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Equipment financing is aimed at businesses and helps them purchase or lease the tools, machinery and work vehicles they need to keep business flowing smoothly. 

Although some smaller trucks can be financed with a common car loan, larger ones, such as class 6, 7, and 8 vehicles can technically qualify as heavy business equipment, and can, therefore, be financed using different methods, in this case, an equipment loan.

Applying For A Secured Loan 

Although terms and conditions may vary from lender to lender, you would normally have to apply for what’s known as a “secured” loan, wherein collateral is necessary in order to be approved. Here, the equipment itself would act as the collateral and your lender would retain its title until you’ve fully paid off your loan, including any interest and fees. 

If all goes well when you apply, a lump sum of liquid money will usually be deposited directly into your business bank account. You would then use said money to purchase or lease whatever truck(s) you want, then repay what you’ve borrowed through divided installments, often over several years. Certain lenders may also offer the option to transfer the capital directly to whoever is selling the truck.

What Are The Benefits and Drawbacks Of An Equipment Loan?

Equipment loans can be helpful in many ways, especially if you’re looking to finance something as expensive as one or more trucks. Nevertheless, it’s extremely important to consider all the benefits and drawbacks of this type of financing before you start applying since they can affect the health of your business.


  • Affordability – An equipment loan can be easier on your savings since you won’t have to shell out thousands of dollars right away and can instead separate your payments over multiple months. As long as you’re a strong candidate, you shouldn’t have a problem qualifying a loan term that suits your financial needs.
  • More Financing, Better Equipment – No matter what kind of business you’re running, you probably have tons of other expenses to factor into your budget, leaving you with a lack of funds. Luckily, an equipment loan can help you lease or purchase items that were once unaffordable, such as the latest truck models.
  • Less Time Wasted – Of course, one of the best things about an equipment loan is that you won’t have to compromise when it comes to your immediate business budget. No need to scramble to find the appropriate funds, just purchase or lease your truck right away and deal with your loan payments as they arrive.


  • Significant Risk – Most equipment loans are secured against the tool, machine, or vehicle you’re financing. Until you’ve repaid your debt, your lender can seize the asset if you miss too many payments. This can definitely hinder your business, cost you a lot in penalties, and ruin your business’s creditworthiness.
  • Potentially High Costs – Depending on where you apply, how much you want to borrow, and what your payment plan looks like, an equipment loan can cost a lot of money over time. Interest rates and fees can also skyrocket if your business has bad credit, a low monthly/yearly revenue, or existing debt problems
  • Value Depreciation – If you purchase the equipment, rather than lease it, you may end up paying more for your loan than the item is actually worth. This is a particular problem with trucks and other vehicles, which can quickly become outdated and decrease in value, especially if they’re being driven regularly.

Tips For Securing A Truck Equipment Loan

Remember, equipment loans come in all shapes, sizes, and costs. Make sure to shop around, do research, and compare lenders so you can find the most cost-effective source of financing for your business. You should also check online to see Canada’s top truck models or, if necessary, to locate second-hand vehicles in your area.

Generally, however, there are a few ways you can qualify for a sizeable truck equipment loan with a decent interest rate and repayment plan, including but not limited to:

  • Make a Higher Down Payment – When it comes to vehicle-based loans, your down payment plays a significant role in determining your approval odds, term, and rate. The more money you put down, the better your loan conditions will be.
  • Find a Cosigner – If you can’t get approved by yourself, someone with stronger finances and a Commercial Driver’s License may be able to cosign your application and agree to take over your loan payments if you can’t afford them. 
  • Improve Your Credit Score – Your business credit score can also play a major role in your approval chances and loan costs. Improving it will make you more eligible for better conditions and help you build a rapport with your lender. 
  • Choose a Bad Credit Lender – If your credit is preventing you from getting a truck, it may be best to apply with a bad credit lender. Although rates and fees may be higher, you can still make good payments to slowly improve your credit.
  • Negotiate With Your Truck Dealer – If your bank or other lender turns you down, look for a truck dealership that offers good in-house financing options and rates. They may be open to a bit of negotiation when other sources of financing won’t. 
  • Get Pre-Approved – The easiest way to know if you’ll actually qualify for a truck equipment loan is to get a pre-approval from your lender, dealer, or manufacturer. Doing this can also give you a basic idea of how much your loan will cost.

Truck Equipment Loans - FAQs

Can I get a truck equipment loan with bad credit?

Yes. If you have bad business credit and need a truck equipment loan, don’t panic. As mentioned, there are plenty of lenders, dealerships, and manufacturers in Canada that will offer you financing no matter what your credit looks like. Just remember that these bad credit lenders may offer smaller, more expensive loans than the average bank.  For the best chances of securing a favourable bad credit equipment loan and affordable interest rate, be sure to maintain a solid business income, offer good collateral, and make the largest down payment you can afford. 

Where can I get a truck equipment loan?

Prior to applying with any lender, check out their policies to know if you’re eligible. This way, you can avoid any unnecessary applications or hard inquiries on your business credit report. Otherwise, truck equipment loans can be found at the following sources:
  • Banks & Credit Unions – While not every traditional financial institution offers equipment loans specifically, many are now starting to branch out when it comes to their business lending practices. Here, rates and repayment terms might even be a bit more reasonable. However, qualifying will almost certainly be harder. 
  • Online & Alternative Lenders – Although rates and fees might be slightly higher with privately owned lending companies, qualifying is often much easier. For instance, your business credit may be less of an issue. Instead, your revenue and available security will become more important during the approval process. 
  • Manufacturers & Dealerships – You may also be able to apply for in-house financing directly through the truck manufacturer or dealership. Not only will this save you the trouble of applying with a normal lender, but you might also even be able to negotiate a better deal, obtain last year’s models, or finance a fleet of trucks. 

How much of a down payment do I have to make for an equipment loan?

While you may be able to qualify for a truck equipment loan without a down payment, the results will definitely be better if you can afford one. In fact, it’s recommended that you save up at least 10% of the truck’s final cost as a down payment and upward of 20% if you really want the best chances of approval for a favourable loan with good conditions. Offering a large down payment won’t just help you reduce your total debt payments, it will show your lender that you’re a serious client and hopefully help you build a solid relationship with them so you can get good deals on trucks for years to come.

Looking To Purchase A Truck?

Whether you’re expanding your business, delivering cargo, or hauling building materials to a construction site, a reliable truck can be a major benefit to your operation and so can the Loans Canada network. If you’re in the market to purchase a truck, we can help find you the best financing. 

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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