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Pros and cons of semi-truck fundraising

May 31, 2025 13 Min Read
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Pros and cons of semi-truck fundraising

Semi-truck fundraising can help ease startup costs as owner operators. And the good news is that if you’re a new business or a bad credit, semi-truck funding can be safer than other business loans. Online and direct lenders often ease eligibility requirements and make loans easier for drivers to access.

Semi-truck funding is easy to secure, but additional costs still apply, such as down payments and loan documents. Additionally, trucks are used as collateral to protect your loan. Before signing your documents, we recommend that you review the pros and cons of semi-truck loans to ensure that it is the right choice for your business.

Pros and cons of semi-truck loans

The advantages of semi-truck loans Cons of semi-truck loans
Fast funding High purchase cost
Tax benefits High interest and loans
Expand the cost of large purchases A down payment is required
Accessible by startups and poor credit borrowers You may use semi-trucks as collateral to support your loan

Semi-Truck Financing Professionals

Semi-truck financing not only reduces upfront costs, but also offers many other benefits to keep your business off the ground.

Fast funding

Semi-truck funding is a simple type of loan. You can easily view your lenders what you are using a loan and what contracts you need to provide payment income. It also uses the truck as collateral and gives lenders a safe reason to approve the loan.

A semi-truck loan can be approved in just a few days and can help you get on the road faster than other types of loans. Please note that if you are raising funds through traditional bank lenders, it may take a week. The exact time to get funds depends on the lender, type of loan, and the characteristics of the truck.

Tax benefits

If you are a self-employed driver, you can deduct the usual necessary expenses to come to your semi-truck at tax time. However, you cannot use standard mileage deductions for business vehicles, so you must calculate the exact vehicle costs.

Vehicle costs that can be claimed as a deduction include purchasing a truck. These purchases include insurance, fuel, repair work, parts, licensing and other fees.

If you are employed by a trucking company, your company will pay these vehicles costs. However, employees can deduct travel expenses when they are away from home, such as accommodation, meals, laundry costs.

Both requirements must be met to deduct travel expenses.

  1. Traveling away from home for longer than normal working days
  2. You need to stop and sleep to keep up with your work demands
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Keep a decent receipt and record to back up what you charge with your taxes, regardless of the costs you are charging.

Funded semi-truck tax benefits

If you fund a semi-truck, you can deduct an annual interest payment on your taxes. You can make this deduction every year for the lifetime of your loan.

The IRS also considers your funding vehicle as a business asset. This means you can claim depreciation even if you don’t own the truck entirely.

What is Section 179 of the IRS Tax Act?

When you claim depreciation for commercial equipment, you typically reduce some of the value of the equipment over the available living. However, using Section 179 allows you to deduct some or all costs of the equipment in the first year of use. This deduction encourages small and medium-sized businesses to invest in commercial equipment that grows their businesses. There is no need to take the full Section 179 deduction. Otherwise, you can depreciate the remaining value of the semi-truck against the lifelong taxes of the truck.

According to the IRS, from 2024 onwards, businesses can claim a maximum deduction of $1,220,000. If your total amount of property exceeds $3,050,000, you will need to reduce your tax deduction by just an excess amount.

For example, if you buy a fleet of trucks worth $3,100,000, you’re over the $3,050,000 limit of $50,000. The total tax credit for depreciation ranges from $1,220,000 to $50,000 = $1,170,000 (or $1.17 million).

Therefore, unless you purchase a fleet of semi-trucks, you can deduct the full cost of a truck owned or funded with tax.

Expand the cost of large purchases

Semi-trucks are an integral part of your job as a truck driver, but being responsible for the overall costs at once can be a real possibility or it can put a strain on your finances. Instead of paying $70,000 to $200,000 to buy a truck in full, semi-truck loans can help spread the cost of purchasing. Most semi-truck loans offer a one- to five-year terms. By spreading semi-truck purchases, you can make business costs more manageable and pay for your truck as you earn income. In other words, let the semi-truck pay themselves.

Lease Options: Is it a good idea to lease semi-trucks?

Leasing a semi-truck is a good idea if you don’t qualify for the loan or if you don’t have the opportunity to default on the loan if your contract goes sideways. Some leasing companies don’t need a down payment and most offer vehicle maintenance packages, which helps you get on the road for predictable monthly payments.

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It also matches a much newer truck than you can afford on a loan. Additionally, you can choose to purchase a truck at the end of your lease. However, you may pay by the end of the day rather than if you funded the truck.

Access to startups and bad credit borrowers

You fund your semi-truck through equipment loans, which are usually secured loans. A secured loan is less risky for lenders as it allows you to regain the loan by seizing the assets used as collateral.

You can secure loans using high-value semi-trucks, allowing you to earn semi-truck funding from a startup business or a lack of credit. Lenders tend to provide generosity when approving secure loans.

Cons of semi-truck fundraising

The main drawback of semi-truck financing is the various costs you incur during the life of your loan. Look at the expected costs you will pay.

High purchase cost

You pay it over time, but semi-trucks cost tens of thousands of dollars no matter what type of fund you choose.

For example, if you need a $100,000 business loan to fund a semi-truck for seven years with 6% interest, you’re considering paying an additional $22,712 with interest that exceeds the cost of the vehicle.

Before signing a semi-truck loan, use a business loan calculator to get ideas about monthly repayments and total interest. Knowing these costs in advance will help you manage your semi-truck loans and help you pay off your loans correctly.

High interest and loans

Most lenders offer low interest rates of 6% if they have a credit score over the 600s. However, if you are a poor credit or a first-time owner, you may see an interest rate of 30-100%.

Let’s take that interest into perspective. Funding a $100,000 semi-truck for seven years with 10% interest will result in you paying $39,450 in interest over the life of the loan. But compare it to a 30% interest rate that pays a hefty $140,181 interest over the course of the loan. This calculation shows why it is important for a business to find the lowest possible interest rate.

Plus, there are regular business loan fees to monitor. Some lenders may pay an origination fee of 2% to 5% of the loan amount. You can also apply for a loan and pay the fee to allow the truck.

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A down payment is required

When getting a semi-truck loan, you will likely need to cut it by 10-20%. Down payments reduce the risk of lenders’ funding and help them to be approved if they have subprime credits. But that means you need a large sum on hand before you can get your tracks.

Some lenders offer funding without down payments, such as US banks, but these lenders are rare, so you have to do your research.

Semi-trucks may be used as collateral

Semi-truck finance typically uses semi-truck as collateral to support loans. A secure loan can lead to lower fees, but that also means that the lender can seize the truck to pay off the loan by default.

You can opt for an unsecured term loan to prevent you from taking away your semi-truck right after your payment is missing. Securing this type of loan requires strong credit and finances.

How to determine if semi-truck funds are right for you

Comparing the pros and cons of semi-truck fundraising can help you avoid potentially expensive mistakes. Semi-truck funding is suitable for businesses that require you to purchase semi-trucks but do not have the capital available to buy them in cash. It also works well for companies that want to gain capital to manage their cash flow.

If you are eligible for half-interest rates and plan to maintain your vehicle in the long run, raising funds for a semi-truck might be a wise decision. However, if the cost of semi-truck funding does not fit your budget or you do not have a prepayment due to down payments and fees, you may need to use an alternative option.

Conclusion

Funding semi-trucks allows you to cover the costs of expensive assets without draining your financial resources before you get on the road. Still, any business loan will pay back interest and fees for purchasing a full truck. This is especially true if you have inadequate credit and do not qualify for the minimum fee.

Your best bet is to shop with different lenders to see what types of loans and qualify. If you’re financially good, try traditional banks for the lowest rates. Otherwise, we recommend working with an online or direct lender who specializes in the trucking industry. These lenders tend to provide tolerant eligibility requirements and help them to be approved.

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