Tow Truck Financing: Where to Find it in 2020

Tow Truck Financing: Where to Find it in 2020

Tow Truck Financing: Where to Find it in 2020

Whether you run a towing and recovery business or maybe a repossession company, there’s one thing your business relies on: commercial vehicles. But flatbed tow trucks don’t come cheap. You might not have the capital on hand to purchase one truck, let alone a fleet.

Fortunately, tow truck financing is available to help you get the loan you need to buy the trucks that your business depends on.

Tow Truck Financing

Keep the above with the following changes:

Loan Amounts: $5,000-$15 million

Repayment Terms: 2-25 years

Tow Truck Financing Offers: 

Nav works with many lenders who specialize in transportation or equipment financing. Learn more about financing programs you can use to purchase tow trucking equipment.


Newtek offers long-term financing programs for a variety of needs, including the purchase of equipment and vehicles. You can secure up to $15 million in funding with repayment over 25 years if you qualify.


If you’re looking for less capital to repay over a shorter time period, Kapitus offers intermediate-term loans to be paid off in 2-5 years, up to $500,000.


If you’re open to leasing a tow truck, TimePayment offers affordable lease options that allow you to retain working capital and still get the vehicles you need.

Types of Tow Truck Financing:

There are a variety of finance options when it comes to commercial truck financing, so explore each to make sure you choose the one that best fits your needs.

Tow Truck Loans

There are a variety of business loans that you may qualify for in the purchase of your vehicle or tow truck equipment. You can go with traditional lenders that offer SBA loans (particularly the 7(a) program), but if your credit doesn’t meet their requirements, look for a financing company with less stringent criteria for loans.

Tow Truck Line of Credit

Another type of financing to consider when shopping for tow trucks for sale is a line of credit. Rather than being approved for a fixed loan amount that you get all at once, you are approved for up to a set amount of working capital. Borrow what you need for your tow truck purchase, and make your payment just on that. Should you need more money down the road, you have the rest of the line of credit available, as well as whatever you’ve paid back.

Tow Truck Collateral Loans

Some lenders will not require you to put cash down as collateral if you are funding the cost of a tow truck because that vehicle serves as your collateral. Should you not be able to pay off the loan, the truck would be taken to cover your debt.

Tow Truck Leases

Buying a tow truck isn’t always the best option. Leasing one, instead, frees up cash flow and doesn’t weigh you down with a greatly-depreciated vehicle after a few years.

Why Finance a Tow Truck?

You might think that it’s better to pay cash for any large purchase your business needs to make, but the fact is: even if you can afford to spend hundreds of thousands of dollars on a fleet of tow trucks, it might not be the wisest financial decision.

Conserving working capital while making monthly payments on your tow truck loan ensures that, should your business suddenly need cash for an unforeseen expense (which is almost guaranteed to happen), you can cover it. If you had tied up that capital in your tow trucks, you would then have to scramble to cover the emergency expense.

Requirements for Tow Truck Financing

While each lender will have its own requirements for approving your tow truck loan application, you can, in general, expect that you will need to meet certain criteria.

You may be required to have credit scores of 650 or higher, as well as no tarnishes like bankruptcy or tax liens in your credit history. You may also need to have been in business at least a year or two, depending on the lender. 

Not sure what your credit scores are? Get your free business credit scores today.

If you have bad credit, not to worry. There are alternative lenders who may approve you for financing at a higher interest rate.

When Does it Make Sense To Finance or Lease A Tow Truck?

You may be unsure of which option between financing and leasing a tow truck is better for you.

If you want to own an asset (the tow truck) and be able to claim depreciation on your taxes, you might want to purchase it. You will also be able to recuperate some of your investment by selling the truck once you’re done with it.

On the other hand, tow truck leasing doesn’t require the down payment or collateral that a loan would. You may have lower truck lease payments than you would loan payments, and, at the end of the leasing period, you aren’t left with a greatly-depreciated vehicle that is worth a fraction of the purchase price.

If you don’t have good credit, however, you may have fewer lease options with leasing companies, and might be better off taking out a loan for the vehicle.

Nav’s Final Word: Tow Truck Financing

Smart small business owners and truck owner-operators leverage tow truck financing options including loans and leases as a way to preserve working capital and build their credit.

In choosing the right financing option, know how much you plan to spend on a commercial truck or fleet, and shop around for the best deal.


This article was originally written on July 16, 2020.

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Susan Guillory

Susan Guillory is a Senior Content Writer for Nav. She’s written books on business and travel, and blogs about small business on sites including Forbes and AllBusiness.

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