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

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.

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.

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.

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.

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.

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.

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.

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.

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.

I own 3 trucks with my own authority. This past spring I traded a '98 Volvo in for '09 Cascadia, everything else is paid for. IMO I would never start off with brand new truck. I think you are setting yourself up for a failure to start. You need to think of insurance cost on a new rig. Yes interest in higher on smaller loan but much lower insurance premiums will make difference plus your overall payment a month still will not be as high. Before I got my '09 I pondered getting brand new Cascadia Evolution but I would have to team it and run the hell out of it to make it work and just not what we do. I am now looking to buy another 1-2 trucks but definitely not new. These will not be Cali trucks like my '09 so older is fine. Looking at $25k trucks. You can buy older truck but budget like big payments and "refurbish" older truck also. Just my 2 cents.

Good point.

its a super bad idea to start out with a new truck. what a lot of people that are just jumping in to it do not understand is that when you apply for your own authority is that you need to hold insurance while you are applying. it takes about 3 months too. i got lucky when i started. i bought a used ryder truck (04 columbia), threw the warranty on it. i started running doing rain containers. i literally started with $90 to my name. i busted my ***** for a year. got my authority and bought my dry van. i had a real decent amount in the bank and by the time i was ready to run under my own authority i was back down to almost nothing in the bank. but it was the best thing i ever did. i have 2 trailers now and gearing up for #3 and another truck. BUT i'm very lucky, i got great customers and great brokers. you NEED money for the unexpected. in the past 3 months my truck has costed me about $7-8k in repairs. about $5000 last month alone.

I sent you a private message and you can call me if you have any questions. I bought my truck straight out of driving school and I took off from there and learned and as I went. It has been 6 years now and doing very well.

If I get sick or injured long term things could get bad quick.


Hi Scott, I have no new private messages.

From start of forms til the time I became active was 21 days. Do the stuff yourself don't have these companies bend you over getting authority for you.

Not to bud in, but I have been reading all the great posts. :)

I'm pretty sure you have to have a minimum of 25 posts to give or receive private messages.
That system is in place as a security measure.

Creepshow…make...

..a bunch :)

of messages to get to 25. :D

Spend $25 and join OOIDA and have them guide you through it.

Scott that's good advice. OOIDA is one thing but these places charging in ballpark of $1,500 to do what you can do yourself much cheaper is ludacrous.

Ok thanks,

Thanks for the advice, had no idea.

Funny, but everything is not white and black. There are some other colors. I even remember it was a separate tread, "New vs Used", or something like that few years ago. So i don't want to start another one. Just a couple thoughts;- Main advantage of a new truck is that you know your cost at a start, and less posible downtime. Disadvantage- initial cost, and newer truck complications. Used truck main advantage is just a initial cost, everything else is disadvantage. BTW, did you look into gliders? But that's just a tools, it's not what you got, it's how you use it. If you doing things right, truck payment is a no big deal, if you are in a wrong, it won't save you, just prolongs an agony.

Is there a carfax type site for tractors / big trucks to check out the claims history? …… If your lucky.

is that the truth! it would have been about $200 cheaper and i ended up filling all the papers out anyway! they just mailed them in.

I don't remember exact cost but think I had $500-600 total in getting authority plus the insurance. May been little less or more. I learned few area I could've saved money too.

Yeah it's called take it to a dealer and have it checked out and dyno'd

The filing fee to get your authority is $300 if you do it yourself.

Buying new used to mean that you would usually spend less time in the shop than buying an older truck. That isn't necessarily true with the new emissions. A friend of mine was in a Freightliner dealer a few months ago and he was told that about 95% of the trucks in their shop were there due to emissions problems. And these were new trucks. A good used truck that has had good maintenance and been taken care of could spend less time in a shop than a new truck.

Any O/O in Lexington Ky area here that wanna talk about this? I'll buy an awesome breakfast.

I may have found an option in the bulk cryogenic arena. It'd be a lot less chancy if they pay.

This may be off-topic, and some people may disagree with the guy, but: If you have XM or Sirius and are thinking of becoming an O/O, you should listen to Kevin Rutherford, weeknights at midnight eastern, weekends at 4pm. I only found his program less than a year ago, I wish I heard of it 6 years ago! I made the terrible mistake of buying a brand new '09 truck in fall of '08. It's paid for now if you'd call it that. I now have tens of thousands of dollars in new debt (credit cards, etc.). If you do decide to buy a truck, buy a used pre-emission truck and you'll have a more reliable truck than a new one. These companies that want a truck 5 years old or newer need to be educated.

These companies want a new truck so they mak sure you are in debt, tell them you paid cash for a new truck, and dont want to work that hard, and they tell you there not hiring

If you are hell bent on being an O/O. I would not buy a brand new truck, i would find a used truck that has been inframe with papers. You want to start out with less overhead, having a big payment will put you in the hole. Owning a truck is a 24hr cycle, you are going to have bad weeks and good weeks. You have to remember if you have a bad week, those truck payments and insurance payments you still have to make. When i started out i was paying over 10k a yr for insurance.

Hi Dave,

Decisions like this can seem overwhelming, but if you do you research, you will have more peace of mind knowing that you are not making a rash decision. You should check out www.wefinancebigtrucks.com to see what they can do to help you. You may qualify for other options than having to put your house on the line.

In reading through the posts, no one has mentioned the lease/purchase option to Creepshow.

Creepshow, are you only interested in staying local to be home with the family every night or are you willing to do whatever it takes to make this work?

My hubby just became an O/O through the lease/purchase program. There are many companies out there that offer it and I won't lie to you, it is a bust your tail situation when you sign on the dotted line. The company hubby signed on with made promises that they did not fulfill (no surprise there) and their dispatchers maintained the attitude that hubby was a "company driver" and "we have you over a barrel until you pay off this truck". However, when you sign on that dotted line, you are an O/O as long as that truck payment is made. Yes, it takes some sucking up to the dispatchers to get the paying loads, BUT hubby did the research before he walked in the door on lease/purchase, truck costs, etc. He ended up with a truck that had less that 500,000 miles and was still under warranty. That first year under lease/purchase that warranty came in handy and the bugs were all worked out of that truck before it was paid off.

I will tell you that sometimes his paychecks were less than what you make now a week. Sometimes they were double and triple what you make. During his time under the lease/purchase we had the advantage of my income to carry us (Uncle Sam pays well in my job). Now, with the truck paid off, that $1500 a month truck payment is going in the bank with the rest of his paycheck.

I would under NO circumstances suggest that you mortgage your home when there are other options out there that may work for you. Your home that is paid off is your sanctuary and your security in the tough times we have experienced and the ones that are yet to come.

If you need to borrow from your home, do it just to cover the down payment of the truck. This way if things don't work you still have your house.

I agree, if your going to start out in the hole, it best to start out with the least amount of debt possible. The loan is not a bad idea if you feel like your going to ride this out. WHat I would do is get 50K on the home, Purchase a truck for $10-15K run a in-frame if needed thats another $10K, If it doesn't need it why bother, but I would do it anyway this way I know what I have. If your plan on pulling a dry box get a decent van for 5k. At best your looking at a total of 35K to get rolling. You still have 15K give or take to handle any problems that will occur. If you had that motor in-framed and tranny redone before you hit the road, NO need to worry truck is in great shape. This is a business plan I would follow if I had the means you do. With that said Good luck!!

so where are you sitting with this?

Always be careful when making such decisions. You can get screwed pretty bad if don't read carefully the papers that you are signing. I have a friend that bought an apartment 10 years ago and he is still paying for it. I think that he paid its value 3 times already. Banks are like the devil. If you are going to sign with them, you better come with your conditions, because their conditions will ruin you. I've been using https://www.finpedia.id for a while now and I must admit that I am pretty satisfied with it. There is no such thing like a perfect bank, but there are some that are willing to help you