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Old 12-02-2013, 03:52 AM
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Default Home Equity Loan to buy Tractor Trailer - My Story - Scared

Hi. 1st time poster on this forum.

I got my Class A CDL back in 1999. I've still gotta lot to learn but have experience pulling and driving various types of units. Pulled tankers for about 6 years, Liquid tank and dry bulk, Van, 48' dump trailer, little flat bed when I first started driving and have recently pulled doubles.

I'm currently with a leading LTL carrier in central Kentucky and I cannot pay the bills with just the income from driving at my current job. I rarely gross much more than $800 weekly and after taxes, 401k and insurance deductions, I generally net between $550 - $650 weekly. I've got car insurance x2, one car payment, home insurance and all the regular stuff like utilities, phones, cable, internet, gas, groceries and stuff for a family of 4 plus a grandchild + anything unexpected and special events. I'm sinking and have a second income.

I'm actually a bit intimidated about the thought of putting my paid off home on the line but this Tuesday I'm using a PTO day and going to check into taking out a home equity loan to buy a brand new tractor. I'm just going to see if it's possible and if it is I need to research things even more than I already have to see what exactly is out there to haul. I have good credit, house should be worth a minimum of $250k and it's paid for. Obviously I'd love to have the freight ready to go when I got the truck but I need the truck 1st so if I land freight I'll be ready to go.

Tank or van is probably what I'm leaning toward since I never liked dealing with flat bed when I did it. I have no idea what they pay but see UPS is hiring O/O in my town.

I've done a lot of reading on this forum. Is there anywhere else I should checkout.

I know it's a bit of a gamble but my current employers just not getting it.

Any and all advice is warmly welcomed.

Thanks,

Dave C
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Old 12-02-2013, 05:30 AM
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Why would you want a brand new tractor? Why pay $140K for a new tractor that is worth less than $100K after your first trip? Your tractor is just a tool in your business and a used tool will get the job done just as well as a new tool. There are alot of good tractors out there in the $25K range that will make you money. I am running a $15K tractor and a $7K dry van that I paid cash for.

Buy a used tractor and trailer and put some cash in the bank for future expenses. You will need a hefty bank account for the unexpected.

A good friend of mine just did the same thing 2 years ago. He quit his job of 20 years hauling for a food service company and got his own authority and with some coaching on how to get started he has done very well. He paid everything off in 2 years and is sitting very good today.

He bought a 2007 Volvo for $28K and a 2008 Reefer trailer for $18K

Check your private messages.
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Old 12-02-2013, 09:17 AM
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A couple reasons I was thinking new freightliner Cascadia was the warranty and I was told some people won't let you haul their freight if your trucks not newer than 5 years old but like I said I know I have a lot to learn relatively quickly.

One of the tanker jobs I had, the guy had 2 Kenworth T2000's. If I remember right, one was a 1998 and the other a 2001 which made both 5 years and older when I got that job in 2006, each had around 800,000 on them and both ran great and I never remember either having any issues.

I'm located in Lexington, Ky at the i-64 & i75 split. Some of the larger cities I can think of I'm close enough to run to round trip at least once in a day are louisville Ky, Indianapolis In, Cincinnati Oh, Columbus Oh, Knoxville Tn, Nashville Tn, Chattanooga Tn, Dayton Oh and Charleston Wv… Wish I could say Atlanta Ga but it'd be a bit of a stretch.
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Old 12-02-2013, 05:33 PM
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I have never heard of anywhere not loading you because your tractor is too old.

I have ran into a place that won't load a trailer that is over 10 years old.
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Old 12-02-2013, 06:39 PM
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I like Scott's response if you want run your own truck. As for LTL I would need alot more info. If you're only grossing $800 then you are not at a leading LTL carrier or you are not at top rate, which also means you have no seniority. If the latter is true, and your home is paid for, then consider giving it more time. Top LTL carriers pay city drivers 50-75k a year once they are at top rate and full time. Road drivers make more like 75-100k. I'm not an O/O but I am a LTL Road driver. When I factor in my pay, the health insurance, and retirement plan, there's no way I could consider running my own truck. That said, I don't have the flexibility of an O/O either. I cant always get vacation or days off when I want. I do it their way, whether I like it or not. There are certainly things I dont like. But at the end of the shift my time is mine. I dont do paperwork or wrench on trucks during my weekends. I sleep in my own bed, have dinner with my wife, and work Mon thru Fri. It suits me.
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Old 12-02-2013, 09:40 PM
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It's a top LTL carrier, conway freight. Your correct, I'm not at top out, I'm not a senior driver and im a city p&d driver. Only been with them 8 months and it takes about 6 years to top out at a little over $24 an hr. they say 5 years but its closer to 6.

Their new business model is to hire part timers to cut out the ot which makes it kinda tough. One of the guys I work with has been here 10 years and has moved up 2 spots so its a long road to the top of the senior board around this place.
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Old 12-02-2013, 10:20 PM
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Originally Posted by CreepShow View Post
It's a top LTL carrier, conway freight. Your correct, I'm not at top out, I'm not a senior driver and im a city p&d driver. Only been with them 8 months and it takes about 6 years to top out at a little over $24 an hr. they say 5 years but its closer to 6.

Their new business model is to hire part timers to cut out the ot which makes it kinda tough. One of the guys I work with has been here 10 years and has moved up 2 spots so its a long road to the top of the senior board around this place.
Gotchya. I know all about Conway. Been there done that. I agree 5 years is a long time to get to top rate. And your right they wont give you much OT. The only ones who make big money there are road drivers, if you don't mind 60-70 hours a week. That would be incentive to stick around if you thought you could get on the road. LTL is tough at the bottom. A lot of middle age guys just dont have time to wait, they need to make money now. Just a thought but you could consider Fedex Ground. Its all owner ops and they dont pay the greatest, OK money. But the nice thing is the contractor owns the "points" which is like seniority. So if he hires you, you run the route he already has. I'm talking road not P&D. While you learn their lanes and system you should be able to learn a good bit about putting your own truck on, or buying someone else's business. You obviously have the assets and credit to pull it off.

If you dont mind being gone during the week you could consider Estes or Old Dominion. But it has to be a hub or terminal that has "wild" extra board. The first dispatch of the week from your home terminal is on seniority but at a foriegn terminal its first in first out. They should keep you moving all week, running legal and sleeping in motels. Even at starting rate you should be able to make 1000-1200 a week gross and go up from there. With seniority you might be able to get a set run that returns home daily or every other.

I wasnt sure what your status was. LTL can be pretty lucrative after 5-10 years but I know its tough on new guys. Cant help you with the O/O side. Good luck to you.
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Old 12-03-2013, 03:09 AM
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It is a bad idea to buy a new truck starting out. It is also a bad idea to put a mortgage on your paid off home to buy a truck. You can find a good used truck for $20,000 or less. If you don't have much cash set aside, you might consider a home equity loan to be used ONLY in an emergency. It is never a good idea to put your home at risk. Let your business build and pay for a new or newer truck later. With the high costs and depreciation, it doesn't make much sense to go out and buy a new truck. This is a business and you need to keep costs as low as possible. The economy is still not doing that well, contrary to what we hear in the media. Many thousands of owner operators and carriers have gone out of business during this slow down. The last thing anyone needs is high payments. If you have good credit then let the truck stand good as collateral for the loan rather than risking your home. Any business enterprise is a risk. There are ways in which to minimize those risks, but there are no guarantee's. Check around, take your time and you can find a good truck in the $20,000 range.
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Old 12-03-2013, 01:21 PM
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Quote:
Originally Posted by Snowman7 View Post
LTL can be pretty lucrative after 5-10 years but I know its tough on new guys. Cant help you with the O/O side. Good luck to you.
Thanks for the tips on FedEx Ground and the LTL companies, I could be wrong but I think my best option is going to be O/O. I think one of my biggest weaknesses is that I don't know any seasoned well rounded owner operators to talk to for ideas and basic information on actually getting this going so I'm doing a lot of reading and taking in as much in as I can.

Quote:
Originally Posted by GMAN View Post
It is a bad idea to buy a new truck starting out. It is also a bad idea to put a mortgage on your paid off home to buy a truck. You can find a good used truck for $20,000 or less. If you don't have much cash set aside, you might consider a home equity loan to be used ONLY in an emergency. It is never a good idea to put your home at risk. Let your business build and pay for a new or newer truck later. With the high costs and depreciation, it doesn't make much sense to go out and buy a new truck. This is a business and you need to keep costs as low as possible. Many thousands of owner operators and carriers have gone out of business during this slow down. The last thing anyone needs is high payments. If you have good credit then let the truck stand good as collateral for the loan rather than risking your home. Any business enterprise is a risk. There are ways in which to minimize those risks, but there are no guarantee's. Check around, take your time and you can find a good truck in the $20,000 range.
Unfortunately I don't have the cash right now to buy a tractor trailer straight out, nor do I have a comfortable amount set aside for repairs and living expenses during a possible breakdown.

I took a PTO day today and later this afternoon I can hopefully be able to find out more about a home equity loan or the type of loan I could use.

Right now I think the type of loan I'm looking at would have an interest rate for around and possibly under 4% so $120k @ 4% for 6 years is $1880 per month…. A $25k truck or $50k loan and this goes way down.. That's a scary payment to come up with every month but I could have what I needed and enough money set aside for startup operations and potential problems that arise. I just don't wanna be in a situation where I wish I'd have gotten more money or need more and can't get it.

Am I thinking about this all wrong ? If I don't take a chance doing something , I'm afraid with my current income I'm going to either lose everything or be forced to sell the home and downgrade to a less desirable home anyway. On the other hand, It'd be a loss to my whole family if I got the tractor and couldn't make a nice profit. We'd be on the street. I don't have any family to live with or to get help from, It's all on me.
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Old 12-03-2013, 04:58 PM
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What's your plan if you get sick, or injured? I may not be an O/O, but buying a brand new truck seems like a huge risk.
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