Is it better to buy brand new?

Yeah, a small bank would probably do him a much better job. You could use the home as a line of credit and probably get 5.5 to 6%. They may even finance his truck by itself.

I’m a big fan of small community banks. I’m paying 3.99 to 4.5 on equipment. No wonder guys can’t get ahead on their loans and save back money. Interest will eat your ### up.

 

buying used should be no monthly payment, pay cash for an older one or buy brand new, 2008-2015 trucks are dirt cheap for a reason, and it’s not because they ran so good and made so much money.

 

I call and get an interest rate, then call other lenders and tell them id like a loan and see if they can beat the current % then I call back to the original and tell them that I have a lower offer and see how low they are willing to go.

 

4 things owner operators don't want you to know:

1. Buy a brand new truck by cash!
2. Work hard, like you work for your mother's life!
3. Become a millionaire in no time soon!
4. Live a good life after you retire!

 

Right.
So you lose 18% per year on the equity in your truck (after tax write offs and all), why would you ever stick more money into a new truck than you absolutely had to? Well you would to bring the truck payment down from $2900 per month. Or, you'd look at a truck older than 5 years in which case that $32,000 per year in depreciation and interest paid on the loan would be replaced, to some degree, by lost revenue and maintenance.

How much does a guy pay in lost revenue and maintenance each year on a used truck with more than 500k on the clock? Edit: above and beyond the short interval stuff like tires and oil.

 

Part of the depreciation is offset by lower maintenance costs. New trucks come with new tires, fresh oil, new coolant, new clutches, new brakes, new air dryers, new shocks, new light bulbs. Part of it is offset by higher up-time, lower down time.

I’ve run both old and new. In my operation, the costs are very similar - but we are VERY down time sensitive, and we don’t do much of our own wrenching.

In our operation (small private carrier) depreciation is VERY predictable, we can run our cost and pricing models off highly certain numbers. Old iron threw us for $20K loops that increased risk and thus reduced predictability, and had additional penalties such as damage to reputation and to pricing power.

 

Hey Midwest Trucker, an older thread here I know but I was curious your thoughts. Most recently when I checked a few weeks ago my 3 credit scores are from 750 to 780 and I was offered 4.5% on a new truck loan and 5.5% on a new trailer loan. This with a mega bank I have a relationship with. I don't really have any relationships with smaller banks in town but could pursue that. Does that seem pretty decent currently or would you shop it? Do you pay the same rate on trailers as you do trucks?

 

In a normal time I’d say that’s pretty darn good. It’s still far from bad though. My little bank is at 3.75% for equipment right now. That is for trucks or trailers. You could always bluff them a little and say that the local small bank offered 4% on both and are they able to match it? If they can’t match it say, well how close can you get? I’ve been doing business here for quite a while and would prefer to keep everything with you guys. But, at the end of the day I have to do what’s best for my business.

Im sure even the big banks have some flexibility. That is one nice thing about small banks is that they definitely can adjust things.

Number one rule is truly believe and act like this is an opportunity for them to make money, and that it’s their honor to win your business. Did they say you had to put much down? Maybe 10% down payment would help the terms?

 

No he didn't say but that's my intention to put 25% down anyway. I also didn't tell him I wasn't interested in a new truck and just left that open as a possibility. I'm not really looking for a brand new trailer either but he thought I was. A "newer" trailer would suit me just fine and save a bunch of money. I kind of had in mind bluffing him like you said about that extra 1%. And his rate might even be different on used, where again he could be bluffed, but I didnt think that was too bad though for a new truck.

 

At 25% they ought to do a double somersault into a back flip to earn the business. LOL I don’t think they could find a better customer to loan money to. Long track record, good credit, big down payment. If it got much better you wouldn’t even need the bank.

But anyway, sounds like you got it handled. It’s always nice to know what all your options are.