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Trucks and Trailers: financing as an Owner Operator

Financing your Car Hauler Dreams

If you just decided to make the jump into your own operating authority, you know money is a primary hurdle. Specifically, finding out where to get it.

You might’ve scrounged up the money for a CDL, training and testing. Now you can take the extra thousands you have laying around to buy yourself a shiny new truck to start hauling with, right?

Of course not! Here in America straight cash will get you anywhere you want – but 20 or 30,000 is a lot to cough up all at once. That’s why we have financing options. So how does a car hauler get the best deal possible, without being swindled?

What you need to finance a truck and trailer

 “You will need to have a minimum 2 years of experience driving.”

Ziggy, a sales rep at Arrow Truck Sales with 20 years of experience in the trucking industry, says that financing a truck and trailer is not for the faint of heart.

“You will need to have a minimum 2 years of experience driving,” says Ziggy. “That means they will pull your CDL and check your haul references to verify that experience.”

In addition to having a long driving record, you will need to put down at least 20% upfront and maintain a good credit score.

“I can get deals done with credit below 600,” Ziggy says about credit. “But you will end up paying thousands more and have to move through a secondary market.”

While credit score is the primary factor in financing your truck, companies like Arrow do watch out for other signs of bad credit.

“We work hard to work with all states and types of credit history,” Ziggy says of Arrow Truck Sales. “But If you have 2 bankruptcies, 3 repossessions and can only put 5% down…you’re not going to get financed here.”

Some factors – such as repossession – weigh heavier against your chances of getting a loan than a lower down payment.

How do I know if it’s a good deal?

“There is no such thing as a bumper to bumper warranty in commercial trucking.”

Unlike Consumer equipment, there are few financial protections in place for Commercial equipment once a contract has been signed. But there are signs Commercial Operators can be aware of before committing.finance truck trailer car hauler

“There is no such thing as a bumper to bumper warranty in commercial trucking,” Ziggy quips.

Former truck salesmen at Super Dispatch expressed the exact same sentiment.

“Just read your contract,” Ziggy stresses. “Because the contract is going to specify exactly what is covered and what is not…., people will compare it to a new car. And the only conversation that is said about the warranty is when the customer asks ‘hey, doesn’t this have a warranty?’ and the salesperson says ‘yes, a brand new warranty.’ And because of the ads on the radio, they think it means bumper to bumper coverage. They didn’t say that. There is no such thing as bumper to bumper coverage in semi truck land.”

A Consumer Protection lawyer in Kansas City, Bryce Bell, has a few suggestions on auto loans that are applicable to commercial financing.

“Bait and switch financing agreements are a big one,” Bryce says. Bait and switch is a tactic where a salesperson “pre-approves” the percent of a lease agreement (say, 10%) on the spot, pending some official approval from the bank. This makes the consumer feel like they already have a great deal on a new car. Then a week later, the sales team calls back saying the bank didn’t approve it at 10%, but the dealership found another place that could approve it on the spot for 20%. Now the customer is more likely to accept this bad offer, because for a week they were sure it was as good as bought.

Beware of red flags before you sign the contract.

“Be sure to read the fine print of everything 5 times before you sign anything,” Ziggy says. “Any contract comes down to – if you signed it, you own it. If you were foolish enough to sign something that you didn’t understand – especially a 14 page document – then shame on you.”

How to keep a truck and trailer

Finally, once you have the truck, how do you make sure you keep up on those payments? Trucks aren’t going to run themselves (yet.)

Ziggy (as well as many Super Dispatch customers) says the most common problem a trucker faces is unexpected maintenance costs.

“The new trucks due to the government regulations, they have really screwed trucking up in the last 20 years. All the new pollution control stuff just wreaks havoc. Your truck can be running fine, your truck will be going down the road and all of a sudden there’s a little light on your dashboard that says check engine, check engine. Back in the old days, the only thing you had to know was, do I have oil, air, temperature? If the answer was ‘yes,’ you kept on trucking. Nowadays, that little yellow light… says ‘no, you’re going to the shoulder of the road, right now.’ And that’s going to cost you $4,500.”

If you’re an Owner Operator, try saving 5% of every load or a portion of your monthly income for future maintenance costs.

How have you financed your truck? What was your experience? Let us know below!