Owner Operator Semi-Truck Financing

Getting a loan on a commercial vehicle can be a complex process. Lenders tend to be more lenient with semi truck loans, because the vehicle possesses high collateral value and is typically only used for business purposes. However, getting semi truck financing isn’t going to be a walk in the park either. You will need to show the commercial lender that you can make loan payments. Here are six things you can do to improve your chances of getting commercial truck financing:

1. Have a registered business.

Most states require an LLC or corporation to register through the Secretary of State. If  you are a sole proprietor, you should be able to show business income through your taxes. As a new sole proprietor, you may want to get an employer identification number (EIN) or have a doing business as (DBA) name. Your lender may also want you to have a CDL, a Motor Carrier (MC) number and USDOT number. Some lenders want to see some experience, at least two years, in the industry.

2. Work on your personal credit.

For new owner operator financing, you may need to have a personal credit score of 600 or more to qualify for financing. If you’ve been in business for a couple of years, you may have a little more leeway. As a sole proprietor, you are probably relying more on your personal credit than your business credit. The higher your score, the better chances you have to qualify for a loan and for a lower down payment.

If you have a lower credit score, you may want to find a co-signer or work on your credit score before applying for a loan. If you are behind on child support, have had a recent bankruptcy or repossession or have a tax lien, the lender may refuse financing. Take care of your finances before applying for a commercial loan.

3. Find a good truck to buy.

The lender may have specific requirements about the truck, for example, it may need to be less than 10 years old, or have less than 700k miles on it. This is to protect their investment as well as your business. Older trucks break down more frequently. The collateral value isn’t as high. However, provided the truck is in good condition, it’s easier today to purchase the truck through a private party or even an auction. Generally, you will need this information

  • Make, model, year and mileage
  • Serial number
  • Pictures of the truck
  • Condition report
  • Specifications of the sale, the seller, new or used truck, etc.
  • Check with the lender for everything you need to finalize the purchase

4. You will need money for a down payment and cash reserves.

Most of the time, you won’t qualify for 100 percent financing. Having a down payment of 10 to 30 percent will reduce your loan payment quite a bit and make the lender feel more confident in your ability to repay the loan. Your lender may also want to see a cash reserve of one to three months to cover repairs, insurance and expenses in case you have a slow month. It makes good business sense to have a little extra in the bank. You never know when you may have to wait for payment or have to take time off because you have the flu. Unexpected things can often upset your finances more than you realize.

5. Have insurance lined up.

Generally, you will need insurance to cover the truck before lender releases the money to pay for the truck. The type of insurance your business requires will depend on many factors, as does the cost of insurance. Make sure you have a policy lined up while you’re working with lenders.

6. Work with your lender.

Traditionally, owner operator loans were only available through financial institutions, such as banks or credit unions, but there are many more lenders in the marketplace today. Many online lenders have almost instant credit decisions, allowing you to have more options for commercial truck loans.

You may want to consider each company carefully before applying. First, lenders may have different qualification requirements. They may also specialize in different types of loans or only work with certain leases. Every lease application can affect your personal credit. Do your research first. Don’t just take the first approval you get. Read all the terms and conditions of the loan application before signing.

Enjoy Financial Freedom

Owning any type of business doesn’t mean that you will be free from responsibilities. You may not have a boss looking over your shoulder any longer, but your stakeholders will be expecting you to make payments on time. However, when you purchase your own new or used semi truck, you are on track to having financial independence. It will take hard work, but you can do it. Just make sure you take the time to understand the requirements of owning your own truck.

Best Tips for New Truck Drivers

The trucking industry is booming in the United States. Being a truck driver has a lot of rewards, but it can also be quite stressful and overwhelming in the first few months as you learn how to do everything that is required of you. Even experienced drivers hit curbs or miss a turn, but they know how to avoid turning that small mistake into a larger one. We’d like to offer these new truck driver tips to help you make the most of your new career. Here are some of the most common rookie truck driver mistakes:

Being Unorganized

One of the most common rookie truck driver mistakes is neglecting your paperwork, mismanaging your time and not handling money wisely. When you are unorganized, it leads to stress and frustration which can definitely affect your driving.

  • Know the rules that affect your hours of service. Plan for rest stops and breaks before you get out on the road.
  • Make sure you understand the regulations on your current load.
  • Do your paperwork as you go. Don’t try to remember it at the end of the week. Spending 15 to 20 minutes every day handling the paperwork ensures you get paid on time and avoid hefty fines for not having an up-to-date logbook.
  • Track expenses. Save receipts. Keep your cab clean and tidy. Have all paperwork for the current load at the ready to provide it when it’s needed.

Getting Lost

You’d be surprised how many truck drivers get lost on their first few runs. When you’re in the cab, it’s easy to miss exit signs or signs that alert you to a truck-only route. You have a lot on your plate, but if you do take a wrong turn, the worst thing you can do is to panic. The mistake isn’t necessarily in getting lost, but in how you handle finding the right route. Instead, stay calm and be prepared to get out of the situation.

  • Find a safe place to pull over
  • Check the GPS and make sure the address is entered correctly
  • Call the company and ask for directions once you can describe where you are
  • Get on the CB radio and ask for help

Avoid getting lost by not relying on just the navigation system to get you where you need to go. Google Maps won’t always tell you about truck-restricted routes or low bridges. Use a motor carriers’ road atlas to plan your route in advance. As a driver, you have to be efficient while considering practical routes for your larger vehicle.

Not Taking Care of Yourself

As with any job, you may have to work when you’re tired of stressed, but as a truck driver, you are handling tons of equipment and product on the road. Dispatchers, family issues, law enforcement, fatigue and weather changes can all lead to catastrophes with devastating results if you lose your cool. You have to take care of yourself by taking breaks and sleeping adequately on those breaks. No assignment is worth an accident.

Take care of your health with these newbie truck driver tips

  • Don’t abuse caffeine or energy drinks. In a pinch, they can keep you going for a little while, but when the effects wear off, you will figuratively crash.
  • When you take breaks, use them to take care of yourself. Stretch your legs by taking a walk. Take a shower. Get sleep. As a driver, you are expected to keep your blood pressure within healthy guidelines. You can’t do that without taking care of yourself.
  • Eat well. Shop at the grocery store for fresh fruit and healthy snacks to pack in the cab with you. When you do eat at a restaurant, choose lean meats that are broiled or grilled, not fried or sautéed. Ask for salads and vegetables instead of French fries and starches. Better nutrition makes you feel better and more alert.
  • Face it, you may get homesick. Have a way to deal with those feelings. Ask your family to make videos that help you keep up with what your kids are doing. Call your friends and family when you have time. Focus on your goals, much like an athlete does when they’re training. Don’t let your emotions get the best of you.

Not Asking for Help

So many people avoid using the resources available to them, but as a truck driver, you need to know when to ask for assistance and use the information that your company is giving you. The safety department in the organization is not an enemy. The safety officers are just as concerned with your success as you are. Your dispatcher may not be happy when you are running late, but it’s better to keep them informed than to try and pull the wool over their eyes. Ask for help when you need it. Always thank people for information and advice, even if you disagree. You never know when you may run into that person again. Be gracious and leave a good impression.