Semi Truck Financing: Types Financing for Commercial Trucks

November 24, 2021

Looking to finance a semi-truck but not sure what your options are? This article highlights the ins and outs of the different finance options for semi-trucks so that your business can maintain your capital while driving the newest trucks. 

Semi-truck financing 

If your business is in need of a semi-truck but does not have the capital to do so, you can look at financing your fleet instead. There are a few options available when it comes to semi-truck financing including leases and loans. 

Investing a large amount of money into this important asset can be daunting, and that’s why Blue Capital is here to help you choose the best financing plan that is best suited for your business. We have curated this guide to the different types of financing for commercial trucks so that you can make an informed decision. 

Traditional loan

Loans are available to finance your semi-truck, however, they are typically difficult to qualify for and are rarely used these days. A traditional truck loan is where an amount of money is borrowed for purchasing equipment and is repaid with regularly scheduled payments. 

At the end of the financing term, you will own the semi-truck outright. While most traditional loans are unsecured, the equipment itself acts as the collateral to the loan and the lender may repossess the semi-truck if you fail to make your payments.

Types of leases for semi-trucks 

There are two different types of semi-truck lease options, a capital lease or an operating lease. In certain situations, a lease may cost more than a traditional loan, however, leases are easier to qualify for and they have more flexible terms and usually do not require a down payment. 

Capital lease

A capital lease for a semi-truck is similar to a loan, and can also be known as a finance lease. In this situation, ownership of the semi-truck is transferred to you at the end of the term. You will have to pay a very small buyout fee at the end of the lease. 

Throughout the loan, you are considered the owner of the semi-truck which makes you responsible for any maintenance, operations and care of the truck, and any other added costs. 

Length & value of a capital lease 

A capital lease term for semi truck financing exceeds 75% of the estimated life of the truck, and capital leases are either 48-60 months but can be made longer if needed. If you’re not sure how long of a term you need, you can discuss this with a team member at Blue Capital Equipment Finance. 

The value of the capital lease payments will equal or exceed 90% of the original cost of the semi-truck. This means that the majority of the cost for the semi-truck is financed, with the remaining 10% typically being a down payment. 

Advantages of a capital lease

The advantage of a capital lease is that the value of the asset depreciates, but the interest amount can be expensed and dedicated as an operating expense.  The transfer is initiated after paying a nominal fee and upgrades can also be purchased during the lease term. This is a great option for those starting their business and looking for semi-trucks. 

Operating lease 

An operating lease is less like a lease than a capital lease, and it’s more akin to renting a semi-truck. With an operating lease, you are given permission to use a semi-truck, or multiple trucks, by a leasing company for a given monthly fee. These payments are considered operational expenses, hence the name operating lease. 

Length & value of an operating lease

An operational lease term for semi truck financing is less than 75% of the economic life of the truck, and just like a capital lease, the value of the payments will usually equal or exceed 90% of the original cost of the truck. 

Advantages of an operating lease

Your taxes become simplified with an operating lease because the semi-truck is not included in your balance sheets and lease payments are fully tax-deductible. If you choose an operating lease, you have the flexibility to replace your fleet frequently and reduce the risk of working with an old and unreliable semi-truck. 

How to start financing a semi-truck 

Blue Capital Equipment Finance is a nationwide finance brokerage that has years of experience helping businesses grow with equipment financing and commercial truck financing. We are your one-stop shop as we can help you locate semi-trucks through our established network of truck dealers, find used trucks for sale, or help you finance a brand new truck. 

We offer many financial services and can help you easily get approved with zero down payment options and low-interest rates. We have multiple leasing options and can help you find the right loan for your business so that you don’t have to let old, and unreliable semi-trucks slow you down.