Buying a Tractor Trailer: Finance Considerations
Whether stocking shelves with the latest merchandise, opening a new location, or buying new equipment, financing is vital to any ambitious, long-term business plan. For transportation-related businesses, this often means financing or buying a tractor-trailer. However, with the average annual cost of operating a truck at about $210,000 annually, according to FreightWaves, doing so requires long-term planning and long-term financing.
By using traditional lending, online lenders, or community lending solutions, delivery professionals can purchase the equipment necessary to stay competitive in the logistics marketplace.
Things to Consider When Buying a Tractor Trailer
There’s no one-size-fits-all way to buy a tractor-trailer. Financing options depend on the specific needs of a business and its clients. In today's highly competitive logistics environment, finding a financing partner that understands the trucking industry is crucial.
Capacity and Utilization
When buying a tractor-trailer, businesses should consider how often they will use the equipment. The answer to this question likely has more significant implications; frequency of use could mean that a company should plan on spending more on fuel costs or that they'll break even on savings more quickly than they had realized. All of these things can be factored into a bottom line and analyzed to ensure that a business runs as efficiently as possible.
Distance and Frequency of Use
Before buying a tractor-trailer, business owners should consider how far the asset is likely to travel on an average trip. For final-mile logistics needs, a day cab tractor will likely suffice; these smaller, more fuel-efficient tractors are perfect for single-day deliveries in crowded final-mile environments. However, for long-haul, a sleeper cab is probably necessary; these larger, often more powerful trucks are designed for cross-country journeys By understanding their needs, businesses can guarantee that they're buying and financing the right equipment for their needs.
Number of Vehicles Needed
Buying a tractor-trailer can quickly turn into buying two or three tractor-trailers. Businesses can avoid costly surprises farther down the road by closely analyzing and assessing their transportation needs before looking into financing options and then talking about these needs with a trucking finance expert.
Types of Cargo Anticipated
Businesses hoping to buy a tractor-trailer should consider their particular needs and the types of loads they intend to move.Lowboys are perfect for heavy, tall equipment, but tankers are necessary if you plan to move any liquids. In other words, tractor-trailers, like financing, are far from a one-size-fits-all proposition. By understanding their needs, businesses can approach financing with a realistic eye toward maximizing efficiency.
Current Credit Risk Level
Buying a tractor-trailer is a risky proposition. The cost to buy a tractor-trailer can be staggeringly high and can often come with unexpected expenses. Before moving to buy a tractor-trailer, businesses should consider their budget and how such a large purchase, even paid off over time, will factor into their bottom line. Understanding the maximum possible down payment can allow businesses to take advantage of lower interest rates and more flexible financing while maintaining a healthy credit standing.
Financial Backing Options
Ultimately, funding is the key to buying a tractor-trailer. However, many businesses are hesitant to look at non-traditional sources of financing. Federal, state, and local government might provide grants for small businesses. However, that funding may not extend to the trucking industry. and specific industry discounts can give a leg-up to first-time tractor-trailer buyers. Working alongside experienced financiers can provide insight into different funding options, lessening the cost of the tractor-trailer for the business or individual.
Short- and Long-Term Goals
When looking to buy a tractor-trailer, businesses should consider both short- and long-term goals.. Why does the industry require this equipment, and what will it allow the company to accomplish? How will this equipment improve short-term operations, and what long-term goals will this equipment enable the business to work? An honest, accurate understanding of short and long-term goals can help a business steer toward an ambitious future.
Make Buying a Tractor Trailer Easy With Expert Guidance and Assistance From Finloc
Buying a tractor trailer is a huge investment. That’s why you should reach out to financial experts. By partnering with Finloc and their network of broker partners, businesses can quickly receive financing offers with flexible financing options, allowing them to react to real-world logistical challenges in real-time. Schedule a call with Finloc today, and see what flexible financing can do for your business.