If you want to own a trucking company, then you first have to own a truck.  Sounds simple, but in reality, getting title to a big rig can be the most challenging part of becoming an owner-operator.  So, in this post, we’ll look at the options for buying a semi of your own.

 

First things first: unless you recently hit the lottery or inherited a small fortune, you’re going to have to finance your truck.  That leads to the issue of credit.

 

Good Credit, Bad Credit

The last few years have been brutal, economically speaking.  As a result, a lot of folks who once had sterling credit may now have trouble getting financing.  If that sounds like you, then persuading a lender to extend credit to you will be harder, but in many cases it’s still possible.  Here are some facts to keep in mind:

 

  1. A good down payment can overcome bad credit.  Car dealers have long known this, which is why they encourage buyers with credit issues to come up with as much money as possible up-front.  A large down payment shows that the buyer is serious about the purchase and hence is more likely to pay the loan back.  A ball park figure to shoot for is 20% of the sticker price, though very low credit ratings could require a down payment of as much as 50%.
  2. A good impression can help when trying to get financing.  Show up at the dealer or finance company well-groomed and reasonably well-dressed.  We’re not talking suit and tie here; just make sure you’re presentable.  If your trucking company has jobs lined up and waiting for you to get a rig of your own, then bring documents attesting to that fact.  Bring your CDL as well.
  3. Pre-owned trucks are easier to get financing for than new ones.  This is particularly true now, as the poor economy has caused many trucking firms to go out of business in the last few years.  Because of this, there are plenty of used rigs on the market and a shortage of buyers.  Of course, buying anything used means being extra-careful to check it out thoroughly first.  Still, going with a pre-owned semi can be a very smart move.
  4. Leasing is worth considering as an alternative to a conventional purchase agreement.  Dealers are generally more willing to lease to persons with troubled credit than to finance an outright sale.  This can free up operating funds that would otherwise go into a hefty down payment, giving you cash on hand for operating expenses until payments start rolling in.

 

Lease-to-Own Agreements: Good or Bad?

Some companies offer to lease rigs to truckers regardless of past credit.  After driving for the business for a specified period of time and making regular payments on the truck, they can take possession of it.  These deals differ widely from each other in their fine print, so we can’t stress strongly enough that you need to read the agreement very carefully before signing anything.  Sometimes drivers have put their name on the dotted line only to find out later that they’ve gotten themselves into a mess of trouble.  For example, truckers have found themselves on the hook for charges such as:

  • Auto losses.
  • Cargo losses.
  • Worker’s compensation audits.
  • DOT fines.

 

You might also be responsible for filing your own fuel taxes.  Then there are the horror stories of drivers who have been on the verge of finishing out their agreement, only to have the company cut their miles to force them into default.  The business then repossesses their truck and leases it out to the next unfortunate person.

 

The lesson here is to check everything out thoroughly before entering into a lease-to-own agreement.  Look for reviews by drivers who have worked with the company.  Ask other truckers their opinion.  Also, as we said before, BE SURE to read the agreement over thoroughly before signing, and voice any concerns you might have.  If the leaser can’t or won’t answer your questions, then you’re probably better off walking away.

 

We hope this post answered your questions about truck financing.  Remember, in these high-tech times, one thing every driver needs is great trucking management software.  That’s why we encourage you to take TruckingOffice for a free 30-day test drive, no credit card or checking account number necessary.  That’s how sure we are that you’ll fall in love with it.

Allen Campbell

The Trucker at TruckingOffice
Allen Campbell has more than 18 years of experience in the trucking industry as a driver, owner/operator, broker, and small fleet manager. He is the "real trucker" at TruckingOffice, an online software that makes it as easy to run the business as it is to run the trucks. It handles dispatching, invoicing, IFTA reporting, and all the other things that get in the way of trucking.

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