What You Need To Know About Commercial Truck Loan Rates

Published September 24, 2020 by WC Team

What You Need To Know About Commercial Truck Loan Rates?

When you are about to finance your commercial truck, the most important thing you need to understand are the loan rates. The commercial truck loan rates greatly vary from lender to lender and depend on various other criteria. 

There are many lending options available to you, such as local and national banks, credit unions, dealer financing, and online lenders. That is a very crucial step when it comes to commercial truck loans. 

Make sure you read very closely about their terms and conditions before signing up for any lender. You can choose what suits your requirements and budget, according to the commercial truck loan rates that they offer.

Loan Rates And Terms Of Commercial Truck Financing

Below are the factors on which your down payment, terms of installments, and loan rates usually depend. 

Let’s take a look and understand the commercial truck loan rates better.

Commercial Truck Loan Interest Rates

To know the commercial truck loan rates, you have to apply for a truck loan. You can expect an interest rate of 5% to 6% if you have a reasonable and exceptional credit score report. If this is the other way round, meaning you have a poor credit score, you may find the loan rate between 7-30%. Sometimes, you have to make a huge down payment.  

If you are trying to find a bank to finance your commercial truck, they offer the rock bottom rates. Their rates usually start at 5%. If you are a professionally qualified borrower with exceptional years of experience, alternative and equipment lenders provide you with a rate of around 8%. 

In case you have got a poor credit score, it will become difficult for you to qualify. The loan rates may go three times higher. 

In many cases, you can repay the whole loan together towards the end of your repayment term. Commercial truck loans have, in most of the situation, fixed terms and interest rates. The repayment period, depending on the loan provider, may also last up to 10 years.

Leasing Or Buying Your Commercial Truck 

Commercial truck loan rates significantly differ depending on your choice, whether you buy or lease the truck. 

In case your truck is on the lease, you don't have to worry about the interest rates. You just have to pay a minimal fee, which may vary from semi-truck to smaller trucks. You would find the fee even lower in some situations than you would pay for a financed truck. The repayment period for lease is between 3 to 5 years.  

Higher payments and extension in the repayment period may occur when you buy the truck. Once you have paid the debt, you are the successful owner of the truck.

Know Everything About Your Credit Score

Your credit score plays a crucial role in determining commercial truck loan rates and terms. A higher credit score lowers interest rates and vice versa. The lender will undoubtedly approve your loan if you have an exceptional credit score of 750. You are equipped with the lowest loan rates for your commercial truck  

Credit scores are calculated based on the subsequent points.

  • Information about credit- credit card balances, outstanding loans, bank accounts, payment histories, etc.
  • Your personal history- date of birth, legal name, history of previous employments, social security number, etc.
  • Public Information- tax liens, bankruptcies, etc.

You need to make sure that your credit score is accurately and duly updated. Any discrepancy in the credit score may result in disqualifying your commercial truck loan, and you might have to agree with high-loan rates.  

A Few Questions To Ask Your Lender

After choosing the lender and taking all the factors under consideration, it is time for you to proceed with the application process. While every lender has its terms and conditions, you should not be laid back from asking important questions.

Make sure you keep the following questions in mind when you meet your commercial truck loan lender.

What Is The Duration Of The Borrowing Period?

With longer terms come the minimum monthly payments that will offer you enough time and space to manage your loan and funds. However, you have to pay more interest in longer terms. 

According to your deposit as a down payment for new trucks, the term period is usually five years. The term may extend up to three years for any used truck as they hold very low inherent collateral value.  

What Would Be The Commercial Truck Loan Rate?

That is very obvious, but the crucial question to ask as this has a considerable impact on the total amount of loans. You should know whether the loan rates are variable or fixed.

How Do They Calculate The Commercial Truck Loan Rates?

You need to make sure whether they use the Rule of 78 or simple interest to calculate your commercial truck loan rates. With the Rule of 78, you have to pay a larger sum in the beginning. You must go with a simple interest in the calculation of your loan rates.

How Much Down Payment Do You Need To Make To Qualify For Financing Your Commercial Truck?

The amount of down payment you make has a major impact on the terms of the loan as well as on the commercial truck loan rates.

Final Thoughts

Buying or leasing a truck is a complex task in itself. What is even more complicated is to know the commercial truck loan rates that suit you according to your financial position. Research all the lending options and their loan rates before finalizing your decision about the lender. 

Finally, do not forget to ask or understand their terms and conditions about loan rates. It is your duty as a responsible borrower to be clear on the points you find misleading.

Commercial truck loans help truck business owners and operators save money while maintaining and gaining credit scores. No matter if you have a single truck or many trucks, you must explore all your options for financing your commercial truck to get the best commercial truck loan rates.

Are you a business owner? Apply for financing. Start Now.

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