years than those who don’t have these qualifications.

The lender will use interest rates to reduce their risk in financing your business. Lenders will offer lower rates if you are able to show that your business is financially sound and trustworthy.

Entrepreneurs must consider the cost of capital. However, most people look at it wrongly. You need to see the whole picture. A higher interest rate is negligible if you intend to use the money to grow your company and generate a profit to offset the cost of interest payments. However, you shouldn’t accept any interest rate. It is important to choose terms that are compatible with your business and your future growth.

What should I do if I receive a denied application?

The denial of a loan application does not mean that the lender will refuse to approve it. Traditional lenders don’t often understand that growing businesses will not have high profit margins as they are investing their profits back into the business. They’ll decline to approve their loan application instead of taking a chance. Even if you have been denied previously, it is now easier to find the right lender with the help of FinTech marketplaces and the abundance of alternative lenders.