What are the semi-truck financing requirements? We get asked this question every day. (Makes sense, we’re a semi-truck financing company). We’ve put together this article about semi-truck financing to answer the top 10 semi-truck financing frequently asked questions and you’ve been probably wondering about.

1. What Are The Semi-truck Financing Requirements?
2. What Credit Score Do You Need To Buy a Semi-truck?
3. No Credit Check Semi-truck Financing?
4. How Can I Finance a Semi-truck With Bad Credit?
5. Do I Need A CDL To Purchase A Semi-truck?
6. How Much is a New Semi-truck?
7. How Much is a Used Semi-truck?
8. What Type of Insurance Do I Need For a Semi-truck?
9. What is Section 179?
10. In-house Semi-truck Financing – Good Or Bad?

What Are Semi-truck Financing Requirements?

When it comes to semi truck financing, the semi-truck you decide to purchase becomes the collateral, which helps to limit the lender’s risk on the truck lease or loan. By reducing the risk you’re more likely to be qualified for truck financing.

Several factors will determine your semi-truck financing terms, interest rate, and down payment. Here’s a list of all the truck financing requirements and factors that determine your eligibility and semi-truck requirements.

Factors That Determine Eligibility

• Credit Score – 600 or Above for the Best Semi-Truck Financing Rates.
• Time in Business with a CDL License – 3+ Years Preferred (But We Can Finance Start-ups Too!)
• Down Payment Amount – How Much Can You Afford to Put Down on Your Truck.

Semi-truck Requirements

When shopping for your new 18-wheeler you need to keep in mind some requirements the lenders have. 

• Make, Model, Year (Less than 10+ years)
• Mileage (Less than 700k)
• The truck needs to be for your intended use.
• Condition Report
• Any past major repairs.
• Preferably sold by a semi-truck dealer. (We can finance private party)
• Serial Number of the truck.
• Is the semi-truck new or used
• Minimum of 3 pictures

Lenders want to make sure the semi-truck you’re trying to buy is a good investment for you and will last the duration of the financing term. Also, the truck is the collateral for the financing. 

What Credit Score Do You Need To Buy A Semi-truck?

When it comes to buying a big rig, credit can play a big role. When looking for a semi-truck financing, you need to keep your credit health in mind. A lot of truckers actually harm their credit by applying haphazardly to any and every company that promises they can get them the truck of their dreams.

Click the link if you want to read our in-depth Semi-Truck Financing guide. Being knowledgeable about the process and what it means in terms of credit will help you make the best choices.

Breakdown of FICO Score Ranges

Statistically speaking, most people’s credit scores fall between the range of 600 to 720. We did some analysis of the funded deals we did in 2019, the majority of clients that got approved for semi-truck financing had an average FICO of 667 or higher. 

It goes without saying, the better the score the better the terms. But, it is possible to get approved with a lower credit score. You have to consider that your monthly truck payment is a business expense. And without having trucks on the road you can’t get paid. 

• 300-579: A score in this range is considered Very Poor. Credit applicants with a score in this range will often be required to pay larger fees and deposits, or sometimes may not be approved for credit at all. 16% of people have a score in this range.
• 580-669: Scores between the 580 mark to the higher 600s are called Fair credit scores. Often, people with scores in this range will be referred to as subprime borrowers. A total of 17% of people have a credit score in this range.
• 670-739: This range is referred to as Good. Individuals with scores this high have a much lower rate of default. Statistically, about 8% of applicants with a Good range credit score will become seriously delinquent. Around 21% of people have a score in this range.
• 740-799: People with scores in mid to top 700s are in the range of Very Good. Borrowers with scores in this range will receive better than average interest rates from banks and lenders. 25% of people have a score in this range.
• 800-850: The top of the scale is considered an Exceptional credit score. Individuals with a credit score above 800 receive the best rates from lenders. Around 21% of people have scores between 800-850.

No Credit Check Semi-truck Financing?

The phrase “no credit check semi-truck financing” sounds like a dream come true for some people looking for a new truck. What it means is an individual was able to get financing for their truck purchase without having the lender looking into their borrowing history. The big question here is… Does no credit check semi-truck financing even exist?

Frankly, finding any reputable lending sources that have no credit check semi-truck financing programs are pretty difficult to come by. If a lender does offer a program like that, you should proceed with a bit of caution as this is outside the norms of the lending world.

The reason most banks and credit grantors want to see your credit is that they want to know if you’ll pay them back as promised. Your credit score and credit report are the fast and dirty way for lenders to see what types of risks you present them and their funds. Companies that forgo any type of credit check will possibly be looking to charge you with high-interest rates and large down payments to secure the money. 

Lucky for you, we have written an in-depth guide to aid you in your search for this type of program. If you want to brush up on your credit knowledge before checking out the ins and outs of semi truck financing with no credit checks, head on over to read The Trucker’s Guide to Understanding Credit.

How Can I Finance a Semi-truck With Bad Credit?

What is bad credit? We get asked this question all the time. To some bad credit might be a 550 credit score and to others, “bad credit” might be a 650 credit score. Some lenders may be fine with a 550 credit score if you have enough time in business, tradelines, ample down payment.

Just like any other financing program, you apply for, getting approved for semi-truck financing is dependant on your credit score, and a few other factors that will determine your eligibility. 

Before you apply for semi-truck financing, you can fill out our quote form (no hard inquiries) or give us a call (866) 627-6644 and one of our semi-truck financing specialists can go over the process and see if you’re pre-qualified.

What Affects Your Credit Score?

• Payment history – This shows if you’ve made your payments on time or at all.
• Credit utilization rate – How much of your credit you are using on your credit cards.
• Type, amount, and age of credit accounts – Lenders do want to see diversity on your credit report. Having a good mix of credit cards, a car loan, maybe a mortgage on their helps your score.
• Total Debt Owed – This is the amount you owe in loans and how much is on your cards.
• Bankruptcies, Child Support Due, Public Records – Filing for bankruptcy or having a large amount of delinquent child support will hurt your score.
• New Credit Accounts – Opening a lot of accounts in a short period of time can hurt your score. If you have gotten too many loans or credit cards in a 2-year period, it can ding you.
• Hard Inquiries – The number of times a lender has requested your credit information will affect your score. These searches stay on your report for 2 years.

Learn More About Credit And How It Affects Semi-truck Financing. – The Truckers Guide To Understanding Credit

Do I Need A CDL To Purchase A Semi-truck?

The short answer is no, you can buy a semi-truck without a CDL. The person paying for the semi-truck and the person driving the vehicle can be two different people. Let us assume you want to start a business with your brother, a trucking partnership. You will operate all of the behind the scenes work such as accounting, and your brother will be the one behind the wheel. You can be the one to purchase and own the Semi-Truck, while your brother, who has a CDL, can do the driving.

Essentially, it doesn’t matter who does the financing so long as the person with the CDL does the driving for the business. If you want to get into the business for yourself and do not have a CDL, however, there is no company that will rationally finance someone with no means of extracting value from the investment.

How Much is a New Semi-truck?

That depends (prepare to hear that answer a lot in this article!). There are various brands of semi-trucks that all run basically the same price in an attempt to stay competitive, but different big rigs have different features that impact the final price. These include features such as:

• Engine specifications (horsepower, torque, fuel efficiency, etc.)
• Fuel capacity in gallons
• Day cab or sleeper, and, if sleeper, the size of the sleeper section of the truck.

In any case, the cost of a new Semi-Truck can run anywhere from $100,000 to $200,000. When you buy a new vehicle, semi-truck or otherwise, it automatically depreciates in value by about 9%. Which can be used as a tax deduction!

How Much is a Used Semi-truck?

Depends. The single greatest determining factor of a used big rig will be the mileage: how many miles have the engine and the chassis traveled?

More so than with a new semi-truck, you will need to do your research on a semi-truck’s history to determine whether you are getting a good deal or a raw one. A low priced truck might seem like a good investment, but if you have to spend money getting replacement parts every few months, was it really worth the savings on the initial purchase? Typically a nice used semi-truck is starting at $40k up to $80k+ depending on the make, model, mileage, and condition.

Check out these truck listing sites for more details and inventory

• Commercial Truck Trader
• Truck Paper
• My Little Salesman
• Trucker to Trucker

What Insurance Do I Need For a Semi-Truck?

Before you get semi-truck financing, you will need semi-truck insurance. There are many types of insurance you may need, and what you need depends entirely on what you need covered. Insurance types include:

• General liability
• Primary liability
• Non-trucking liability
• Bobtail
• Physical damage
• Motor truck cargo
• Worker’s compensation

If you want to learn more, check out our article on commercial truck insurance.

Insurance Cost Estimates

Your business is probably your largest asset, and not having the proper insurance for your trucking when an accident happens can cause financial ruin. Insurance is like anything else you buy. You get what you pay for. You want to make sure you use a reputable carrier and or broker.

• General Liability (GL) – Typical coverage limit of $1 million with an estimated annual premium of $750 to $7,000
• Primary Liability Insurance – Minimum interstate trucker coverage limit of $750k  with an estimated annual premium of $2,500 to $4,000 per truck
• Non-Trucking Liability – Typical coverage limit of $250k with an estimated annual premium of $450 to $5,000 per truck
• Bobtail Insurance – Typical coverage limit of $1 million with an estimated annual premium of $350 to $450
• Physical Damage Insurance – Stated or the actual value of the truck with an estimated annual premium of $2.5% to 5% of the truck’s value.
• Motor Truck Cargo Insurance – Typical coverage limit of $5,000 with an estimated annual premium of $500 to $1,000

If you’re a fleet owner and have employees and or multiple drivers you need to have a strong insurance portfolio. Having a good insurance broker can help you get the correct coverages and bundle discounts for your business insurance.

What is Section 179?

Section 179 allows knowledgeable business owners to write-off their depreciable assets as an expense instead, effectively getting a discount on the truck equal to their tax rate percentages.

Say you are the owner of a truck driving business that will owe the US government $100,000 in 2020, and your marginal tax rate is 35%. If you purchase a $150,000 new truck and use Section 179 to write it off as an expense, you will lower your tax liability by $52,500, meaning you will owe the US government only $47,500. This tax reduction effectively makes the cost of purchase for the new truck $97,500.

For more information, check out our article on Section 179.

What Is Form 4562?

Form 4562 is the IRS form to declare depreciation and amortization. It is also where you use Section 179 to deduct assets as an expense immediately. When filling out Form 4562, you will want to work backward: Part I, the part relating to Section 179, requires you to finish Part V first.

Want to check out Form 4562 for yourself? Here is a link to the PDF.

In-house Semi-truck Financing – Good or Bad?

Is in-house semi-truck financing a good or bad thing, that is the question? It all depends on the dealerships finance and insurance department. Unfortunately many F&I departments shotgun your credit application to dozens of lenders and you get hammered with hard inquiries that have a negative impact on your personal credit score. 

Perhaps you’re not ashamed of your credit but rather, you don’t want any pesky hard inquiries on your report. Hard inquiries can ding your score up to 10 points! At the same time, the damage can last a long time.

This does not mean shopping around is impossible though. There are semi truck financing companies who can get you your terms and rates with a simple soft credit inquiry (these are the ones that don’t show up on your report). So, where are these companies?

Right here! Not to self-promote too much… but TopMark Funding can get you pre-approved with a simple soft inquiry. This way, you can get your rates and terms with no ding to your score and zero commitment from you. If you don’t like what we offer, you can simply say no thanks and continue on your search for semi-truck financing or leasing program that works for you.

Bottom Line

Financing a semi-truck, whether new or simply new-to-you, has a variety of different facets that need examination. Credit score, the truck brand and model purchased, the insurance required, knowledge as to who is driving the commercial vehicle, and more all impact the process.

Fortunately for you, TopMark Funding is here to help you with a plan to help you get commercial truck financing every step of the way.