If you’ve just recently taken the plunge to become an owner-operator, then it’s likely that you now understand the level of investment required in starting such an endeavor; becoming an owner-operator requires many up-front costs, including paying 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! Straight cash will get you anywhere you want, but 20 to 30 thousand dollars is certainly a lot to cough up all at once. That’s why financing options exist. So, how does a car hauler get the best deal possible without getting swindled? We hope to help answer that question in today’s piece.
What You Need to Finance a Truck and Trailer
You will need to have a minimum 2 years of experience driving.
There are a lot of prerequisites that you’ll need in order to finance a truck and trailer. To start, you’ll need to have a minimum of two years of driving experience which means your CDL and car hauler references will be checked to verify your 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. Some truck leasers will do deals with drivers who have credit below 600, but the lesser 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 will watch out for other signs of bad credit as well — bankruptcies, repossessions, or less cash for a down payment will lower the likelihood of getting financed. 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 a car hauler should try to look out for before committing. There is no such thing as a bumper to bumper warranty in commercial trucking; always read your contract before signing, as it will specify exactly what is and what is not covered. The only conversation spoken about warranty is when a customer asks about it specifically, so it’s vital to know exactly what is covered, save money, and hopefully avoid future headaches.
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,” Bell shares. “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.”
Always beware of red flags like this before signing a contract. As a word of advice, always be sure to read the fine print of everything, perhaps even several times over, before you sign anything. Any contract comes down to ‘if you signed it, you own it.’
How to Keep a Truck and Trailer
Finally, once you have your truck, it’s important to keep up with your payments. After all, trucks aren’t going to run themselves (yet.) Many Super Dispatch customers say the most common problem a car hauler faces is unexpected maintenance costs. An easy rule to follow is to always keep up with maintenance costs by getting your vehicle checked regularly, and whenever your check engine light turns on. Taking your vehicle in for regular inspections and tune-ups may wind up saving you thousands of dollars, rather than getting stuck needing major repairs later down the line. If you’re an Owner Operator, try saving 5% of every load or a portion of your monthly income for future maintenance costs.
If you did recently become an owner operator, then it’s also likely that you need a tool for managing your loads, communicating with shippers, and send BOLs. If that’s the case, then you may want to try Super Dispatch — our platform features both an advanced load board and Carrier TMS that will greatly simplify how you can get work done while off the road. Try it for free today!
