What You Should Know Before Buying a Truck

by Fran Bernard, on Jan 28, 2020 2:38:00 PM

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If you have always dreamed of owning your own truck, there are a few questions you have to ask. Trucks are not cheap. Even used, you can expect to pay well over $40,000. Since most people don’t have that kind of cash lying around, you may ask yourself, how should I buy my truck?

You can get a loan, but the banking industry’s rules may make it hard for people to qualify for a loan with less-than-perfect credit. There are solutions to this problem if you find that you can not get a loan.

  • Continue being a company driver, and work on improving your credit rating
  • Lease a truck from an independent equipment leasing company
  • Lease a truck with an option to buy from a carrier

New, Used, or Leased? 

When considering leasing, there are advantages and disadvantages.

A lease is a contractual agreement in which a leasing company (lessee) allows a customer (lessor) to use its equipment for a specific length of time (lease term). During that time, the lessor pays the lessee a set amount of money at specific times (usually monthly). At the end of the lease term, the lessor can return the equipment, continue leasing, or buy it. The specific arrangements are all set out from the very beginning of the agreement in the lease.

The advantage of a lease is that they generally require less money up front than a loan. You might be able to lease a truck with little or no money down. Your payments are typically fixed and predictable, and there may be some tax advantages involved in leasing. If you work with an independent leasing company, you can choose the type of lease that best suits your needs, so if you think you will make less money at the beginning of the lease term and more money, later on, you can get a step-up lease and increase your payments over time.

The disadvantages of leasing are that if you intend to buy the truck at the end of the lease term, you may end up paying more than you would have if you had purchased the truck outright. Since you are driving someone else’s equipment, you can’t modify it the way you could if it were your own. You might also have to carry extra insurance on the vehicle to protect the lessee’s investment. 

So, there are three options you have in purchasing a truck:

First Option

You can continue to work as a company driver while saving money and improving your credit score. This is the slowest but most financially sound way to get into truck ownership. This arrangement will also give you time to learn about the real business side of truck ownership, and the actual costs involved.

Second Option - Credit

Lease from an independent leasing company

If you can’t possibly wait that long, then leasing from a third party will allow you many of the advantages of truck ownership. Since your vehicle isn’t owned by the carrier you haul for, you will have the freedom to work for different companies and leave companies that don’t treat you right. Independent leasing companies won’t be responsible for your scheduling and dispatching, and they can’t deduct your lease payments right out of your paycheck. There are still some drawbacks: 

  • As a self-employed contract driver, your costs will be higher than they ever were as a company driver
  • You will have to fix anything that goes wrong with the truck
  • You will have to budget for your taxes and health insurance

Third Option – Credit

Lease from a carrier

Your third option would be to lease your truck directly from the company you work for, and it is one you should examine very carefully before you sign. Carrier lease agreements usually offer no credit check, no down payment, and truck payments from load pay. Just know that in these arrangements:

  • You are no longer a company driver 
  • You are generally not eligible for health benefits, retirement planning, or income tax withholding. 
  • The company gives you a truck, and they deduct your lease payment directly from your paycheck. 
  • At the end of a set period of time, you will either own the truck, or you can make a single payment to close out the lease and get the vehicle

According to the Owner-Operator Independent Driver Association (OOIDA), lease-purchase agreements can spell financial disaster for truckers who sign on before they fully understand the terms of the lease.

Many things can go wrong in a carrier lease situation. OOIDA lists some of the risks on its website. In some cases, lease drivers did not get enough miles to make their truck payments, but the fact that the carrier owned the truck prohibited them from going to other companies to get work. Without enough miles, some drivers received negative checks – meaning they actually owed the company money each pay period. Truck payments may be deducted weekly instead of monthly, which takes away some control of your budget planning. Also, OOIDA reported that several drivers kept getting billed for truck payments even after they had walked away from the deal – and their lease agreement specified no penalty for returning the truck and canceling the lease.

If you do enter into a carrier lease agreement, be sure to understand what happens if your truck needs repairs. Find out if the truck is in good condition to start with, or if it will spend excessive time in the shop. When it does have problems, will you be able to work on it yourself or select your own repair shop, or will it have to be fixed in a company shop? If it must be maintained by the company, will they deduct repairs right out of your paycheck? Does the company require that a portion of your pay be set aside into a maintenance account? If it does, make sure you understand when that money can be used and what the procedure is for getting to the money. There have been cases where drivers have money sitting in a maintenance reserve, but they can only tap into it if repairs cost over $1,000. That means they have to pay out of pocket for every $950 repair.

There are certainly reputable companies out there that offer lease agreements in which drivers have a realistic chance of success. To find these companies, do serious research on potential programs. Ask around, read reliable print sources, and listen to people you trust. Most importantly, make sure you understand the real costs involved in operating your truck, and balance those costs against realistic expectations of miles that you are likely to drive and income you are confident you can make. If there is a slim or nonexistent profit margin on paper, there will probably be a loss in real life.

Things to Consider

Buying:

Buying or adding a truck to a fleet is not something to jump into without considering a few things first.  

  • How much money do you expect to spend?
  • Will the freight the truck hauls be enough to make a payment?
  • How many miles do you expect to get out of the vehicle?
  • What are the available funding options for both purchase and lease agreements?
Deciding Between New or Used Trucks

Once you have considered your financing options and the future business use of the truck, you can decide whether to get a new or used truck. Buying a semi-truck is never easy especially when you want to purchase used semi-trucks. When you are purchasing a new semi-truck, it is easier because you don’t have doubts about the functionality of the equipment.

However, in most cases, many people are choosing to buy used over new trucks to save money. If you decide to go this route, you need to perform a detailed truck inspection in order to protect yourself from additional repair expenses and to alleviate the problem of having a used truck that can’t be properly repaired. 

Used Trucks 

There are some drawbacks when buying a used truck. Buying a used truck can be more cost-effective in the beginning stages. However, a used truck can develop issues as it acquires more miles. 

Another disadvantage to buying or leasing a used truck is often these trucks have a minimal warranty, if any at all. Some used truck dealers sell their vehicles “as-is.” Buying or leasing a truck “as-is” means the dealer has no responsibility to fix the truck after the papers have been signed. However, there are many well-maintained used trucks available that are still a great deal. Ensure these trucks have been serviced regularly and have low mileage for the purchase price.

If possible, you should try to buy a used truck from a friend. Buying from people that you personally know is always a good step. They wouldn’t tend to sell you a truck that is in bad shape. Most importantly, they will inform you about the history of the truck and any possible problems that you may face in the future. Quite possibly because of your friendship you may get a good price too.

If you are looking for a smaller bill to pay and possibly shorter term to pay it, a used truck is for you. Especially smart if you are new to trucking and it is your first truck better because you don't even know if you're going to love being a trucker or owner-operator.  With a used truck, you can get usually get out sooner if need be. And also, you might be able to get all of your money out of the truck as long as you bought it at a reasonable price.

A used truck can be just as profitable as a new truck and have you in the black sooner.  Even with repairs. You will be paying less insurance and taxes.  You might spend some money on repairs, but your monthly expenses otherwise will probably be a lot lower.  Especially after you replace/repair all of the wear and tear parts.  (Don't forget a brand new truck also gets low fuel mileage until broken in!)

The trick is doing a thorough look over when choosing a used truck.  Also, don't overpay for that truck. Try to buy with equity already in the truck.

Inspect everything and see if they will let you take it to get a Dyno. Be aware that many places won't.  Alternatively, you could get an oil sample and have it tested. Most reputable dealers, are not trying to sell you junk for a truck, especially if they have a website and social media. 

You should also check the VIN number at www.rigdig.com to get the history of that truck.  Make sure it hasn't been in an accident, or at least you know about the extent of damages and repairs.  You can buy trucks that have cosmetic issues (ugly trucks) at a significantly reduced rate.  You might get DOT inspected more often but stay legal, and you really can make higher profit margins with a lesser truck expense.

Many people will do this, save their money, and then buy a newer truck with cash later from the lot or an auction.  This is a good idea if you're going to the oil fields to work too.  You don't need a pretty truck in the oil fields, just a dependable one.

Even if you get a used truck just a year or two older, you save a lot of depreciation.

Check the papers and check the maintenance records. They are very important. The truck is supposed to be taken in for periodical checkups and on every visit, the condition of the truck is recorded in the maintenance logs. Ask for the maintenance records of the used semi truck that you intend to buy, and be sure that those records are valid and match the used semi truck that you want to buy.

When you are finished checking everything out, the final task is to take the truck to a professional mechanic. He is an expert in his field and knows where to look to find hidden defects. If he finally gives you the green light to buy, then you should be good to go.

Perform a Test Drive

When we buy a new car, we want to test drive it; then, we should triple test drive a used semi truck. Feeling how the vehicle realistically performs will give you a better picture of the truck performance.

Buying a semi truck is never easy especially when you want to buy a used semi truck. When you are buying a new semi truck it is easier because you don’t have doubts about the functionality of the truck and the equipment. If you are looking for a smaller bill to pay and possibly shorter term to pay it, a used truck is for you.  Especially smart if you are new to trucking and it is your first truck. Even better because you don't even know if you're going to love being a trucker or owner-operator.  With a used truck, you can get usually get out sooner if need be.  And also, you might be able to get all of your money out of the truck as long as you bought it at a reasonable price.

A used truck can be just as profitable as a new truck and have you in the black sooner.  Even with repairs.  You will be paying less insurance and taxes.  You might spend some money on repairs, but your monthly expenses otherwise will probably be a lot lower.  Especially after you replace/repair all of the wear and tear parts. (Don't forget a brand new truck also gets low fuel mileage until broken in!)

The trick is doing a thorough look over when choosing a used truck. Also, don't overpay for that truck. Try to buy with equity already in the truck.

If you are worried about a warranty, you can get an extended warranty on used trucks. Some companies like Ryder and Freightliner will have a warranty on certain used trucks.

New Trucks

The initial cost of buying or leasing a new truck is a lot higher than a used truck. However, a new truck comes with a factory warranty. Factory warranties cover significant problems that arise during the warranty period.

Choosing to buy a new truck also ensures you are getting the latest in mechanical technology. New trucks are more fuel-efficient and can save money on operating costs. 

When deciding between buying or leasing a new or used truck, keep in mind the miles you plan to get out of the truck and how much money you want to put into it.  

Pros and Cons on a new truck purchase

A new truck will lose a lot of value as soon as you take it off of the lot. You might think it guarantees no break downs. Well, that would be a wish, not a guarantee. Brand new trucks break down more than you might think.

True, lots of stuff might be covered if you break down, but some things aren’t. Usually, the power train is covered for a certain period of time or mileage. Make sure you find out what is and what isn’t covered with breakdowns, and that you will be okay with that. Also, see if you can get a loaner or rental if your new truck should break down.

A new truck definitely lets you know ALL of the histories with the truck.  If you're going to get the truck, pay for it, keep it for a few years after it's paid off to get that extra value out of it.  Go for it.

Which Engine is best?

Bigger doesn’t necessarily mean better. A lot of people like Detroit and Cummings simply because you get more for your money, and it is easier to find parts. 

Other people like CAT.  Some claim they are better quality or pull harder.  The parts are not as abundant as Detroit and Cummings, so it costs more and could have you sitting longer for repairs.

It would help if you knew what type of work you will be doing:

  • the average load weight
  • the kind of terrain where you’ll be traveling
  • the type of trailer you’ll be pulling
  • know the specifications of the rest of the driveline
  • know what the transmission and the rear differential ratio
280″ LONG WHEELBASE TRUCK: IS A LONG WHEELBASE TRUCK PRACTICAL?

If you haul a step-deck or flatbed, there should be no problems, but with a reefer unit, you might get into some places where it’s really tight. If you’re looking at buying a long wheelbase rig, it makes a difference where you run your truck. Currently, Canadian regs prohibit the use of this wheelbase with 53′ trailers. However, this isn’t a problem in the U.S.

If the truck is spec’ed well, regarding the front axle turning radius, the advantages of a 280 long wheelbase are improved ride and improved swing/dip radius (the distance from truck to the trailer).

This increased radius improves the ability to maximize your weight allowance on the steering axle. The extra frame rail length also allows room to mount generators or tool boxes.

The only disadvantage with a 280 long wheelbase truck, seems to be if you find yourself turning in extremely tight spots, as it adds to the overall length of the unit.

What are Glider Kits?

Glider kits are a great way to get a newer truck with an older engine that doesn't have to meet new engine emissions requirements.  These trucks will have rebuilt engines often warranted.  You can also buy glider kits with just the body, and you get your own engine put in it.

Fitzgerald Glider kits are one of the best places to get Glider Kits.

In the end, you have to determine what truck you want based on your goals and personal desires.  Take into account the info and perspective that have been provided, but also ask questions to mechanics and other owner-operators.

References 
  • 2020 OOIDA, Inc. 1 NW OOIDA Drive Grain Valley, MO 64029
  • Special Semis – logging rigs, Big Custom Sleeper Berth Trucks
  • The Complete Semi Trucks Guide The Only One You’ll Ever Need
    Smart.truckin.com/Semi-trucks/
    2012-2019. Smart Trucking
  • Trucking Job Finder Your Gateway to Trucking and Freight Careers
    Truckingjobfinder.com./members/owner-operators/lease-semi-trailer/
    2006-2020 – M&L Research, Inc.
  • Fueloyal.com/20.things-check-used-semi-truck
    2020 fueloyal-Inc.
  • Lifeasatrucker.com/what-truck-should-I-buy.html
    2019 Life As A Trucker.com
Topics:OperationsLife on the Road

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