Truck Loan and Two MCAs: 6 Questions Before Choosing Which Payment to Make

Usually, the truck payment comes first. Keep the truck out of repo. Keep it running. Get fuel. Get repairs. Keep it on the road and on the job. So, truck first. Don’t forget the insurance payment. The last thing you want is to be on the road with the truck and no insurance. The advance lenders probably file against receivables, and they’d argue the daily debit isn’t negotiable. But the truck lender usually holds the tractor as collateral, and a repo stops the business. That gives them first call on the money. Understand the agreement with your lender, and with your advance funders.

Work it through before you decide. Collateral’s important: if the truck payment is a late payment on collateral, it’s first. Can you survive a truck repo? After that, do you have advances to pay, and if so, is your account in default? Do you have factoring on your receivables? Are you insured? And what’s negotiable?

The answer depends on what’s in your loan agreements, and what UCC filings you signed. Usually, the advance funders file against receivables and the general intangibles, and that leaves the equipment notes separate. Advance companies usually don’t file on the tractor, but some do. Don’t assume that’s true in your case: read all your contracts and filings.

You Risk Repossession

If you fall behind with the truck payments, you risk repossession. When a lien is on the title, the truck lender has a repo right that sometimes lets them take the truck without going to court, although they can’t breach the peace to do that. Sometimes they can disable the truck where it’s parked, but that depends on the lien and your contract.

When a repo happens, the lender generally has to tell you before selling the truck. If you’re serious about making it right, you can redeem the truck if you pay everything secured by the truck--including missing payments and all related expenses--before the truck is sold. If they sell the truck for less than you owe, you’ll still owe them the difference.

Advance Funders

If the advance company’s daily payment comes out of the same account that your fuel card settles against, that’s a problem. You can get into a situation where you can’t pay both. Diesel is the ticket. That’s a big part of the deal: first you pay for fuel and repairs to get the truck running, then you deliver the freight to make some cash, and a good part of that gets debited for the advance, and what’s left may not be enough to make the truck loan payment until the next load comes in.

Getting stuck on the road isn’t supposed to happen. But a breakdown is big, sudden and not optional. It just happens. A road service operator may do a credit card sale, but an advance funder gets the cash fastest. And you’ll get it stacked on top of the original advance.

Some advance funders will ask you to sign a confession of judgment, and that’s a dangerous document in the wrong hands. They often have clauses that let them collect the debt from the principals, and that means your personal assets. In New York, a lender can’t file a confession of judgment unless your business is based in the state. Texas voids them from September 2025.

If you factor, the factor owns the receivables it bought. Once he pays for them, he owns them. If both companies file on “all receivables,” they’re both claiming the same ones. Generally, the first to file takes priority. Whether settlement matters to your factoring agreement depends on the agreement. Some won’t care and some will. Make sure that any lender or negotiator you talk to knows you factor.

As for insurance, you do have to have it with the FMCSA to keep your authority, and a lapse in coverage can lead to revocation. You can’t run if you can’t keep insurance. The FMCSA requires at least $750,000 coverage for non-hazardous freight. In general, you want truck insurance to come before almost anything else, because the policy makes it possible to do business. Without it, you’re off the road.

What Can Be Settled Varies by Agreement and Collateral

Advance balances and daily debits are things that can be settled. Taxes, notes, factoring, and anything that’s been sold off to another party, in general, can’t. The advance company might take a settlement or stretch the daily debit to make it workable. The truck lender wants to know they’ll get paid, and they want their collateral protected and properly insured. Taxes are paid separately. Don’t treat them as part of the advance deal. You can usually make a payment arrangement with the tax collector.

If nothing works, a Subchapter V small-business Chapter 11 can stop repossession, lien enforcement and collections and let the company reorganize. It generally requires qualifying debts of around $3.4 million or less.

Many business owners use personal cards to make payments to make their business run. Those debts end up personal. Many advances and loans have personal guarantees, and they can end up personal, too. Know where the debts and guarantees are.

Pull all your business agreements and UCC filings and lay them out in one place. Draw a map of what’s been filed against what collateral. Carefully look at what’s business debt and what’s personal; this is important. If you talk to a negotiator, get what they’re willing to do in writing, including what it leaves out.