Buying a trailer is a big investment. Before you make a purchase, it’s important to research what trailer size and type you need and how much it will cost you. But it’s also a good idea to come up with a plan to pay for your new trailer. While paying the full amount up front is the most ideal option, it’s not always feasible.
That’s why at Ken Feagin Truck & Trailer, we work closely with you to create a smooth, secure financing process. In this guide, we’ll walk you through the trailer financing process so you can buy the perfect trailer when you need it.
What is trailer financing?
Trailer financing is the process of taking out a loan through a bank or credit union when you purchase a trailer. Typically, a trailer loan involves monthly payments at a fixed interest rate, similar to how cars are financed. Your payment plan term, payment amount, and interest rate depend on the loan amount, whether the trailer is new or used, and your credit score.
Can you finance a trailer?
If you qualify, you can easily finance a new or used trailer. Depending on whether you finance as an individual or a business, a lender may use your credit score, employment history, financial documentation, and income or revenue level to evaluate your eligibility for trailer financing. They will also need to know the make, model, and age of the trailer you intend to buy, as well as how much you can provide as a down payment. Once all of these factors have been considered, the lender will come up with the best financing options for you or your business.
How hard is it to finance a trailer?
With the right partner and qualifications, getting a trailer loan is a simple process. If you’re concerned about getting approved for financing, focus on improving your credit score, debt-to-income ratio, and down payment amount before applying. Keep in mind that your goal is to assure the lender you will have the means to pay the loan in due time.
When you buy from Ken Feagin Truck & Trailer, we aim to make the financing process as easy and accessible as possible, no matter what kind of trailer you need. Shop our selection of trailers to find the perfect one, and we’ll work with you and our funding partners to find a viable payment plan.
Types of trailers to finance
Need help deciding what kind of trailer to buy? You can finance an array of trailer types, all with different sizes and functions. Here are some questions to consider in your decision-making process:
- What industry are you involved in?
- What are you hauling?
- What weight capacity will your loads require?
- How much weight can your tow vehicle handle?
- Do you need an aluminum or steel trailer?
With a basic understanding of what features to look for in a trailer, you can evaluate which one will best meet your hauling needs and your budgetary requirements. Below, we’ve defined the most popular types of trailers, what they’re used for, and what to expect when financing them.
Horse trailer financing
A horse or stock trailer is used to transport large animals and tack or other equipment they require. Horse trailers come in different sizes and configurations, so you can buy one that fits just one horse or one that can transport as many as six horses (and beyond). Some horse trailers have living quarters at the front, and these are most suitable for horse owners who enjoy traveling with their horse or horses. A farm or commercial horse-hauling business, on the other hand, would aim to transport several animals at a time.
Because horse trailers come in a variety of sizes and amenities, pricing also varies from very affordable to quite pricey and everything in between. Interest rates typically range from 7% to 24% depending on your credit score.
If you’re looking for a new horse trailer, check out four of our favorites.
Cargo trailer financing
A cargo or enclosed trailer has walls and a roof for hauling cargo that must be kept secure. These are most commonly used by landscaping, entertainment, and other businesses that carry expensive equipment. Other uses include mobile businesses, camping, and storage. Cargo trailers are available in 5’ wide, 6’wide, 7’ wide, and 8’ wide sizes to cater to a variety of uses.
Enclosed trailer interest rates tend to be slightly lower than horse trailer rates, starting at 6.5% and maxing out at around 20%. The price varies depending on the size of the cargo trailer.
To discover which enclosed trailer is right for you, read our guide to enclosed trailer sizes.
Dump trailer financing
Dump trailers perform a lifting mechanism to unload whatever materials they contain. These trailers are primarily used for construction, landscaping, and agriculture to transport dirt, sand, gravel, hay, and more.
Generally, dump trailer loan interest rates are similar to cargo trailer rates. Like most trailers, dump trailers come in several different sizes, with lengths from 10’ to 20’, so pricing depends on the trailer’s size.
Looking for a dump trailer? Explore our guide to buying a dump trailer.
Utility trailer financing
Sometimes called an equipment trailer, a utility trailer transports personal belongings, recreational vehicles, or landscaping equipment. Utility trailers are similar in size to dump trailers, with equipment trailers usually being longer with heavier axles and ramps.
If your business needs a trailer that’s not in the budget, financing one allows you to make smaller monthly payments while you use it to transport the equipment and materials you need to expand your business and generate more revenue.
Landscaping businesses often use enclosed, dump, or utility trailers to transport equipment to worksites. Learn more about which trailer is best for your landscaping business.
Car trailer financing
Car haulers are open or enclosed trailers that are often used to safely transport race cars or other highly valued cars. While open car haulers can be a cost-effective option and easy to load and unload, enclosed car haulers offer extra protection and are great for longer-distance hauling.
Car haulers, like horse trailers, vary widely in price depending on size and amenities. Enclosed car haulers and racing trailers large enough to carry one car (or a few motorcycles) are financed much like enclosed cargo trailers with similar rates. Larger racing and carrier trailers come with a heftier price tag and possibly higher interest rates.
If you’re looking for a car trailer, check out our car hauler buying guide.
If you have more questions about your trailer needs, call us or stop by, and one of our friendly and knowledgeable staff members will point you toward the best options.
How to finance a trailer
Follow these 7 steps to finance your trailer with ease:
1. Consider your credit score
Typically, the higher the credit score, the easier it is to get approval and the lower the interest rate. Credit is scored from 300 to 850, so the best interest rates are reserved for those with credit scores between 670 and 850 (Good, Very Good, or Excellent). If your credit score is in the 500 to 650 range, there are lenders who will help, but you’ll likely have a higher interest rate. If you would like to increase your credit score, work toward paying off existing debt, and make other credit or loan payments on time.
2. Establish a budget
Before beginning your search for the perfect trailer, establish how much you’re able to spend. Budgeting helps you narrow down options to what you can afford so you avoid going into debt from your purchase. When you create your budget, also consider ongoing expenses associated with a trailer, such as accessories, maintenance, or storage.
3. Find the trailer you want
Look at trailers within your budget to find the one that perfectly suits your needs. Before applying for a loan, you need to know which make and model you plan to buy. Then, you can figure out how much you can pay up front and how much you will need to borrow. Most banks and credit unions will allow you to get prequalified so you can see an estimate of how much you can borrow. Remember, the higher the down payment, the lower your monthly payments and interest rate will be.
4. Consider several lenders
Before you commit to a lender, ask several to provide estimates so you can see what your interest rate, monthly payment amounts, and loan term would be. This allows you to “shop around” for the best payment plan for you. While whoever you bank with can most likely provide the best interest rates, credit unions are a great option as they may grant higher loan amounts at lower interest rates. A dealership will have a wealth of experience in directing you to the best lender for your circumstances.
At Ken Feagin Truck & Trailer, we aim to make this process as simple as possible. When you fill out our loan application, we’ll call you before sharing your information with our funding partners. Then, you will receive information to help you make the best trailer financing decision for you without the hassle of contacting lenders.
5. Submit the loan application
Once you’ve decided on a lender, it’s time to submit your official loan application. Even if you were prequalified with your chosen lender, they will perform a more in-depth credit check upon receiving your application. They will ask for your social security number, bank information, employment history, and some basic personal information, in addition to information about the trailer you intend to purchase.
6. Sign the agreement
If a lender offers you a loan and you receive the agreement, read it carefully and double-check that you can keep up with the payment plan. If the agreement looks good to you, you can sign it and purchase your trailer!
7. Make payments on time
Once you’ve purchased your trailer, be sure to make all payments on time. Late or missing payments could result in increased debt and interest, a hit to your credit score, and eventually, repossession of your trailer. If necessary, set a reminder to make your payment each month.
Is your business growing quickly? Do you need a horse trailer for an upcoming show? Time keeps ticking, but you can slow it down by financing your next trailer purchase. We’ll work alongside one of our partner lenders or the lender of your choice to offer sound and pain-free financing options.
If you’re shopping for a new trailer in Asheville or Greenville, SC, we’re right down the road in Campobello, SC. Come visit us, or give us a call–we’re always happy to help.
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