Updated October 26, 2026
Quick answer
All three put a lien on the truck's title; the difference is what the money does. A title loan raises cash against a truck you own. A refinance replaces the loan on a truck you are still paying for, to cut the payment or take cash out. An equipment loan buys a truck. Axiant Partners, a business-loan broker in Boca Raton, starts with one question: do you need cash, a lower payment, or another truck?
Side by Side
| Title loan | Refinance | Equipment loan | |
|---|---|---|---|
| What it does | Cash from a truck you own | Replaces your current truck loan | Buys a truck |
| Money goes to | You | Old lender (plus any cash-out to you) | The seller |
| Sized on | 50-80% of liquidation value | Liquidation value, less the payoff | The purchase price |
| Typical term | 24-72 months | 24-72 months | 24-84 months |
| Typical down | None | None | 0-20% |
| Typical rate | About 7-22% APR | About 7-22% APR | About 6-15% on trucks |
Typical ranges across lenders, not quotes. Purchase financing tends to price best because the money buys a new asset at a known price; borrowing against a truck you already own prices like other equipment refinancing. See typical truck title loan rates.
Title Loan: You Own the Truck and Need Cash
The truck is paid off, or nearly, and the business needs working capital - a repair, a slow month, a down payment, a contract that pays net-60. The lender values the truck, advances a share of its liquidation value, notes its lien on the title and you keep driving.
It fits when the need is real and earns something back. It does not fix a business that cannot carry its current payments. More in commercial truck title loans.
Refinance: You Are Still Paying for the Truck
Two versions, and they solve different problems:
- Rate-and-term refinance. A new loan pays off the old one with a lower rate, a longer term or both. No cash to you; the point is a lower payment. It makes sense when your credit or the business has improved since you bought the truck, or the original loan was expensive.
- Cash-out refinance. The new loan pays off the old one and advances the extra equity to you. On a truck you are paying for, this is effectively a title loan; see title loans with an existing lien.
Before refinancing, ask your current lender for a payoff letter and check for a prepayment penalty. A longer term lowers the payment but usually raises the total you pay.
Equipment Loan: You Need Another Truck
Buying a truck is purchase financing: the lender pays the seller, takes a lien on the new truck's title, and sizes the loan on the price, usually with some money down. It is generally the cheapest of the three, because the lender is financing a known asset at a known price. See semi truck financing.
The combination owner-operators ask about is using the equity in the truck they own as the down payment on the next one. It works - a title loan on truck one, an equipment loan on truck two - but it leaves you with two liens and two payments on two trucks that both have to be working. Plan for the month one of them is in the shop.
Three Owner-Operators, Three Answers
Illustrative situations, not quotes:
| Situation | Usually the fit | Why |
|---|---|---|
| Paid off, needs $40K | Title loan | Equity, no loan to replace |
| Owes $30K at a high rate | Rate-and-term refi | Lower payment, no new debt |
| Owes $20K, needs $25K | Cash-out refi | One loan pays off and funds |
| Wants a second truck | Equipment loan | Cheapest money for a purchase |
If two of these apply at once - you want a second truck and the first one is expensive to carry - fix the first payment before adding the second.
Things That Are the Same in All Three
- The lien goes on the title. Trucks are titled vehicles, so every lender records its lien on the certificate of title rather than with a UCC filing.
- Insurance naming the lender as loss payee.
- A valuation from the VIN, mileage, photos and records.
- Depreciation stays with the owner. Borrowing against a truck does not change who depreciates it; a purchase may qualify for Section 179 in the year it is placed in service (IRS Publication 946).
Selling the truck and leasing it back is a fourth route with different trade-offs: see title loan vs sale-leaseback.
Frequently Asked Questions
What is the difference between a truck title loan and a refinance?
A title loan raises cash against a truck you own. A refinance replaces the existing loan on a truck you are still paying for, either to lower the payment (rate-and-term) or to take equity out as cash (cash-out).
Is a cash-out refinance the same as a title loan?
On a truck that still has a loan, effectively yes: the new lender pays off the old one and advances the remaining equity to you.
Which is cheaper: a title loan or an equipment loan?
Purchase financing is usually cheaper, because the lender is financing a known asset at a known price. Borrowing against a truck you already own is priced like other equipment refinancing.
Can I use my truck's equity as a down payment on another truck?
Yes - a title loan on the truck you own and an equipment loan on the new one. It means two liens and two payments, so both trucks need to be earning.
When does refinancing a truck make sense?
When your credit or business has improved since you bought it, or the original loan was expensive. Check the payoff and any prepayment penalty first, and remember a longer term usually raises the total cost.
Sources & Further Reading
- UCC § 9-311: Property Subject to Certificate-of-Title Statutes — Why a lender's lien on a titled truck is noted on the title rather than filed as a UCC-1 - the same for a title loan, a refinance or a purchase loan.
- IRS Publication 946: How To Depreciate Property — The authority on Section 179 and depreciation for business vehicles, which is what determines a truck's book value against its market value.
- FTC: Protecting Small Businesses Seeking Financing — The FTC's guidance to lenders, brokers and merchant cash advance providers on misrepresented costs, unlawful collection and false claims of government affiliation.
Figures above describe ranges commonly seen across lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.