Whether you’re starting your career in trucking or expanding your fleet, one thing is certain — trucks are a major investment! For many, the most practical and accessible way to purchase a semi-truck is through a commercial vehicle loan. However, it’s important to know that qualifying for semi-truck financing involves meeting specific requirements.
Let’s take a closer look at what you’ll need to secure the financing that fits your needs.
Commercial Driver’s License (CDL) License
First things first: a CDL is a prerequisite for operating a semi-truck. A Commercial Driver’s License (CDL) is essential for both driving and securing financing. Additionally, you will need some driving experience before applying. Most lenders will not approve a loan if you are unable to legally drive a commercial vehicle.
Before applying for semi-truck financing, make sure you have your CDL in hand. Not sure how to get started? Check out our blog for a step-by-step guide on how to get your license, including tips on training programs, testing requirements, and more.
Credit Score
Your credit score plays a key role in securing a commercial vehicle loan. Lenders use it to assess how you’ve managed credit in the past and how likely you are to repay that loan. One thing is simple: the better your credit score, the easier it will be to qualify for financing. But don’t worry, semi-truck financing depends on more than just a strong credit score.
If you’re unsure about your credit standing, read our blog to learn where you fall on the credit scale.
Down Payment
When applying for financing, most lenders will require a down payment. A down payment is typically a percentage of the truck’s purchase price. The exact amount often depends on your credit score.
For borrowers with strong credit, a down payment of at least 10 to 20 percent is typically expected. However, if you have little, no, or poor credit, lenders may require a down payment of 30% or more to lessen the additional risk.
Keep in mind that down payment requirements, loan terms, and rates vary based on your financial history as well as the specific truck you’re looking to purchase.
New or Used Semi-Truck
A lender will need details about the truck you plan to purchase because it serves as collateral for the loan. Approval often depends on the truck’s value being sufficient to secure the loan. To meet this requirement, you’ll need to provide information such as the truck’s model, age, mileage, and overall condition.
Choosing the right truck — whether new or used — comes with its own set of pros and cons:
Pros of New Trucks
- Warranties that cover major components
- Fewer repairs and lower maintenance costs
- Better fuel efficiency which can reduce costs
- Advanced technology, features, and amenities for enhanced comfort and safety
Pros of Used Trucks
- Budget friendly
- Slower depreciation, which means they retain their value over time
- Lower insurance premiums compared to new trucks
Make sure the truck meets both your operational needs and the lender’s requirements to secure the most favorable financing terms.
Financial History
A stable revenue stream significantly improves your chances of securing semi-truck financing. Lenders want to see consistent income, as it shows your ability to make regular loan payments. In addition to steady cash flow, having a diverse credit profile can also strengthen your application.
Different types of credit, such as installment loans — like a mortgage, car loan, or any regularly scheduled fixed payment — show lenders that you are able to manage multiple financial responsibilities. Together, a solid income and diverse credit history can enhance your eligibility and help you secure the financing you need for your truck.
Can’t Afford a Loan? Here’s What to Do
First and foremost: Save, save, save! Building a solid financial cushion is essential, especially for expenses like down payments and any unexpected costs that might pop up. Additionally, do what you can to improve your credit score. It can make a big difference in securing more favorable rates when financing in the future.
Need tips on financing with limited or no credit? We’ve got you covered with this blog.
Experience
And remember — experience matters! When it comes to financing, work with experts who know the industry inside and out.
Semi-trucks are a significant investment, but with the right financing, owning a Kenworth to start or grow your business is more achievable than you might think. Meeting the necessary financing requirements can simplify the process and expedite the loan approval. Take the time to explore your options — especially our extensive inventory of new and used trucks. Partnering with a dealership that cares about your success (like us!) will get you on the road faster and with confidence.
Call or visit our Coopersburg Kenworth and Liberty Kenworth of South Jersey dealerships to explore all financing options for your truck!