Tow truck financing is an equipment loan or lease used to buy a rollback, wrecker, rotator or other towing and recovery unit, with the truck itself as the main collateral. The choice is usually between the body maker’s own finance program, an equipment lender, a bank or SBA loan, and a lease, and the right one depends on your credit, how long you have been towing, and whether the unit is new or used.
Towing sits inside our transportation business loans guide. If you also haul freight, read trucking business loans too, since freight and towing lenders check some of the same federal paperwork.
What tow truck financing covers
Lenders finance the complete unit: the chassis plus the towing body. The main equipment types are:
- Rollbacks (car carriers). A flatbed that tilts to load vehicles. These are the workhorse for light-duty and dealer or auction work.
- Wheel-lift and integrated wreckers. Light-, medium- and heavy-duty wreckers for roadside, police rotation and repossession work.
- Rotators. Heavy recovery units with a rotating boom. These are the most expensive units and usually get the most scrutiny from lenders.
- Upfits and add-ons. Some lenders will roll the body, lighting, winches and a wheel-lift onto a chassis you already own into one loan.
Used units are common in towing. If you are buying second-hand, read our used equipment financing guide. Lenders look at age, hours and condition, and some set a maximum age for the chassis.
Manufacturer finance programs
The big towing body makers work with finance partners, which is often the fastest route when you buy from a dealer.
- Jerr-Dan. Jerr-Dan Financial Solutions offers loans and leases on new and used Jerr-Dan equipment. The page advertises 100% financing with no down payment for qualified buyers, terms from 24 to 84 months, and a 24-hour turnaround on credit applications. Its online application goes to Ascentium Capital.
- Miller Industries. Miller, which makes the Century, Vulcan, Chevron and Holmes brands, has partnered with Commercial Fleet Financing to launch Miller Finance Solutions, a program built for the towing and recovery industry. Monitor Daily reports it covers first-time buyers, equipment replacement and fleet expansion. Neither source lists rates or terms.
“100% financing” in a manufacturer ad is for qualified buyers. A new towing company, or one with thin credit, should expect to be asked for money down.
Federal rules lenders check
Towing is less regulated at the federal level than freight hauling, but lenders still check your USDOT registration and insurance.
Insurance. FMCSA says for-hire tow trucks with a GVWR or GCWR of 10,000 pounds or more doing emergency moves in interstate or foreign commerce must carry at least $750,000 in financial responsibility. For secondary (non-emergency) tows, the required coverage depends on what the towed vehicle is carrying (FMCSA: When are tow trucks subject to financial responsibility coverage?). State and city towing licenses, and the police or motor-club contracts you hold, often require more coverage than that.
Operating authority. If you haul vehicles as for-hire cargo across state lines, you may need interstate operating authority. The FMCSA filing fee is $300 per authority. Whether you need it depends on the type of work you do, so confirm with FMCSA before you apply.
An equipment lender will also require physical damage insurance on the unit and list itself as loss payee.
Tow truck financing options compared
Rates depend on the lender, your credit, the unit’s age and your time in business, so we have not listed a rate range. Compare offers by APR and total repayment.
| Option | Best for | What we could source | Watch for |
|---|---|---|---|
| Manufacturer program (e.g., Jerr-Dan, Miller) | New or dealer-sold units | Jerr-Dan: loans and leases, 24–84 months, up to 100% for qualified buyers | Promotional terms tied to specific units or credit tiers |
| Independent equipment lender | Used units, private-party sales, fair or thin credit | Terms set by each lender | Higher cost for older units or weaker credit |
| Equipment lease | Lower monthly payment, planned upgrades | Terms set by each lessor | End-of-lease buyout terms |
| SBA 7(a) | Buying a towing company, a yard, or several units at once | Up to $5 million; up to 10 years for equipment | Longer approval process and more paperwork |
| SBA 504 | Buying or building a yard or shop | Up to $5.5 million; 10-, 20- or 25-year terms | Cannot be used for working capital |
The SBA figures come from the SBA’s 7(a) loan page, its 7(a) terms page and its 504 loan page. From March 1, 2026, the SBA no longer uses the FICO SBSS score on 7(a) Small loans of up to $350,000. Lenders use their own credit analysis and need a debt service coverage ratio of at least 1.10:1.
What lenders look for
- Time in business and towing experience. A towing company with a year or more of deposits is in a stronger position than a startup. If you are new but have driven for another operator, document it.
- Where the work comes from. Police rotation lists, motor-club contracts, dealer and auction accounts, and private-property impound agreements show the lender that the truck will earn its payment. Bring copies.
- Bank statements. Most lenders ask for recent business bank statements. Motor clubs and insurers can pay slowly, so steady deposits matter.
- The unit. Year, chassis make, body make, mileage and price. A dealer invoice is simpler for a lender than a private sale.
- Credit. Personal credit matters for most small towing companies because the owner signs a personal guarantee. If yours is weak, see equipment financing for bad credit. New operators should also read equipment financing for startups.
Taxes
For tax years beginning in 2026, the Section 179 expensing limit is $2,560,000, reduced once you place more than $4,090,000 of qualifying property in service in the year (IRS Rev. Proc. 2025-32). The IRS also says 100% bonus depreciation is now permanent for qualified property acquired after January 19, 2025. How these apply depends on whether you buy or lease and on your business income, so ask your tax preparer before you choose.
Pitfalls to avoid
- Buying more truck than the work supports. A rotator earns more per call but carries a much bigger payment. Match the unit to the calls you already get.
- Ignoring insurance cost. Towing insurance is a major monthly expense. Get an insurance quote on the specific unit before you commit to the loan.
- Private sales without a title check. Make sure the seller has a clear title and there is no existing lien. Our guide to UCC filings explains how lenders record liens.
- Stacking daily-payment advances. Towing income is lumpy. Daily-debit advances on top of a truck payment can empty your account in a slow week.
- Balloon payments you have not planned for. Some leases and loans carry a large final payment. Know the number before you sign.
Tow truck financing FAQs
Can I finance a used tow truck?
Yes. Manufacturer programs such as Jerr-Dan’s cover new and used units of their own brand, and independent equipment lenders finance used units from dealers and private sellers. Older units usually need a larger down payment or a shorter term.
Can I get tow truck financing as a startup?
It is possible, but expect stricter terms. Lenders look for towing experience, a signed motor-club or rotation contract, a down payment and reasonable personal credit. Starting with a lighter-duty rollback is easier to finance than a heavy wrecker.
How much insurance does a tow truck need?
Under FMCSA rules, for-hire tow trucks with a GVWR or GCWR of 10,000 pounds or more doing interstate emergency moves need at least $750,000 in coverage. State, city and contract requirements are often higher, and your lender will require physical damage coverage too.
Is it better to lease or buy a tow truck?
Buying builds equity and suits a unit you will run for years. A lease can lower the monthly payment and make it easier to upgrade. Compare the total cost, including any buyout at the end, and ask your accountant how each option affects your taxes.
Next step
If you are pricing a specific unit, get the dealer’s invoice and your last few months of bank statements together first. Our transportation business loans hub and the equipment financing guide explain how SMB Compass helps you compare offers from the lenders we work with.
Sources
- Jerr-Dan: Tow truck financing and leasing
- Miller Industries
- Monitor Daily: Miller Industries and Commercial Fleet Financing launch Miller Finance Solutions
- FMCSA: When are tow trucks subject to financial responsibility coverage?
- FMCSA: What is the cost for obtaining operating authority?
- SBA: 7(a) loans
- SBA: 7(a) terms, conditions and eligibility
- SBA: 504 loans
- SBA Procedural Notice 5000-875701: Sunset of SBSS score for 7(a) small loans
- IRS Revenue Procedure 2025-32
- IRS: Guidance on the additional first-year depreciation deduction
About this page. Written by Ezra Cabrera, Content Team Lead at SMB Compass. Figures were checked against the primary sources listed above on September 21, 2026; lenders change their terms, so confirm current terms before you apply, and let us know if you spot a figure that has changed. SMB Compass is a business financing broker: we don’t lend our own money, and we are paid by the lenders we place loans with. This page is general information, not financial, legal or tax advice.