Financing Trucks and Trailers
Loans, leases, and lease-purchase programs all put you in a truck. They do not all leave you owning one.
The truck is the business. Get the financing right and the payment fits your cost per mile with room to spare. Get it wrong and you can spend three years making payments on equipment you never own, or walk away with nothing after a single bad season.
Your main options
| Equipment loan | TRAC lease | Carrier lease-purchase | |
|---|---|---|---|
| Who owns it | You, with a lien | Lessor, until you buy out | Carrier or its affiliate |
| Payment size | Higher | Lower | Taken from settlements |
| End of term | Truck is yours | Pay residual, or settle the difference on sale | Balloon or buyout, if you finish |
| Main risk | Down payment and repairs | Residual vs. market value | Losing all equity if you leave |
An equipment loan is the plain path: the truck secures the loan and you own it outright at the end. A TRAC lease (terminal rental adjustment clause) sets a residual value up front, which lowers the monthly payment. At the end you can buy the truck for the residual, or it is sold; if the sale brings less than the residual, you pay the gap, and if more, you keep the difference.
Lease-purchase programs: read every page
In many carrier lease-purchase deals, payments, fuel, and escrow are deducted from your settlement, and the same carrier controls which loads you get. If freight slows or you leave, you may lose every payment you made. Before signing, ask for the total of all payments plus the buyout, compare it to the truck's market value, and have someone outside the carrier review the contract.
Down payment, new vs. used
Lenders often ask for a larger down payment on older trucks and from newer authorities, and they look at your credit, time in business, and bank statements. A used tractor with a lower price can be a smart first truck, but get an inspection, pull the ECM report, and price out the next big repair (a rebuild, aftertreatment work, or a set of tires) before you call it a bargain. A new truck costs more but comes with warranty coverage and better fuel economy.
Owner story
Luis compared a 2019 tractor with a $1,750 payment to a 2024 with a $2,900 payment. The older truck looked $1,150 a month cheaper. Then he priced in its likely repairs at roughly 4 cents a mile more than the newer truck, plus a fuel economy difference worth about 1.5 cents a mile, over 10,000 miles a month. The real gap shrank to about $600, and the newer truck came with warranty. He still chose the older truck to keep his debt smaller, but with his eyes open and a reserve in place.
Illustrative composite, not a real customer.
Build a maintenance reserve
- 1
Pick a per-mile number
Base it on your truck's age and shop history. Older trucks need more set aside.
- 2
Move it every settlement
Transfer miles times your rate into a separate account, the same day you get paid.
- 3
Spend it only on the truck
Repairs, tires, and major service come from the reserve, not from fuel money.
- 4
Revisit quarterly
If the reserve keeps running dry, your rate is too low or the truck is near the end of its life.
Section 179 and the tax angle
Section 179 lets many businesses deduct the cost of qualifying equipment, including trucks and trailers used more than half for business, in the year it is placed in service rather than over several years. Legislation in 2025 raised the limit, and for 2026 it is $2,560,000, phasing out once total equipment purchases pass $4,090,000. Bonus depreciation can work alongside it.
A big deduction is a timing decision
Expensing a $150,000 truck this year can wipe out your taxable income now, but it leaves no depreciation for future years, and selling the truck later can trigger depreciation recapture taxed as ordinary income. A tax pro can help you decide how much to take this year versus spread out, especially if you expect a stronger year ahead.
Whatever path you choose, make sure the payment and reserve fit inside your cost per mile, and read when to borrow before adding a second truck.
Quick check
At the end of a TRAC lease with a $40,000 residual, the truck sells for $33,000. What happens?
Words to know
- TRAC lease
- A vehicle lease with a preset residual value, where you settle any difference between that value and the sale price.
- Residual value
- The expected value of equipment at the end of a lease.
- Section 179
- A tax rule that lets businesses deduct qualifying equipment costs in the year it goes into service.
- Depreciation recapture
- Tax owed on the gain when you sell an asset you already deducted.
Finished reading?
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