Posted by Nikki Wardle on Nov 23, 2016 9:00:00 AM

Used semi truck

When you run a trucking company, your equipment is the most important tool you have. It enables you to grow your business and do the work necessary to get paid. Equipment costs can also be one of the greatest costs to your business, and by costs, we don't mean the sticker price, but rather the monthly payment that will be coming out of your account every month. That magic number is determined by the overall price, your money down, and your credit. Here are three main factors to think about when considering the cost of your equipment and deciding on the right move for your situation.

Truck Price

Right now the used truck market is at one of the lowest points it has been in decades. Fleet failures are rising and therefore equipment liquidation is becoming very common. This benefits buyers by depressing the price you may pay. While a near-new truck used to run near $100,000, it isn't uncommon to find those trucks ranging from $60-80,000. That will help your monthly payment by dropping the overall cost of the loan. However, don't let the low prices make the decision for you. A thorough mechanical examination is critical on these pieces of equipment because larger fleets probably didn't bother with a full service or oil change right before they sold it, so make sure you have a trusted mechanic go over your equipment thoroughly.

Money Down

If you are just starting in this industry, then you are likely not in the best position to put a large sum of money down, and instead, will be relying on collateral. If you happen to have some money stored away, it can significantly help your rate and monthly payment. In general, having 25 to 50 percent down can allow you to avoid many of the potential obstacles that can stand in the way of financing your truck. Having a good amount of money to throw at this purchase will also make a world of difference to your potential lenders. It shows that you have the discipline to save your money, it demonstrates that you are serious about this business option, and it ultimately decreases their exposure to loss. These efforts will reward you by giving you a lower interest rate and shrinking that monthly payment.

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Your Credit

It is an unfortunate fact that many truck drivers and new trucking business owners struggle with less than stellar credit. While a larger down payment can help you avoid many of the credit-based obstacles that might come up your credit will still impact your financing decision and monthly payment. However, if you seriously run your numbers and know your business plan, then you can price yourself in a way in which you can still be profitable at a potentially higher monthly cost. Then you can generate revenue and continue rebuilding your personal and business credit.

Nikki Wardle

Written by Nikki Wardle

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