Getting started

[Mark01GT]

How does one get the financing for a new tractor/trailer? I would imagine that would cost upwards of $200k. I have only been earning $45k a year in a company truck the past couple of years, so I doubt no bank will loan me that amount of money for a vehicle based on my salary.

You could make the argument that I should get a used tractor/trailer and only spend $40k. Which is fine, but what happens when you get a tractor with 500k miles on it, and you turn the key, and the engine explodes?

Any suggestions?

Oh and also, is it better financially to use a broker to find loads rather than run with a company? Most companies steal the money that you could be putting in your pocket.

thanks

[merrick4]

I'll say one thing I have very good credit and I just got a used truck for $67,000 with taxes and they made me put down 10% and gave me an interest rate that is sickening. The only reason I took it is I wanted to establish business credit and have no plans on keeping the balance on this loan amount more than $5,000 to $10,000 by the end of next month. They'll get their little interest and I'll get my business credit.

[pepe4158]

Yeah you have to be somewhat mechanically inclined to buy older equiptment....i have never worked on diesels or trailers, but i was an auto-mechanic for a few years when younger, somethings do translate over well enough.........people think i was just stupid buying cheaper equiptment, believe me, i had grass and oil all over me crawling under to inspect the tucks i bid on at auction :-p
As you older hands point out...I know nothing about decent rates, thats cuz I was setting caster, camber, n toe on your wifes family car 20 years ago when you were out telling brokers to go shove their cheap freight where the sun dont shine (n its still here) :-p

[GMAN]

Mark, you don't need to go out and buy a new truck when you first start. In fact, I think it is bad business to over extend yourself so much before you even know what you are doing. You can find a good truck for less than $20-25M. Even if the engine did blow right away, you likely won't spend more than about $15M. That is a far cry from $140M for a new truck. If you look around and take your time, you can find a good truck for a decent price. It is much less expensive to make a few repairs on a truck when you don't have huge payments. If you properly check out a used truck, there is no reason to expect to need to have to replace the engine right away. There are a lot of trucks which have over a million miles and running every day. You need to understand that just because you buy a new truck doesn't mean that it won't break down, and not everything is covered under warranty.

[Truckdobe]

First year businesses have an extremely high failure rate, more so in trucking than most. Having your business in debt day 1, makes it that much harder to succeed. As a sole proprietor, if your business fails, you are responsible for that debt.

While I don't think that $200k in equipment is ridiculous (as some around here do), I do think that it's biting off more than you can chew when starting out.

You do need 3-6 mos of personal expenses to carry you through, b/c it's unlikely that a new business will have much cash flow starting out. You also need hefty business savings for those 'just-in-case' things.

Buying new won't help not having savings and good plan. I bought a new truck last year and wound up in the shop more with it than I have in the last 5 years with my older trucks. Warranty might cover the work, but doesn't do a thing for down-time and lost revenue. I sold the new truck, not b/c I couldn't afford it, but b/c it was a piece of junk compared to my old truck and less reliable.

Some ppl disagree, but I still think CASH is the way to go. It's a lot easier to swallow a bad week or a repair if the bank isn't tapping their toes waiting for a fat check. And, if you decide it's not for you, you can sell the equipment and move along without making payments on something you don't need. I have talked to several ppl that want out, but can't find someone to buy their truck/trailer and can't make enough to pay the payments unless they drive the truck, which is only making its' payment, leaving them on the Beanie Weenie plan with no way out.

[GMAN]

I agree with Truckdobe about paying cash. I paid cash for my first truck and trailer. It takes a lot of pressure off when you aren't faced with high monthly payments starting out. As he said, you can have a lot of problems even with a new truck.