There are a lot of things to think about when financing a truck, the capital outlay can vary greatly. Small trucks can start out around the $50k mark and less for a used one.
With larger trucks, the expense can be more than purchasing a home. Here are a few things to consider when making your purchase.
Large Capital Commitment
For owner operators, the outlay might be worth more than the value of a house so it’s important to make the right choices at the beginning of the agreement. A complete rig including truck and trailer might be upwards of $700,000. The two may be financed separately so truck or trailer can be upgraded or changed over at any time.
Longer Terms Available
For example if the income producing period / purpose of the truck is over 10 years, a 7 year finance contract might be available. This provides cash flow cost certainty and reduces need to refinance large balloons on shorter terms. If a truck has a shorter life in your enterprise than the trailer/s, two different terms might be appropriate. For example, heavy or long haulage prime mover might have a shorter life but the trailer because it might be used less in multi-applications (like harvest only), meaning a longer term may be more appropriate.
Knowing your monthly commitments means you can budget more effectively on the cost side of the ledger. Most often the specific purpose means you can estimate/forward forecast income and be able to best determine suitable term and balloon options.
As always, be sure to be aware of your obligations to the lender and the ramifications for you. Having a range of lenders for different trucks can be easier to negotiate as well an enable an ability to utilise finance for a small fleet.
New v Used
Newer trucks are generally able to have longer terms and or larger balloons than used because they are a known quantity. Used on the other hand can have unknown history so they might be required to be on a shorter term.
Customise your truck – And your finance!
Trucks have specific purposes, the body is generally manufactured for an industry application. You can customise you finance for your needs. Most terms are done on a 4 to 5 year term with payments being made monthly, some that derive their income on a seasonal basis might be done an annual or semi-annual basis.
Talk to the team at Laurentide to discuss options further.