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Financing Options for Building Your Tow Truck Fleet

Posted On: January 27, 2023 author Paul Kendall

Trucking is a huge part of the American economy, 


And tow trucks play a vital role in keeping it moving. But with the high cost of new tow trucks it is painful for tow truck companies if they need 2-4 trucks at a time it will be very difficult. But a Tow Truck financing option is available here, 

How can you finance a fleet? 

There are a few options available to help you finance your tow truck fleet. You can do a tow truck loan, lease your trucks, or purchase them outright. Each option has its own advantages and disadvantages, so it’s important to weigh your options carefully before making a decision. 

In this blog post, we will explore how to finance a tow truck fleet. We will discuss the different financing options available and offer some advice on which one may be right for you.

The Cost of a Tow Truck Fleet


Building a tow truck fleet can be a significant investment, but it can also be a profitable one. The cost of a 2-4 tow truck fleet can vary depending on the type of trucks you choose, as well as any additional equipment or features you may need. On average, a new tow truck fleet can cost anywhere from $100,000 to $500,000. Depending on how many trucks you buy at one time and if they're new or used tow trucks. This cost includes the purchase price of the trucks themselves, as well as any additional equipment such as winches, lighting, or storage compartments. Also budget in any necessary maintenance or repairs that may be required in the first few years of operation. 

While this cost can seem daunting, there are financing options available to help make the investment more manageable. One option is to take out a loan from a bank or a tow truck financing company. Banks and credit unions often offer special financing options for commercial vehicles such as tow trucks. But this is a very long and time consuming procedure and time is very valuable and banks require money down. 

Another option is leasing the tow trucks instead of buying them outright. Tow truck Leasing gives you terms of two to five years. You can set your lease agreement up with a $1 buyout so you own it at the end and depreciate the truck over its useful life or utilize section 179 to excellerate the depreciation the first year. A FMV buy out so you can return it at the end and get a lower payment and write off all the principal and interest on the lease. A TRAC lease with a ten to twenty percent balloon payment at the end to have lower payments. A Term residual lease so you can return it early or make the remaining payments and own it at the end of the preselected term. This allows you to write off all of your payments as well.

Another significant cost associated with a tow truck fleet is insurance. Tow truck insurance rates can be high, due to the inherent risks associated with the business. If you are financing your tow trucks, you will need to factor in the cost of insurance into your budget.

Fuel costs are also a major expense for a tow truck fleet. Gas prices fluctuate, but you can expect to spend several thousand dollars per month on fuel for your fleet. This cost will need to be factored into your budget as well.

Finally, you will also need to factor in the cost of maintenance and repairs for your tow trucks. Tow trucks are subject to a lot of wear and tear, and they require regular maintenance and repairs to keep them running properly. This cost can also add up quickly, so it is important to factor it into your budget when you are financing your fleet.

Before you make a decision on financing, it is important to consider all of your options and speak with a tow truck financing advisor. They can help you determine which tow truck financing option is best for your business and help you navigate the process. It is also important to have a clear understanding of the costs associated with operating a tow truck fleet, such as fuel, insurance, and maintenance, to ensure that your business can sustain the investment over the long term.

Financing Options for a Tow Truck Fleet


There are many financing options available to those looking to finance a tow truck fleet. A few tow ruck financing options could be to take out a loan from a bank, a personal loan, a home equity line of credit, but it's possible when you have a good credit score otherwise it's not possible. Another option is to lease the trucks from a truck dealership or manufacturer. There are also many equipment financing companies like Trust Capital that offer financing for tow truck fleets.

One of the most important things to consider when choosing a financing option is the interest rate. The interest rate will have a big impact on the monthly payments and the total cost of the loan. There are a couple of ways to finance a tow truck, such as keeping payments low and making one final, large payment at the end, which is called a TRAC Lease. Or you can keep steady payments and only have to pay a single $1 at the end. If you are looking to finance a tow truck fleet, there are a few things you need to consider. The interest rate is one of the most important. The interest rate will have a big impact on the monthly payments and the overall cost of the fleet. 

Here is a list of some of the most common interest rates for tow truck financing:

  1. Fixed-rate financing: A fixed-rate loan will have the same interest rate throughout the term of the loan. This is good if you know how long you plan on keeping the fleet and want to lock in an interest rate.
  2. Variable-rate loans: A variable-rate loan has an adjustable interest rate, which means it can change over time. This can be good if you don't know how long you will keep the fleet or if market conditions change and affect borrowing costs.
  3. Balloon-payment loans: If you take out a loan for a fixed amount of money with a set number of years left on it, your tow truck lender may offer a balloon payment option called a TRAC Lease. 


Another thing to consider when financing a tow truck fleet is the term of the loan. The term is the length of time that the loan will be in effect. Longer the term you select the smaller the payments. Shorter the term you select the larger the payments as you will be paying off the truck lease quicker overall you’ll end up paying less with shorter lease well there many considerations be sure that you select an option where you can afford we also suggest you choose a truck model and year that you feel best for you and your driving preferences. You can request a declining payment structure so you pay more principle in the beginning of your loan, this method will decrease your total out of pocket. You can request quarterly payments, but when you do this make sure you understand interim rent on the agreement and don't get charged extra time on your loan. You can also request deferred payments up to 6 months so your payments don't begin right away but this will increase your total out of pocket cost. 

Once you have chosen a tow truck financing option, it is important to make sure that you get all of the paperwork in order. This includes getting insurance for your fleet, as well as making sure that all of your drivers are properly licensed and insured. Getting everything in order before you start operating your fleet will help avoid any problems down the road.

Credit Requirements for Financing Tow Truck Fleet:

When it comes to financing tow truck Fleet, there are a few things you need to know in order to make sure you get the best possible deal. First and foremost, your credit score and credit history is going to be a major factor in determining what kind of interest rate you qualify for. The higher your credit score, the lower your interest rate will be. The other factor besides your credit score is to make sure you have installment pay history over of at least fifty percent of the requested loan amount and five open trade lines reporting on your credit history. This is important because it can save you a significant amount of money over the life of the loan. But if you have a bad credit score no worry about it because you’re able to get finance but might be your interest rate will be higher. The better off you'll be. Other Lenders like to see a down payment because it shows them that you're serious about making your payments and that you have some skin in the game but top companies like Trust Capital don’t require down payment and have competitive offers. Finally, when you're looking for a tow truck finance, make sure to shop around and compare rates from different lenders. You might be surprised at how much difference there can be from one lender to another. By taking the time to do your research, you can ensure that you're getting the best possible deal on your loan.

Following Credit requirements are important for getting a tow truck fleet up to $350,000

  • Personal guarantees required from all owners.
  • Minimum 650+ credit score. 
  • Business license or active business entity with the secretary of state. 
  • No bankruptcies in the last 7 years. 
  • Tax liens must be resolved.
  • Installment debt history of half of the loan amount requested.


Should you want more than $350,000 You might be asked for tax returns, bank statements and business financials.


How to Get the Best Financing Deal for a Tow Truck Fleet


When it comes to financing a tow truck fleet, It is important to make sure that the credit requirements of the financing companies meet with the type of credit you've built over the years and compare different tow truck financing options to find the best deal for your business. One way to do this is to work with a financing specialist who understands the tow trucking industry, and can help you find tow truck financing options that are tailored to your specific needs. 

Here are a few other tips on how to get the best financing deal for your fleet:

Know the value of your trucks: Knowing the fair market value of your trucks will help you negotiate better terms and interest rates, as well as giving you an idea of how much you should budget for financing. 

Compare different types of financing: There are various financing options available for tow truck fleets such as traditional bank loans, equipment financing, and leasing. Understand the pros and cons of each option and compare them to find which one is best for your business.

Look for flexible terms: Finding tow truck fleet financing options with flexible terms, such as adjustable interest rates or seasonal payments, can make it easier for your business to manage cash flow and budget for the long-term.

Choose a reputable lender: Choosing a reputable lender is crucial in getting the best financing deal for your tow truck fleet. Look for a lender that is transparent, has a great reputation and a proven track record such as Trust Capital.

By following these tips, you can ensure that you are getting the best financing deal for your tow truck fleet. Remember that financing is a tool to help your business grow, so make sure you make the best decision for your company, and always look for a financing option that will help you achieve your business goals.

Final Thoughts on Financing Options for Building Your Tow Truck Fleet


Financing a tow truck fleet can be a daunting task, 

but it doesn't have to be. Yes of course

With a little bit of research and planning, you can get the financing you need to get your business up and running. Yeah Right…

There are a few different options available to you, 

Once you've found the right tow truck financing option for your business, you'll be on your way to success in no time to finance a tow truck.

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