There are several advantages to owning your own semi truck. Most importantly, owning the truck provides a degree of independence. You can work for as many different carriers as you like, and when one carrier is slow, you can shift to another one so that you’re always busy. Owner-operators usually gross more than their company-paid counterparts, but their operating costs tend to be much higher. If you own, rather than lease a truck, you can probably save some money on insurance costs, and most of your payments should be tax deductible. A tax professional can help you sort out the tax issues.
Ah, the lure of that brand-new truck smell. The advantage to a new truck, of course, is that there are no skeletons in your vehicle’s closet. You don’t have to worry about whether the previous owner changed the oil regularly – you know that the truck is in good working condition when you buy it. When you buy your new tractor, you can customize it exactly the way you want. You can get the sleeping berth set up how you want, and make sure it has all the features that matter to you, like a good climate control system.
The disadvantage is that new trucks are expensive. A 2012 Peterbilt tractor, for example, can cost between $115,000 and $140,000, depending on how well tricked-out it is. If you don’t happen to have big stacks of bills sitting in your sock drawer, you can finance the purchase of your truck through a dealer or a bank.
Used trucks are generally less expensive than new ones. The tricky part is finding a good one. As with used cars, it’s hard to know exactly how well-cared for a vehicle was with its previous owner. If the truck has been through a half-dozen owners before it reached you, it’ll be extremely difficult to figure out what’s really going on under the hood, or if you might end up stranded on a back road in the Nevada desert with a seized engine.
If you buy a used truck, be sure to check out the truck and the seller completely. Be wary of unbelievably low prices or deals that seem too good to be true. If possible, buy from someone in your local area. That way you can find them more easily if you have a problem with your vehicle. It’s also easier to get the scoop on a local seller than it is to find out about someone three states away.
Taking out a loan will break down the total cost of the truck into manageable monthly payments, usually over a period of five or six years. At the end of the term, you will completely own the truck, as opposed to a lease situation where you may have to make a large balloon payment at the end of the term to keep the truck. Taking out a loan will add finance charges to the total cost of the loan, but the more money you put down at the beginning, the less interest you have to pay.
There are two problems with financing. Many people have a hard time putting together enough cash for a down payment. Flexible lenders may respond by letting you take out a loan with nothing down. The other issue with financing is that if you have less-than-perfect credit, your odds of getting approved for such a large loan are pretty slim. The lower your credit rating is, the higher your interest rate is likely to be, if you can get approved at all.
When owner-operators are looking to upgrade their equipment, they don’t always turn their old tractors in to the dealer for a new one. As with cars, lots of smart sellers sell their own trucks. Check your local newspaper for ads from truck owners looking to sell. Once you find a good condition, reliable truck that meets your needs, consider asking the owner to let you make payments direct to him instead of arranging financing through a bank.
If you pay the owner directly, you might be able to save some money on finance charges. This is still a legal agreement, and the seller will require a proper loan contract that specifies how much you are going to pay him and when, and clarifies the fact that he has the right to take back the truck if you don’t pay. Sellers will be more likely to accept this arrangement if you live in their area (so it’s easier for them to find you and the truck if you fall behind).