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What Factors to Consider When Financing a Truck

Trucks can be very expensive to purchase depending on the use of the vehicle. The buyer needs to determine if they are purchasing a new or used truck. They also need to look at the financing options; through a bank, a trucking company or a dealership. Commercial motor vehicles (semi-trucks) can cost anywhere from $30,000 to over $800,000 depending upon the size, style and purpose of the vehicle.

New or Used

New trucks come off a factory line new, never been owned, and come with warranties. New trucks also have the latest software, built-in GPS system, and APU (auxiliary power unit). Used trucks may have an APU, dents, frame, water, accident damage and no warranty. Buyers deciding on a used truck need to review the vehicle history. A used truck that is being financed is similar to purchasing a vehicle at a car dealership when wanting to look at the history, dealerships are required to provide such history. For example, a Carfax report detailing previous damages and owners of the vehicle.

Purpose

When determining the purpose of the vehicle the driver must first determine which type of equipment and product they will be hauling. The purpose of the truck can be any of the following;
  • ·         Dry van – 48 to 53 feet long, hauls anything that doesn’t require refrigeration and can fit in the trailer. For example, recycled paper.
  • ·         Reefer – 28 to 53 feet long, hauls anything needed to be refrigerated and dry products. For example, a truck load of frozen chicken.
  • ·         Flatbed – 48 to 53 feet long, these types of trailers are open to Mother Nature’s weather and can haul anything requiring heavy chains or tarps. For example, a load of lumber.
  • ·         Oversized – 53 feet or longer, this type of trailer is meant for anything requiring flags, possible escort service, and weighs more than 80,000lbs gross weight. For example, construction vehicles.
  • ·         Covered Wagon – 48 feet long, this trailer is a dry van and flatbed all in one. It can haul dry van and flatbed product. For example, windows and glass doors.
  • ·         Livestock – 53 feet long, similar to dry van but the trailer from top to bottom is normally a metal type material with ramps attached at the rear, sides and even inside the trailer. This trailer also has holes on both sides to the live animals inside can breathe during transport.

 Condo trucks have two beds and mid-roof trucks have a single bed. Flat-bed trucks have racks on the back of the cab and extra side boxes for storage. Racks are used for hanging chains that secure the cargo. Extra side boxes are used for storing tarps, straps, load locks, tire chains and maintenance supplies. There are three different types of sleepers; standard, extended, studio. Standard sleepers are range from 40-50 inches and are used for sleeping, resting, and pre-planning trips. Extended sleepers or studio sleepers range from 55 to more than 60 inches. These types of sleepers can have showers, bathroom facilities and even a small electric stove. The bigger the sleeper the higher the cost.

Financing through a bank or dealership

The buyer having excellent or good credit, finance through a bank or dealership. They search the internet, newspaper, and truck paper for dealerships and banks. Banks and dealerships run credit checks and loan options. Bank interest rates and payments on a loan are lower than financing through a dealership or trucking company. Buyers that have average credit, lease a truck through a dealership. However, interest rates are high and a signed contract with a company (trucking or non-trucking) for one year is required.

Financing through a trucking company


Buyers having poor credit, finance a truck through a trucking company. A trucking company offers two options; clean walk away and tied lease-finance. Tied lease-finance means the buyer is tied to the truck for a certain amount of years with serious consequences if not finished. Walk away lease-finance gives the buyer the choice to walk away from the truck at any time without any consequences. Buyers considering finance with a trucking company will sign a contract. Contracts inform buyers of any problems, fees, payments, and insurance. Trucking companies have the same concept as a dealership when selling a truck.

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