Starting a transport and logistics company is not difficult. At least with capital, business plan and approvals you are good to go. However, building a successful trucking company is something else that often requires you to identify opportunities your business can expand to in terms of service delivery.
That means attracting cold chain logistics opportunities by adding refrigerated trailers — reefer units, which are a crucial component in the storage and transportation of highly perishable products such as food, beverages, flower, pharmaceutical and other temperature-sensitive goods.
Whether you’re looking to buy new or used carrier reefer trailers, there are things you must know that will help you make an informed decision.
Buy a Reefer Trailer! New or Used?
The first decision you’ll have to make when buying a reefer trailer is whether to go for a new or used one. Of course, both options have their pros and cons and mostly depend on several considerations such as budget and maintenance.
Although buying used reefer trailer is more cost-effective — since you can get a reefer half the price of a new one and still in good condition — buy a new reefer trailer that comes with the manufacturer warranty and always in excellent condition.
Today, it’s much easier to buy a reefer trailer, especially for small and medium-sized trucking companies with limited investment capital for expansion. In addition to discounts offered by reefer manufactures, many business and specialty banks offer truck financing services with low-interest rates.
Trucking business with good business credit history of customers and suppliers may be eligible for 100% financing with negotiable rates. Bad credit — whether personal or business — will negatively impact your chances of securing a loan because to a financier you’re more likely to default loan repayments just as your history shows.
Some lenders offer loans to truckers with bad-credit truckers. Consider operating lease type of truck financing that allows you acquire new trucks upon the maturity of your lease. Suitable for trucker with bad credit and limited cashflow.
Operating leases are best alternative to buying used reefer trailers that might may ende up costing you more due to repairs, or possible breakdown after just a few years of service. Additionally, you assured of new and quality trucks with significantly low interest payments than other truck financing options.
Choosing Between Commercial Truck Leasing and Commercial Truck Loans
You’ll want to choose the option that favors your business growth. Whichever you choose will depend on your business plan, available cash flow and other essential considerations.
Commercial Truck Loans
This type of truck financing allows truckers to own and start using trucks even before completing repaying their loans. But you only become the official truck owner once you clear paying off your loan. And that’s when you will be handed the title.
The main advantage and perhaps the key difference between truck loans and leases is that you make payment for a specified period, which ceases once the term is over. The only downside wit this option, however, is that you get to own a truck that you might no longer find useful for your current needs.
For instance, you might have owned a new and efficient truck through loan, but let’s say after 5 years and thousands of miles you can certainly expect the truck to start developing issues after another. This means that even after repaying the loan you’ll still need to deal with increasing maintenance costs of an old truck.
You can also buy a reefer trailer by applying for commercial truck loans, which are pretty much the same as personal loans. But they are costly and often attract high interest rates on loans. This means you’ll also need to scavenge through banks and money lenders will to risk extending your a loan.
Commercial Truck Lease
Meanwhile, commercial truck leasing is a limited truck financing option, where you only rent a truck from the lender and once your term is up, the truck goes back to the lender. Benefits is that you get new truck option upon the maturity of your lease.
Whichever option you choose, it’s important to have a defined relationship with the lender before committing to anything to buy a reefer trailer that is good for your business.