Truck and trailer financing

Discussion in 'Ask An Owner Operator' started by Oilfieldtrucker82, May 23, 2012.

  1. Oilfieldtrucker82

    Oilfieldtrucker82 Bobtail Member

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    I am currently looking to finance my first truck and trailer. I was told by the dealer they would want 20 percent down and only finance for three years. Is this correct? I have a 720 credit score and some property in my name that could be used as collateral.
     
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  3. HDFatboy

    HDFatboy Light Load Member

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    :biggrin_2551: You'd want to lose your property if the truck thing don't work out?
     
  4. RedForeman

    RedForeman Momentum Conservationist

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    Commercial lending is a different ball game than personal. It's stupid since you have to sign a personal guarantee anyway, but it is what it is. I've done business with my credit union for about 15 years and they wouldn't touch a commercial truck loan until my company had been in business two years and established good credit on it's own. In addition, commercial terms are not as generous as personal. 20% down is customary and the length of the loan is tied to the useful life of the asset securing it. Not to mention that a shorter term reduces the bank's risk of default.

    You'll be better off and get better terms if you mortgage the land and use the cash to purchase the equipment. Not advising that you hock personal property to buy a truck, but if you do, this is the best way to do it. At least if things go sour, you have clear title on the equipment.

    FWIW, I financed our first truck by doing exactly this. Only I secured the note with personal vehicles that were paid off, instead of real estate. I got 1.9% money, no down payment, 60 months with no pre-payment penalty. From the same credit union. I probably won't let the note go to it's full term. I wanted easy terms to give myself some breathing room while starting a new business. So far it's worked out. When I bought the second truck, I had the cash to buy it outright. Instead, I financed $10k of a $30k purchase for 12 months in order to build credit as my business. So far that's working out too. It'll be paid off in November and I'll have more options when I decide to change/upgrade my equipment.
     
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  5. Allow Me.

    Allow Me. Trucker Forum STAFF Staff Member

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    Yeah financing for 3 years is the norm, on older trucks. Buy new and you'll get 6 years or better. I bought new in '07. $104K, just needed the first month pymt to drive off. $1937 a month for 6 years. Int'l with a credit score of 850. Look around for a better deal.
     
  6. vangtransport

    vangtransport Heavy Load Member

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    You also have the option of a SBA loan. Depending on the bank & year of the truck/trailer you may get better terms, & possibly some start up cash.
     
  7. MNdriver

    MNdriver Road Train Member

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    I worked with my bank on an SBA patriot express loan in February. I Think I am going to talk to some other banks again, but they wanted 30% down, for me to have $28,000 operating expense and told me I was going to have to finance a $40-60K truck. Something about a minimum mileage to them meant it was not going to be needing repairs too soon. Like 400-600K miles.


    The loan itself is guaranteed for 80% too.

    Kind of hard to stomach needing to come up with close to $46,000. $18,000 for a down payment and $28,000 for operating expenses.

    Especially when I was initially looking at a $15-20K truck to begin with.

    I also got this information in the email today.....

    http://www.thetruckersreport.com/tr...erator/179401-s-c-o-r-e-what.html#post2620982
     
    vangtransport Thanks this.
  8. vangtransport

    vangtransport Heavy Load Member

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    So much for getting America moving again, that's ridiculous, especially for a Patriot Express Loan. Got to love banks, they will loan money as long as you have money, it kinda defeats the purpose.
     
  9. MNdriver

    MNdriver Road Train Member

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    His exact comment:

     
  10. vangtransport

    vangtransport Heavy Load Member

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    The sad part is they claim the guidelines used for SBA Loans can be "stretched" due to the guarantee provided by Uncle Sam. I guess this isn't the case. It sounds like the banks are still being banks but not taking any risk. So they loan out money with no risk, collect interest on that money, and in the event of a default, collect money from tax payers. We should go into banking.lol
     
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  11. MNdriver

    MNdriver Road Train Member

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    Considering I have a company to lease on to.

    $8,000 saved up and growing by $1400 per month.....

    Couple inexpensive trucks I wouldn't mind financing on.....

    The opportunity cost to start today is seriously less than if I were to wait 18 months.
     
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