Trucking equipment financing is a loan or lease that pays for the trucks, trailers, and other gear your business needs. You pay it back in fixed monthly payments over a set term.
The equipment itself is the collateral. That makes approval easier than with an unsecured business loan, even if your credit has a few dings.
What Is Trucking Equipment Financing?
Trucking equipment financing is funding for the business equipment that keeps your loads moving. Common examples include:
- New and used semi trucks and other commercial vehicles
- Dry van, reefer, and flatbed trailers
- Box trucks and dump trucks
- Specialized equipment, like refrigeration units, liftgates, or tires
Equipment financing companies fund restaurant equipment, medical equipment, manufacturing equipment, and plenty more. In 2023, 82% of businesses that acquired equipment or software used some form of financing.
A semi truck is the biggest capital investment most owner-operators make. Few can buy equipment outright, given what a semi truck costs. Most buyers finance instead. The best fit is a lender who knows the trucking industry and how age, mileage, and engine affect value.
New equipment adds a 12% federal excise tax to the first retail sale of most heavy trucks and trailers (26 U.S. Code 4051).
How Does Trucking Equipment Financing Work?
A lender pays the seller for the equipment, and you repay the lender over time with interest. Here’s how it typically plays out:
- You pick the truck or trailer and get a written quote from the seller.
- You apply with a lender and make a down payment.
- The lender pays the seller and records a lien on the title.
- You make monthly payments until the loan is paid off.
- The lender releases the lien, and the equipment is fully yours.
If you stop paying, the lender can repossess the equipment, which is why approval is easier than for unsecured loans.
Example of Equipment Financing
Say you buy a used semi truck for $50,000 and put 25% down ($12,500). You finance the remaining $37,500 at a 20% contract rate for 42 months.
Your payment would be about $1,249 a month, with about $14,943 in total interest.
Our 16% prepaid finance charge and $495 doc fee add about $6,500 on top of that. If you roll them into the loan, your payment comes to about $1,465 a month.
Always compare lenders on APR, since it includes fees as well as the contract rate.
Types of Trucking Equipment Financing
The main equipment financing options are equipment loans, leases, bank loans, SBA loans, and dealer financing.
Equipment Loans
An equipment loan is a business loan you use to purchase equipment, like a specific truck or trailer. You own it from day one, and the lender holds a lien until you pay it off.
Some lenders call this an Equipment Finance Agreement (EFA). Lenders structure financing around the truck’s age, the loan amount, and your credit, so terms vary.
Equipment Leasing
With equipment leasing, the leasing company owns the truck. You pay to use it for a set term. Leases usually come with lower upfront costs than a purchase.
- Capital lease: Works like a purchase. You usually buy the equipment at the end for a set residual price.
- Operating lease: Works like a rental. You return the equipment at the end, often with mileage limits.
Bank and Credit Union Loans
Banks and credit unions usually offer the lowest interest rates, but they’re the hardest to qualify for.
They favor established businesses with 2+ years of history, strong credit, and a newer truck. Many banks don’t finance commercial trucks at all.
Specialty truck lenders finance the used trucks banks turn down, with equipment financing solutions built for owner-operators.
SBA Loans
The Small Business Administration guarantees loans made by partner lenders, which helps borrowers get longer terms.
SBA 7(a) loans go up to $5 million, and you can use them to finance equipment (SBA).
SBA 504 loans work through certified development companies. They only cover equipment with at least 10 years of useful life left. That likely rules out most used trucks.
Approval involves a stack of paperwork, so SBA loans suit planned equipment purchases better than quick buys.
Dealer and Manufacturer Financing
Dealers and truck makers often arrange financing at the point of sale. It’s convenient, and new-truck promotions can be hard to beat if your credit is strong.
Compare the dealer’s offer with at least one outside lender before you sign. Mission Financial is a preferred lender for dealerships, so you can often use us through the dealer, too.
What Credit Score Do You Need for Equipment Financing?
There’s no single minimum credit score. Each lender sets its own.
Banks usually want a score above 700, plus two or more years in business. Online lenders go as low as 550.
Some lenders check business credit scores too. If you’ve just formed your LLC, though, lenders usually rely on your personal credit.
We’ve helped owner-operators get loans with credit scores as low as 460. We look at your overall credit, including on-time payments on your home or car. Past bankruptcies and repossessions don’t rule out bad credit truck loans if they’re more than a year old.
Equipment Financing Rates and Down Payments
FreightWaves puts commercial truck loan APRs in 2026 at about 6% to 35%. Well-qualified borrowers pay 4% to 8% at banks and 7% to 12% at specialty lenders.
Specialty lenders offer terms up to 84 months. Trucks over 10 years old with 700,000+ miles get harder to finance, though some lenders go up to 15 years.
Our contract rates run from 18% to 29.95%, with terms up to 42 months. Trucks from 2012 and newer can qualify for 48 months.
Those rates are higher because we approve credit profiles that banks turn down. We also finance trucks as far back as model year 2000.
First-time buyers with us typically put down 20% to 30%.
Rates shift with the market, so check current commercial truck financing rates before you sign. Your term matters just as much, since how long you finance a commercial truck changes your total interest.
Pros and Cons of Trucking Equipment Financing
Financing gets you working equipment without a huge cash outlay, but you pay interest and risk losing the truck.
Advantages of Financing
- Keeps working capital free: Your cash stays available for fuel, insurance, and repairs.
- Builds equity: Every payment brings you closer to owning the truck outright.
- Easier approval: The equipment secures the loan, so lenders take on less risk.
- Tax benefits: The tax code’s Section 179 lets you expense up to $2,560,000 of qualifying equipment in 2026 (IRS).
Property acquired after January 19, 2025, can also get 100% bonus depreciation.
With a loan, you can’t deduct the whole monthly payment. You deduct the interest and write off the truck through depreciation or Section 179.
The rules depend on your setup, so talk to a tax professional before you count on a deduction. Our list of truck driver tax deductions covers other write-offs owner-operators can claim.
Potential Challenges and Risks
- Interest adds up: Higher rates for weaker credit can add thousands to the total cost.
- Down payment: You’ll still need cash upfront.
- Depreciation: Trucks lose value, so you can end up owing more than the truck is worth.
- Personal guarantees: Many lenders make you personally responsible if the business can’t pay.
A personal guarantee puts your personal assets on the line, even if you’ve set up an LLC. An LLC can still protect you from business debts you haven’t guaranteed, so your trucking company’s business structure matters.
How to Apply for Trucking Equipment Financing
Getting your financial documents ready before you shop speeds up approval. Most lenders ask for the same basics:
- A completed credit application
- Your CDL
- Recent bank statements or tax returns
- A written quote or bill of sale for the equipment
- A spec sheet with the year, make, model, VIN, and mileage
- Proof of insurance
- Your LLC agreement or articles of incorporation (the filing that forms a corporation), if you have them
Some lenders also ask for business licenses or operating authority, like an MC number.
Final Thoughts
Trucking equipment financing lets you put a truck or trailer to work now and pay for it over time. Compare loans, leases, and SBA options on total cost, along with the monthly payment.
When you’ve found the right truck, start your credit application with Mission Financial.
Frequently Asked Questions
Is Collateral Required for Equipment Financing?
Yes, but the equipment you’re buying usually serves as the collateral. Some lenders ask for other business assets as extra collateral if your credit is weak.
What Is the Minimum Credit Score to Buy a Semi Truck?
It depends on the lender. Banks usually want a score above 700, while Mission Financial Services has approved scores as low as 460.
Can Startups Get Trucking Equipment Financing?
Yes. Many lenders work with a new trucking company, though you’ll likely need a bigger down payment. Mission Financial Services’ first-time buyer loans are built for new owner-operators.