Are you planning to start your own dirt-hauling or trucking business? The United States trucking industry handles more cargo than ships, trains, and airplanes!
This makes your choice of business a lucrative one. However, the success of this venture depends heavily upon ensuring you own (used) dump trucks, and that all are in top-notch condition. This is where things get tricky because even second-hand versions of these vehicles can be pretty expensive.
Is there a way to materialize your dream without breaking the bank? Yes, this guide will walk you through commercial vehicle finance, even if yours is a startup.
Choosing Used Dump Truck Financing
Trucking businesses promise huge profits, but they also require huge capital. Much is at stake and you must take calculative steps even when it comes to financing options.
While brand-new dump trucks are challenging for startups to finance, used or second-hand ones are no different. This is mainly because, with the latter, your maintenance costs may blow through the roof.
A second-hand dump truck, be it a side truck, super dump, or semi-trailer, comes attached with costs like insurance, fuel, and maintenance besides the monthly business loan repayments. So, your best chance at reducing these costs is to apply for used dump truck financing. What are your options and how to go about them?
1. Local Banks
The most obvious choice available to you is to secure commercial vehicle finance from a local bank. Do keep in mind that these banks follow stringent regulations when it comes to extending dump truck financing for startups.
This is simply because such companies pose a higher risk for the bank, and many businesses even fail within the first two years of their establishment. Most local banks will demand that you maintain a credit score of 680 and above, and even then, they think twice before lending the required money.
2. Dump Truck Financing Companies
The next (and perhaps better alternative) that lies with startups are dump truck financing companies. These companies generally provide two options – a (used) dump truck financing loan or a dump truck lease program.
In the case of the former, you get to become the permanent owner of the financed dump trucks once payment obligations are over. But, this also means that you will incur higher upfront costs. In the case of the latter, you get into a sort of rental agreement with the dump truck financing company during the lease period.
This is a much better option for fledgling businesses because you are provided with the choice of either closing payment obligations and owning the dump trucks or surrendering them back to the company at the end of lease tenure.
Tips to Keep in Mind for Financing Dump Trucks
Knowledge is power. So, before you apply for a used dump truck financing loan or lease, it is important to understand how each process works.
Start by conducting thorough background research on the dump truck financing company you plan on choosing. Answer the following crucial questions about it –
- Do they have exclusive expertise in dump truck financing or is that just one of the many asset classes they deal in?
- Are their pre-approval eligibility criteria relaxed or too strict?
- Do they specialize in dump trucks that match your hauling requirements?
- What are the clauses and terms of their different financing or leasing programs?
In general, business loans for dump truck financing as well as lease programs may have a tenure that ranges between 36 and 60 months. This tenure depends largely upon the age of the trucks. Also, try your best to find out the detailed process the company follows for a loan or lease application – read through their documents carefully to ensure you’re not caught by surprise later.
Selecting the Best Dump Truck(s) for Business Needs
Besides the financier and financing option, it is equally important that you choose the right dump truck(s) based on your individualistic hauling needs. Listed below are a few tips or factors to keep in mind toward that end.
- Choose the right body style – conventional rectangle, semi-elliptical, or semi-circular. For instance – while the rectangular dump box offers the most surface area, it is the semi-circular style that handles the most impact.
- Determine your power output needs. Compare the engine with the weight load. Choosing more horsepower than needed will only cost you more in the long run.
- Choose between automatic or manual transmission. While the former creates less operator fatigue, the former offers better maneuverability due to more gear options.
- Check your local area’s axle requirements. The fewer the axles, the lesser the weight the dump truck may carry legally.
Though starting a trucking or dirt-hauling business is a costly venture, there are several used dump truck financing options available to ease the pressure.
Most startups do not find much luck with local banks simply because they either do not sanction the loan or charge exorbitantly high-interest rates due to the high risk involved. Thankfully, better alternatives like dump truck financing companies exist.
All that you need to do is ensure the commercial vehicle finance dealership is a reputed and reliable one. Then, what’s next? Surf on the waves of business success!