Is Semi Truck Financing Right for Me?
Trying to decide between semi truck financing and buying a semi truck, is kind of like deciding whether to buy new or used. If you’re a trucker or in the trucking business, you already know that your truck is your number one asset. Needs less to say, you need to get the best deal for your money. Answering this question is actually less about personal preference, and more about choosing the best finance option for you and your business.
Today we’ll run through the benefits of financing a semi truck.
Cash is money at hand. This is a great concern for any small business owner. In most cases, the cash is scarce and small business cannot afford the upfront amount to acquire a truck.
When financing a semi truck, you pay a considerable initial payment, around 20% of the total cost, and then you pay small monthly payments over an agreed upon period. The total cost paid is usually higher than if one acquired the asset by cash but the monthly payments are more manageable.
Running a trucking business can also be quite unpredictable in terms of unforeseen expenses due to repairs, gas, and miscellaneous expenditure. Repair costs are especially tricky if you intend to invest in a used truck that has outlasted its warranty period. Due to these unforeseen expenses, it would be safer to invest in an investment whose payment is spread out over a long time and you only part with a little amount each month. As such, you generally have enough left for unforeseen costs and reserves.
When you acquire your big rig through semi truck financing, the truck can be immediately classified as an asset although you have not fully paid for it. This means that the depreciation of the truck can be written off against taxable profits even before you can claim full ownership of it.
You may also be able to claim tax relief on the interest charged across the period over which you will be paying for the truck. (Always consult your CPA or tax preparer for advice. We are not licensed tax professionals. You should do your own due diligence before proceeding.)
When financing a semi truck, you still enjoy many of the privileges that would be enjoyed if you had bought the truck outright. You may still use the truck however you want and travel as many miles as you desire.
In most semi truck financing agreements, you have more rights to the commercial vehicle after payment of a third of the total amount. This means that you can return it without paying an extra amount.
Personal loans are another option for financing a semi truck, but semi truck financing is easier to negotiate in almost every case. In our experience, truck sellers tend to be more trusting of semi truck financing companies, than of private banks.
Furthermore, the deposit paid while purchasing an asset by financing are also much cheaper than the deposits one has to part with when using the personal loan approach.
When financing a semi truck to acquire your trucking business’ number one asset, you can sit down with the financier and work out a deal where you will pay monthly installments. Similar to buying a car, this is where you negotiate monthly payments that are in line with your revenue and profit.
When you buy a truck outright, you are not confident about how much it will make per month and you may end up with a ‘white elephant’ whereas the money to buy the truck could have been used for ventures that are more profitable.
More Questions About Financing a Semi Truck?
First Capital Business Finance is a national leader in commercial truck financing. In addition to tractor trailers, commercial trucks, and box trucks, our generous financing options include tow truck financing, dump truck financing, PTO & blower financing, construction equipment financing, heavy equipment financing, and many bad credit financing opportunities.
Benefits of Semi Truck Financing Instead of Buying | First Capital Business Finance