Where Owner Operators Thrive!
Blog for the modern day trucker
Every small business venture deserves some educated decisions that will not only take care of its foreseen and unforeseen challenges but also ensure that its resources are effectively managed. When it comes to working as a truck owner-operator, one of the most important decisions you need to take when setting up your business is deciding if you are buying a semi truck or not. Nevertheless, if you have chosen to own a truck for hauling loads for your customers, you are faced with the dilemma of finding a way to buy a semi truck.
Whether you have loads of money saved from your trucker driver salary or you are going to visit a finance company or bank to get a loan, you must be certain of how you are going to finance buying an older truck. Like most people, if you are obtaining a loan to finance a semi truck, you will be required to repay a specific amount of money every month for 3 to 5 years. Generally, once you have paid off the interest and principal amounts, you are the new owner of the truck.
When it comes to financing a commercial truck, there are two types of payments that people are often concerned about, and these are:
Simply put, a loan is an amount of money that an individual or other entity takes from a bank or any other finance company with an agreement to repay it at a stipulated time. Provided that you can fulfill the loan terms of a bank or any financial institution, you can quickly obtain a loan to buy a semi truck. Although you will be required to repay parts of your loan every month, the semi-truck will be entirely your own once you have repaid the full loan.
In most cases, there is no need for a down payment as the loan will take care of buying a used semi truck for you with the expectation of a monthly repayment as you continue to use the truck. Nevertheless, if you can include a down payment in the deal, your monthly repayment will be significantly reduced. Also, getting a loan to buy a truck will reduce the insurance costs; hence, you can get more money to repay your loans and own the truck outright.
One of the few downsides of obtaining a loan to buy a semi truck is that all forms of maintenance and servicing of the truck are your responsibility, and this will have a significant impact on the overall cost of running the truck. If you are having any problems with obtaining loans to buy a semi truck, you can also choose to lease. When you lease a semi truck, your monthly payment covers maintenance and service; thus, the leasing company is responsible for repairs, maintenance, and servicing of the truck.
If you are going to finance your semi truck through a loan from a bank or other financial institutions, it is very likely that the institution will consider your credit score. To some financial institutions, bad credit is enough to disqualify you from getting a loan to finance your semi truck. However, for other institutions, you may qualify for loans despite having bad credit, but your down payment will be distinctively higher than that of someone with a good credit score. If you have a bad credit score, you may be required to get a down payment of more than 10% of the total cost of the semi truck, and this may be too much considering how costly semi trucks are.
If you have a bad credit score as well as an insufficient down payment, you can use collateral when obtaining a loan to finance a truck. In a nutshell, your credit score, down payment and collateral will play pivotal roles in determining whether you will be able to obtain loans or a lease to get a semi truck.
Here are a few things you should note when you want to buy a semi truck:
First, you should be confident of the work you will be using the truck for as this will play a pivotal role in determining whether buying it will be worthwhile or not. Different trucks are designed for various purposes, and unless the truck you want to buy suits that purpose, your efforts may be wasted.
The second thing you should consider is how reliable and well-maintained the truck is. In this regard, here are a few things you need to look at when financing a used truck:
With the perfect understanding of the things mentioned above, it will be easy for you decide whether the semi truck is dependable and durable enough for business or not. Also, these things will help you to understand how much will be needed to repair the truck if it requires maintenance.
As clearly indicated above, it is not necessary for you to have thousands of dollars in your account before buying a semi truck as different methods can be explored to finance your truck and get started in the trucking industry. Nonetheless, whatever options you have decided to use to lease or buy a semi truck, diligently research about it and make wise decisions that will ensure the success of your trucking business.