Commercial vehicle loans

What is a commercial vehicle loan?

It is equipment financing for vehicles. The lender pays the dealer or seller, holds the title or a lien until you finish paying, and you make fixed monthly payments. Banks, credit unions, manufacturer finance arms and specialist transportation lenders all offer them, with rates that vary more by lender type than by vehicle.

Vehicles are easy collateral because they have a liquid resale market, which is why approval is simpler than for an unsecured loan. The flip side is that lenders are strict about age and mileage: most will not finance a truck over 10 to 12 years old or with very high mileage, and terms shorten as the vehicle ages. Leasing is the alternative for vehicles you will replace often.

Who qualifies for a commercial vehicle loan?

Established businesses with a year or more of history, owner credit of 600 or higher and steady revenue are approved by most lenders, often with no money down. Banks want two years and 680 credit for their best rates. New owner operators are a separate category: specialist lenders approve them with 10% to 25% down, 650 credit, a commercial driver's license and some driving history.

• Declined most often: credit under 600 with no down payment, a prior vehicle repossession, vehicles too old or high mileage for the lender's policy, and owner operators without a contract or carrier agreement.
• Trucking has its own rules on authority and insurance; see trucking financing.

What does a commercial vehicle loan really cost?

A typical example: you buy a $120,000 truck with 10% down, so you borrow $108,000 over five years at 9%. The payment is about $2,240 a month and total interest about $26,500. A new operator at 18% pays about $2,740 a month and roughly $56,500 in interest on the same truck, which is why a larger down payment and a year of history matter.

Add a documentation fee of $200 to $500, title and registration, and the lender's insurance requirements, which usually mean full coverage with the lender named. Dealers sometimes mark up the rate; ask what the lender's buy rate is. Run the numbers in the business loan calculator.

How do you qualify, and what documents do you need?

For loans under about $150,000, most lenders run application only: the dealer quote or bill of sale with the vehicle identification number, your formation documents, an ID, a driver's license, and three months of bank statements. Larger amounts and fleets add two years of tax returns and interim financials. Owner operators add their commercial driver's license, driving record, and any carrier agreement or contract.

Our document checklist covers the standard items. Get a quote with the exact vehicle, mileage and price before you apply; lenders approve a specific truck, not a budget, and a vehicle swap after approval starts the process again.

How long does a commercial vehicle loan take?

Typically one to seven business days from application to the dealer being paid, and often same day approval for established businesses buying from a dealer. Private party sales take longer because the lender must verify the title and often inspect the vehicle. Fleet lines of credit at banks take two to four weeks to set up and then fund each vehicle in days.

If you are a new operator, apply before you shop. A preapproval tells you what price range and down payment you can manage and stops a dealer from steering you to its own expensive financing. See how long business loans take.

When should you choose something else?

Choose equipment leasing if you replace vehicles every three to four years or want lower payments; a fair market value lease on a delivery van can cost less per month than a loan, though you build no equity. Choose an SBA 7(a) loan if the vehicles are part of a larger startup or expansion budget that also needs working capital.

Do not finance a vehicle on a term longer than its working life. A seven year loan on a high mileage used truck means payments after the truck is gone.

How do you apply for a commercial vehicle loan?

Apply once on this site with the vehicle quote and your application reaches banks, specialist transportation lenders and leasing companies that fit your business and the vehicle type, so you can compare a loan against a lease before you commit to a dealer. It is free for your business, and we are paid the same whichever lender you choose. Or ask your AI assistant to apply through our MCP server: it reads the quote and your statements, fills the application and submits it.