10 Things to Consider When Buying bobtail truck price

So, you want to buy a semi-truck? That’s great. When done right, trucking can be a great business with lots of opportunities for growth. 

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When you buy your first semi-truck, the options can be overwhelming: what type of truck? What brand should I get? Should I save to buy in cash or finance with a loan? Used or new? 

Before we get into answering all these questions, let’s get something clear. If you’re very new to the trucking industry (less than 1 year of experience), we recommend being a company driver for 2+ years before starting your own business. 

It’s true that your earning potential as a driver is lower as a driver relative to an owner-operator in most cases. But your earning potential as an owner-operator without a solid base of knowledge about the industry is $0. 

In your time as a company driver, you will be able to get up close and personal with trucking as a business, and, if you’re able to live well below your means, save enough for a down payment or cash purchase.

If you’ve already been driving trucks for some time and you’re ready to get into your very own, these questions have likely crossed your mind:

• What kind of truck should I buy?
• Where should I buy my truck?
• What are my options for financing?
• How much does it cost to finance a truck?
• How can I improve my credit score if financing isn’t an option for me yet?

So let’s begin.

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What Kind Of Truck Should I Buy?

We’ve spoken to thousands of new trucking entrepreneurs looking to become owner-operators and this is the question we get more often than any other. 

Unfortunately, it’s the wrong question to ask. The right question is: “What business should I run?”

Once you know what type of business you want to have, choosing a truck will be quite simple. Here are three questions you want to ask yourself:

1. What do I want to haul? This will determine the needs of your trailer and the power you need.
2. Where do I want to go? Consider terrain, distance, and weather.
3. What am I authorized to operate? Tankers? Hazmat?

Answer these questions and the type of truck will follow. 

Want to do local deliveries? A box truck is probably your best bet. Refrigerated food? Then you’re going to need a reefer. Overweight loads? You’ll need an engine with more horsepower.

Are you a new CDL A driver looking to haul general freight? You might want to look into dry vans.

Are you going to be on OTR routes, spending most of your waking hours in the truck? You’ll want to save up for a truck with more of the comforts of a home.

Dreaming of growing to a large fleet? Access to parts will be key, so you may want to go with Freightliner. Peterbilt and Kenworth trucks are more luxurious and smoother to drive, but they are more expensive to maintain.

This is where your trucking business plan comes in to inform what kind of company you want to run and the plans you have for the future.

There is no one-size-fits-all truck for every business because trucking is a diverse industry with many different niches. What industry needs will your business serve?

Once you know what type of truck you need for your business, you may have some lingering questions…

Should I buy used or new?

For most new owner-operators, there’s probably not much of a choice here because buying used is the only affordable option. In fact, there’s quite a large market for used trucks. This is because large carriers, like Prime, buy new trucks and only use them for 3-4 years. 

These make up the majority of the used trucks in the market and, for the most part, are found in really good condition because they’ve gone through all the preventative maintenance processes of a large carrier.

Buying a new truck has a hefty price tag, but it’s not for nothing. New trucks come with extensive warranties, covering a lot of issues that you would end up paying a lot of money for with a used truck.

How much power do I need?

Finally, you may wonder how much power you need for your truck’s engine. This comes back to the questions about your business: what kind of freight will you haul? 

Some new trucking business owners make the mistake of buying as much power as they can so that they’re ready to haul anything. However, the more powerful an engine you have, the more fuel it will cost to run. Instead of buying a truck that’s ready for “anything”, plan out your business and let the type of truck (and engine) follow. 

What brand should I buy?

Approach this decision with some real research: understand the main issues with the manufacturer, make, model, and year of the trucks you’re considering. The same exact truck made in will not necessarily have the same performance as the one from .

Where should I buy my truck?

Now that you’ve consulted your business plan and know what kind of truck you need, your best bet is to establish a relationship with a local dealership. 

When you’re buying your first truck, you probably don’t have a lot of money. But, at his stage, you have something even more valuable: time. When you become an active business owner, time will become very scarce. So take advantage of the time you have now and visit multiple dealerships in your area to meet the people and get to know what they offer.

Buying from private sellers is also an option but be wary of deals you see online and always get a pre-purchase inspection (PPI). Any dealer or seller that won’t allow a PPI is a giant red flag – DO NOT buy from them.

If you find a great deal on the exact truck you want, but it’s too far away, you can always ask the dealer or seller for a video call so you can see it inside and out before making a decision.

What are my options for financing?

When you get a truck for your business (or any vehicle for any reason, really), you have three options:

• Buy with cash
• Finance with a loan
• Lease from a carrier

Buying in cash

This means you have the money up-front to buy the truck without getting a loan. If you have the cash saved to buy a truck, this can be a good option. It’s especially good if you don’t have a great credit score (below 700) and you know you want to be in business for at least the next five years. 

However, buying in cash means you will need to plan out your finances in such a way that you don’t blow every cent on the truck. Remember that there are quite a few other upfront costs to starting a trucking business and your costs of operation will make money tight, especially in the first year.

Financing with a loan

Financing a truck with a loan will require a significant down payment (usually 10-25% of the value of the truck). You’ll then have a monthly truck payment that includes interest on the loan. This is a great option as long as you have good credit (above 700). 

Financing means you don’t need to spend all your savings in one go and you can deduct the truck payments and interest from your income when tax season rolls around. However, if your credit score is not great, you’ll either get a really high-interest rate or be denied altogether.

Leasing

Finally, leasing a truck can be a good option if you’re not sure how long you want to stay in the trucking business or don’t have good credit or savings. Financially speaking, a lease is the least favorable option because you’ll pay a fee to lease the truck as well as a percentage of your earnings to the carrier.

Leasing also means you are tied to one carrier and will need to depend on them for loads and abide by their lease agreement, which can restrict mileage. Unfortunately, there are many bad deals in the leasing world, so only agree to lease with a highly reputable carrier.

To decide which option is the best for you, here are the considerations to make:

• How much do you have in savings?
• What’s your credit score?
• How much risk are you willing to take on?
• How long do you want to be in the trucking business?

If you don’t have much in savings, buying in cash is pretty much out of the question. You may be able to find a very inexpensive truck to buy in cash, but depleting all your cash savings is the last thing you want to do when starting a business. If you buy a less expensive or older truck, you’re sure to make it up in maintenance costs.

A mediocre or bad credit score could mean delaying becoming an owner-operator altogether. If you can get a financier to approve a loan with a credit score of less than 600-640, it likely has an astronomically high-interest rate. You will be better off buying in cash (if you have the savings for it), leasing, or staying on as a company driver while you save and improve your credit score. 

If you tend to be more risk-averse, you may prefer to save your pennies and buy in cash. This way, you’ll reduce your monthly expenses and improve your business’s cash flow right away.

Finally, if you’re not sure you want to be in the trucking industry on a long-term basis, leasing is your best option for becoming an owner-operator. It will give you a taste of being a business owner without a long-term commitment or depreciating asset.

What does a loan for a semi-truck cost?

The cost of financing a truck has two parts: the down payment and the interest rate. The down payment is the money needed upfront to drive the truck off the lot. You then pay a truck payment each month, including an additional percentage, the interest rate, until the full amount is paid off.

Once your business is up and running, you’ve established a strong relationship with your financial institution, and you can produce financial reports, you may have better access to lower down payments and interest rates.

As a new business owner, interest rates are based largely on market conditions and your credit score. Gone are the days of 3-5% interest on commercial trucks. Since the federal government is raising interest rates for banks, interest rates for everything continue to rise. That being said, the interest rates quoted in this article are based on market conditions in the fourth quarter of .

If your personal credit score is less than 600, you’re probably better off not financing a truck. Instead, you should save until you can buy in cash and/or work to improve your credit score to finance in the future.

With a score between 600 and 650, you’ll likely need to pay 25-35% of the value of the truck upfront and 10-18% in interest.

If your personal credit score is between 650 and 700, you’ll need 10-15% for the down payment and you’ll pay 10-15% interest. 

If you have good or excellent credit (700+), you’ll still likely need at least 10% down, but your interest rate will be in the range of 6-10%.

Where should I look for financing?

Shopping for financing is just as (if not more) important than shopping for your truck. Too many new owner-operators rely on the dealership for financing. It could very well be the best deal in town. Or it could be the worst. You’ll never know if you don’t shop around first! 

In fact, you should shop for financing before you shop for a truck. There are two reasons for this: 

1. You’ll get an understanding of how much financing you qualify for.
2. You’ll have plenty of time to decide what financier to go with.

Commercial truck loans are quite different from personal vehicle financing. In fact, most large banks and credit unions won’t finance the purchase of commercial vehicles for small companies. 

But not to worry! Here are some places to find financing:

• Call around the truck dealerships in your area and ask what financing institutions they work with.
• Pay a visit to smaller, local banks and credit unions.
• Research “first-time truck buyer programs” at institutions like Amur Equipment Financing, BMO Harris Equipment Financing, Navitas Credit Corp, Daimler Truck Financial, or Calfund LLC.

Once you’ve been in the business for at least 2 years and can produce financial reports, you may be eligible for financing with larger banks like Bank of America, Chase, or PNC. 

When comparing financing options, there are a few considerations in addition to the down payment and the interest rate.

Term of the loan

The term of the loan is how long it will take to pay off. You’ll want a term for only as long as the truck is likely to be in good working condition – that’s typically a 3-year (36-month) term at the most.= for used vehicles.

Conditions

Conditions of the loan may include getting a warranty on your truck. Now, a warranty is usually recommended, but the financier may require a specific type of warranty.

Another condition could be an end-of-term buyout, meaning you agree to pay the last 10-15% of the purchase price at the close of the agreement. This is not generally recommended because it’s impossible to know how a business will be going by the end of the truck’s second or third year. Will you have that last 10-15% on hand? Instead, get an agreement to pay off the vehicle outright during the duration of the term.

Other conditions could be hidden in the fine print of financing agreements. Read all agreements carefully! 

How to improve your credit score

As we’ve mentioned above, you really shouldn’t plan to finance a semi-truck with bad credit. You will pay an astronomical interest rate and higher insurance premiums or get denied for a loan outright. 

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But don’t get discouraged – you are not powerless!  Just like there’s a lot you can do to kill your credit score, there’s also a lot you can do (or not do) to improve your credit score. 

What lenders want to see is that you pay your bills and obligations on time. Here are some steps you can take if you have mediocre or bad credit to improve it over time and increase your chances of getting approved for loans with lower rates:

• Pay credit card bills on time – if you’ve gotten lazy about your credit card payments, now’s the time to set up a reminder every month and get serious about paying at least the minimum, if not more of or the whole balance. Doing this consistently over time will help improve your credit score.
• Pay all child support obligations on time – this is a lesser-known impact on credit. Paying child support on time every month is a good demonstration that you can meet your financial obligations.
• Stop paying with checks – if you have a history of writing bounced checks, it’s better to stop using checks altogether and instead get certified checks or find other payment methods that ensure you have sufficient funds to pay.
• Don’t take on more debt – unless you are absolutely certain you can pay for it, do not take on any additional debt until you’ve paid off what you owe to other creditors. Taking on debt to pay for a specific lifestyle or impulse buys is what puts a lot of people at a disadvantage. Missing payments on debt is the driving force behind a poor credit score. 
• Avoid payday or cash advance loans – lenders will often request bank statements and look for a steady source of income. If you’re working as a driver and routing your checks through places like a Money Mart, your bank statements won’t show the bimonthly payments from your employer.
• File your taxes as a truck driver – if you’re not putting “driver” as your occupation on your tax returns, start in the next tax season! This is extra evidence that you are an experienced, reliable truck driver.

If you don’t have good enough credit to get a decent interest rate on a loan to buy your truck, implement these points above, do some more research about how to improve your credit score, and then take at least 6-12 months before you get quotes for financing again. 

Depending on the length of your credit history and how many missed payments you have, it can take multiple years to improve your score. Regardless, the best time to start improving your credit is right now since it affects so many other aspects of your life!

Learning how to maintain good credit is excellent practice for the discipline required to start your own business and you will save thousands of dollars in interest.

If you’re a first-time truck owner, here are 10 of the most important factors to consider before purchasing your first truck!

Getting started in the trucking world and buying your first truck is an exciting yet daunting part of the process and can be nerve-wracking, especially when you’re committing to buying a truck. 

The decisions you make with this first truck purchase will play a significant role in your professional trucking and driving career, the jobs you accept, and the work you can do. 

The last thing any truck driver wants is to make a long-term commitment to buying a truck they’re not 100% satisfied with, which could ultimately make your life harder and cost you a lot of money. Looking for trucks for sale should be an exciting experience, not a hassle.

In the following article, we’ll be focusing on 10 essential factors to consider before buying your first truck, including:

• Buying A Truck That Suits Your Lifestyle

• Financial and Budgetary Considerations

• New Truck Versus Used Truck

• Considering Your Cargo

• Dealer Sales Versus Private Sales

• Future-Proofing and Maintenance

• Insurance Costs and Fees

• Licensing Requirements

• Networking with Other Truck Drivers

• Long-Term Goals

1. Buying A Truck That Suits Your Lifestyle

If you’re looking to buy a commercial vehicle, there’s a good chance that you’ve already got a few hours logged as a professional truck driver and know what to expect from choosing driving trucking as a professional career. However, purchasing your first truck adds a few more challenges and commitments to the job you need to be aware of before taking that final financial step toward owning your first truck.

Before you fully commit to a career in the trucking industry, and buy a truck, carefully consider the stress, and pressure you’ll be applying to personal relationships, including friends and family relationships.

Did you know, according to the U.S. Bureau of Labor Statistics, the average truck driver works nights, weekends, and public holidays and spends approximately 11 hours a day driving, with an average working day being 14 hours, which includes parking, inspections, rest stops, loading, and unloading.

Buying your first truck is a long-term financial commitment to your career as a professional truck driver, so speaking with family and loved ones first to ensure they’re on board and aware of the potential challenges of the future is vital. The last thing you want is to be put in a position where you’re financially committed to a truck purchase but don’t or can’t drive trucks professionally any longer.

2. Financial and Budgetary Considerations

Before investing in your first truck, you must carefully consider all the financial implications of your first truck purchase. According to this article on CNBC, the average cost of a new truck ranges from $150,000 to $200,000, with between 100,000 and 250,000 new semi-trucks sold annually in America.

Along with the initial purchase price, other budgetary factors you need to consider when you buy a truck are insurance, fuel, maintenance and servicing, repairs, fees, and taxes.

According to the report from the American Trucking Research Institute, the operational costs of running a truck increased from to its highest level ever, $1.85 per mile. Not only that but the operational cost of running a semi-truck in the United States is expected to rise to almost $2 per mile by .

By taking the time required to carefully research the total costs of owning a truck and ongoing running costs, you won’t run into any unexpected hits to your wallet and avoid leaving yourself with buyer’s regret and a financial hole you can’t find your way out of. Being financially disciplined from the start when you buy a commercial vehicle will give you the best opportunity to be profitable throughout your trucking career while avoiding any nasty surprises.

3. New Truck Versus Used Truck

Choosing whether to buy a truck fresh from the factory versus a used truck could be pivotal in your first-time truck purchasing process. You’ll need to carefully consider the pros and cons of a new truck versus a used truck.

Below, we prepared a table to help you compare the pros and cons of buying a new truck versus a used truck as your first truck purchase. 

New Truck ProsNew Truck ConsGreater ReliabilityLonger Financial CommitmentLess Maintenance Bigger Financial CommitmentExtensive Warranty & Longer Warranty PeriodMore Fuel Efficient (Potentially)Lower Emission Levels (Potentially)Used Truck ProsUsed Truck ConsLower Purchase PriceMore Maintenance/Repair CostsLow Mileage Trucks Comparable Quality to New TrucksLimited/No WarrantyBuilt to LastUnknown HistoryLess Fuel-Efficient (Potentially)

It’s important to note that these pros and cons are generalized and may not apply to all new or used truck purchases. There’s no guarantee that you won’t purchase a new truck with its own mechanical issues or a used truck that runs flawlessly for thousands of miles.

The initial purchase price is the most significant implication of purchasing a used truck versus a new truck. You could save a lot of money buying a used truck versus a new one, but you’ll need to carefully weigh all the risks of purchasing a used versus a new one.

While buying used can save you a lot of money upfront, it could end up costing you more money in the long term, so keep that in mind when you are browsing trucks for sale in the classifieds or online. When you buy a commercial truck it’s a long-term investment, so you need to be prepared to be in it long-term.

4. Considering Your Cargo

While it’s nice to think you’ll always be carrying the same cargo for the same clients, times change, and your cargo will change, also. 

You need to buy a truck or buy a commercial vehicle that will ultimately align with your cargo specialization while also being flexible enough to change as your cargo changes. Are you going to be transporting perishable goods that require refrigeration, construction equipment, and vehicles that need a large flatbed, or just general freight and containers?

If you purchase a truck that limits what sort of cargo you can transport, you’re potentially limiting the jobs you can accept. Did you know that the trucking industry transports over 70% of all freight in the USA and that dry goods make up over 80% of all shipments?

It’s essential to choose a truck that offers you flexibility in what you transport while also not limiting yourself to just one type of cargo. While you’re still looking at trucks for sale, remember to keep one eye on the future. The more flexible your truck is when you’re buying a truck, the more room you’ll have pivot should the need arise in the future.

5. Dealer Sales Versus Private Sales

Like used versus new truck purchases, there are a variety of pros and cons when you’re making a dealer purchase or private purchase for your first truck. Before you buy a truck, carefully weigh up your options and choose one that best suits your financial position. 

Buying your truck from a reputable truck dealership will offer you:

• Warranties.

• Financing Options.

• After Sales Services and Servicing Options.

Making a private truck purchase will offer you the following:

• A lower purchase price.

• More ability to negotiate on price.

Regardless of whether you choose to buy a commercial vehicle from a dealership or through a private sale, you need to carefully investigate the truck’s history, get a mechanical inspection if it’s used, and do your due diligence on the person/company making the sale.

Buying a new truck from a dealership typically gives you greater peace of mind, knowing that your purchase is backed up by their warranties and reputation. Still, it doesn’t provide you as much flexibility when it comes time to negotiate the price. However, some dealerships will offer a little flexibility on price and add-ons, depending on whether or not you’re buying the truck outright or financing your purchase.

If you plan on buying your first truck outright, you’ll be in a much better position to negotiate on the price, especially when you’re dealing with a dealership. It gives you a strong bargaining position as you search for trucks for sale when you already have finance. However, some dealerships also offer competitive prices and special deals when you take advantage of their in-house financing options.

6. Future-Proofing and Maintenance

Being proactive about your truck maintenance, repairs, and servicing is the backbone of any profitable trucking endeavor. You’ll need to carefully evaluate your ability to manage routine maintenance and any minor repairs against the cost of professional services. 

If you’re buying a new truck, you may be obligated to conduct regular maintenance and servicing through the dealership, which will come with its own costs.

Consider where you’re planning on driving your truck. Will you be in a hot climate, a cold climate, or a mix of both climates? Some trucks may perform better in cold or hot weather, while others will perform well in all environments. 

You also need to consider the future of the trucking industry, especially how environmental concerns such as emissions reductions are influencing trucking policies and regulations. It’s much harder to modify an older truck to comply with new regulations compared to new models, which are more adaptable.

While you can’t predict the future of the trucking industry and the environmental issues it faces, you can position yourself and your vehicle to be ready to meet these challenges.

7. Insurance Costs and Fees

Insurance is an ongoing cost associated with owning and operating a truck. There are a variety of different insurance options and costs you’ll need to consider when you own your own truck, including:

• Liability Coverage

• Cargo Insurance

• Comprehensive Coverage 

According to Forerunner Insurance, the average insurance cost for an owner operator in the trucking industry in the United States is between $9,000 – $12,000 per year. 

How much you pay for trucking insurance will depend on a variety of factors, including:

• What you’re transporting.

• How far you’re typically driving.

• The total value of your truck.

• Your age and experience.

• Your credit history.

• What type of payment plan you use.

All of these factors will ultimately influence how much you pay for your truck insurance, making it either higher or lower than the average. Below is a breakdown of the different types of liability you may need to get an idea of the average cost of your insurance.

• Primary Liability – $-

• General Liability – $500-600

• Umbrella Policy – $500-700

• Physical Damages – $-

• Bobtail Insurance – $400-450

• Uninsured/Under-Insured Driver – $50-100

• Occupational Accident – $-

• Cargo Insurance – Varies Depending on Cargo.

When it comes to truck insurance, like any other motor vehicle insurance, it pays to shop around and get a variety of quotes before committing to one insurance carrier. It’s also important to consider how much the insurance carrier regularly deals with trucking insurance policies and claims and how much they will work for you when it comes to offering competitive prices and customer service in dealing with any potential claims.

8. Licensing Requirements

Not just anyone can jump into a truck and start driving it around, let alone operate it as a professional truck driver. The operation of commercial vehicles is strictly controlled by licensing requirements, permits, and certifications, which are all mandated by the state in which you’re operating. So, carefully consider that when you’re planning on buying a commercial vehicle.

If you’re planning on operating between different countries, such as Mexico or Canada, you’ll also need to ensure you comply with all their licensing and permit requirements.

This article by the Federal Motor Carrier Safety Administration further breaks down the agreements and licensing requirements for American truck drivers planning on carrying loads into Canada.

Carrying cargo into Canada or Mexico from the United States may also have insurance implications you’ll need to consider if you’re planning on owning and operating your own truck.

9. Networking with Other Truck Drivers

Cultivating friendships and professional networks with other truck drivers, particularly experienced truck drivers who have already been involved in the trucking industry for several years, will give you priceless information, tips, tricks, and pitfalls to avoid while you’re navigating your first steps into the trucking industry.

Not only can they help you make the right decisions, but their advice could also potentially save you a lot of time and money making the wrong ones.

Along with helpful advice, building a network around you can also identify potential job opportunities and provide you with a support network. There’s nothing better than a friendly and understanding ear when times are tough or when need you need assistance getting out of a tight spot. You never know when you’ll need a lift, spare part, or just some helpful advice on the side of a lonely highway.

10. Long-Term Goals

Finally, what are your long-term goals in the trucking industry? Do you plan on establishing your own trucking company later on, or are you just looking for a reliable long-term truck for yourself as a professional truck driver?

Did you know that the trucking industry employs, on average, 7,000,000 people in the USA?

If you’re planning on owning and operating your own trucking company, look at trucks that offer you greater ability to create a fleet of vehicles. If you’re operating the same make and model trucks, it’ll be much easier and cheaper to operate and maintain them.

If you just want a truck for yourself, choose the best model that suits your needs and the cargo you’ll be typically carrying. That truck may not be the best truck if you’re planning on scaling up to a full-sized transportation company, but it could be a much better personal choice for you and your needs.

10 Essential Factors to Consider Before Buying Your First Truck – Conclusion

There’s no one-size-fits-all approach to buying your first truck. Everyone will need to consider their own needs and requirements when carefully researching their first truck purchase. Once you sign on the dotted line, trying to get out of your truck purchase or contract can be a very complicated and expensive process.

By carefully considering each of the ten factors we’ve covered above, you’ll be better prepared and informed when making your first truck purchase. Buying a new truck, especially your first truck, should be an exciting and life-changing moment, so don’t rush into it and make a decision you may end up regretting for many years to come.

During your research and pre-purchasing reconnaissance, don’t be afraid to reach out and ask questions. Talk to friends and family in the trucking industry other drivers or reach out to aquatintists involved in the trucking industry, especially those who own and operate their own trucks, to get their opinions.

If you have any questions about buying your first truck or would like to learn more about factors to consider when purchasing your first new truck, don’t hesitate to comment below or contact us directly. Our friendly and professional team will be more than happy to do our best to answer your questions or point you in the right direction.

Remember, take your time, do your homework, and make your first new truck purchase one to remember for all the right reasons.

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