Truck Loan Calculator

Truck loan calculator with trade in to calculate the monthly payment and total costs of financing the purchase of a truck.

What is a truck loan?

A truck loan is a loan used to finance a business's purchase of a truck or other commercial vehicle.

How does a truck loan work?

Banks lend money to a business so that they can buy a truck, and the borrower agrees to repay the lender by installment payments with interest. A truck loan is a secured loan that uses the purchased truck as collateral. If the business fails to make payments, the lender has the right to seize the truck. The lender has a lien on the title of the truck until the loan is paid off. Most truck loans are fixed interest so borrowers will make the same monthly payments every month until the truck loan is paid in full.

How to apply for a truck loan?

As with any other loan, applying for a truck loan requires credit checks from lenders. To get the cheapest interest rate for a truck loan or any other commercial vehicle, you need a good credit score.

1. Credit Score Check

Check the credit report for your business. Review the credit score and know where you stand. If you just started your business, you don't have a business credit history yet, you can apply for business credit cards and improve your business credit score. If there are any errors, contact the relevant credit reporting agencies such as Experian, Equifax, and Dun & Bradstreet to fix them. The business credit score is separated from your personal credit score, but they work the same way. A good personal credit score gets you low-interest rates for personal loans and home mortgages, and a good business credit score helps your business get finance like equipment, truck, and commercial loans.

2. Compare Rates From Lenders

After you have your credit report handy, the next step is to shop around and compare the quotes from different lenders. Traditional lenders like local and regional banks offer truck loans with competitive interest rates. Online lenders are also available to finance truck loans. They are usually quicker and require less documentation than traditional lenders. Truck dealers often work with financing companies that offer truck loans. Getting a truck loan through the dealership is the most convenient way to fund the purchase of a truck, but they don't necessarily offer you the best interest rate. One way to get the best interest rate is to get quotes from online lenders and ask traditional banks to see if they can beat it. Then after you set a deal with your truck dealer, ask them if they can beat your current interest. If they do, go with the dealer financing. If not, stick with your traditional or online lender.

How to qualify for a truck loan?

There are a few things you need to apply for a truck loan, credit score, down payment, proof of income, and time in business.

1. Down Payment

Most lenders require a down payment of 10%-20%. You may get away with a lower down payment if you have other assets that you can put up as collateral. If not, some lenders may still approve your loan but will come with a much higher interest.

2. Collateral

The truck or the business vehicle will be used as collateral. If you stop making payments before the loan is paid in full, your truck will be seized by the lender as they have a lien on the vehicle.

3. Proof of Income

You will need to provide 3 years of financial statements and tax returns as proof that your business has the financial means to repay the truck loan. Lenders may also ask for your personal financial and bank statements. You will also be required to show a commercial driver's license to prove that you or someone in your company can drive a truck.

4. Time in Business

New businesses will have a harder time getting a truck loan as they are viewed as riskier by the lender. Most new businesses fail in the first 2-5 years, so you can't blame the lender. As your business survives and thrives after the initial years, you will have an easier time getting approved for a truck loan.

Truck Loan FAQs

How can I get a truck loan?

You can get a truck loan from traditional lenders like banks, online lenders, or truck dealerships. Traditional banks offer the most competitive rates but may be slow in the approval process and may require more documents. If you are not in a rush and have good credit, go for traditional lenders.

Can I get a 0 down payment on a truck loan?

It is possible to get a 0 down truck loan if you have a good credit score and other assets as collateral. However, a 0 down truck loan is not recommended because the interest rate may be sky-high and the overall costs for the truck loan will be much higher than if you were to put a down payment of 10% to 20%.

What is a typical loan term for a truck?

Truck loan terms usually range from 36 to 72 months depending on the lender and the borrower.

Can I pay off a truck loan early?

Yes, you can pay off a truck loan earlier, but check with your lender to see if there are any prepayment penalties. Preferably, you should have checked that before signing the final contract for the truck loan.

What is the best way to finance a truck?

Getting a truck loan with a low-interest rate from the banks is the best way to finance a truck if you don't mind the longer loan process. Getting a loan from truck dealers is the fastest way to get approved for a truck loan, but the interest rates and the costs are usually higher.

How to lower my monthly truck loan payments?

• Compare Rates - you should compare interest rates from multiple lenders before you apply for a truck loan. Go with the lender that offers you the lowest interest rate which means low monthly payments.
  
  
• Buy a cheaper truck - buying an affordable truck will lower the loan size and the monthly payments.
  
  
• Larger down payment - save more money so that you can put down a larger down payment which reduces the size of your truck loan.
  
  
• Longer term - apply for a longer term which lowers your monthly payments but your overall costs for the loan increase.
  
  
• Improve credit score - a good credit score qualifies you with the best interest rate from any lender which results in a lower monthly payment.
  
  
• Refinance your truck loan - if your credit score has improved after you got the truck loan, you may be able to refinance your loan and lower your monthly payments and save money in interest payments.