According to trucking industry experts, it takes $180,000 to operate a commercial truck on an annual basis. Lenders who offer loans for commercial trucks to owner-operators know what it takes to run a trucking business. Therefore, they have strict requirements on who they approve loans for. If you are new to truck driving, you may have a difficult time finding a lender to finance a commercial truck for your owner-operator business venture. Here are a few ideas that can help you avoid being turned down for a loan.
Gain more experience
Inexperienced drivers are a high risk to employers and lenders. Just as with any other industry out there, you cannot expect to earn the same as a seasoned truck driver. For this reason, lenders don't foresee a good earning potential in those who are fresh out of trucking school and those who have logged limited hours.
The more experience you have, the more faith a lender will have in your ability to acquire contracts and keep them. Without experience, you may have a difficult time finding contracts. Companies may not want to entrust you with the care and transport of their valuable cargo. If they do, they may expect to pay you much less than they would someone who has a lot more experience.
This means that you will probably need to drive for someone else before you can start thinking about driving for yourself as an owner-operator. Consider this a good thing, and learn while you earn. Take your time to learn various tricks of the trade while employed by someone else. Then, that experience will show a lender that you are worth the risk.
Make a larger down payment
Given the high amount of operating expenses, you'll want to have a low monthly loan repayment. To do this, put down a larger percentage of the sales price when you make the down payment on your truck. You may want to consider a more affordable used truck so your down payment will be a higher percentage of the sales price. In turn, your monthly payments will be lower. Ask the dealership what their terms and conditions are regarding trading in trucks for other years and models. Start out small and build up as your owner-operator trucking business grows.
Get a line of credit for your business
With the high expenses of operating a trucking business, you will need to have a good line of credit available to you, or at least a good business credit card. That way, you'll be able to pay for maintenance and repairs whenever they are necessary without having to get another loan or having to leave your truck in the shop until you get enough cash to pay the fees. Also, a line of credit can be used to fuel your truck and your stomach while on the road when you wait for your clients to pay you.
Network with others
Get to know the freight brokers you regularly do business with. However, when you are driving a truck for someone else, there may be a non-compete clause in your contract. A non-compete clause may inform you that you will not be able to enter into a contract with any person, business or other entity you met through your employment. These types of clauses are put into contracts so new businesses cannot steal clients. However, you may be able to network with freight brokers and other truckers you encounter on a daily basis.
Financing an expensive item such as a commercial truck shouldn't be taken lightly. Most lenders want you to have some experience before giving you a loan for a commercial truck, or you may need to consider buying a used truck so your monthly payments will be lower. Keep these tips in mind as you look for your commercial truck. Visit http://www.arrowtruck.com/ for more information about your options.
Share3 June 2015
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