Starting a commercial trucking company is a business opportunity that is rife with countless long-term advantages and profitable outcomes. When executed carefully, success can stretch on for years and expand into a stable source of financial security.
But before one can get started with running a successful trucking business, it is necessary to understand the costs that come with it. Applying for truck finance is an excellent way of securing enough funds for keeping the business well-supported and afloat.
A trucking business can be quite costly, considering the amount of fuel, workforce, and hours that must be dedicated to achieve the daily objectives for the company and maintain its operability.
There are five types of truck financing that you can choose from if you need assistance in building your very own trucking company:
- Angel Investors
At times, new businesses struggle to qualify for loan requirements or convince banks to loan money to them because they are new to the industry. The same reality holds for entrepreneurs who wish to open a trucking business. Angel investors are individuals or companies who are willing to provide funding for new businesses. With an agreeable negotiation of the business’ ownership equity, angel investors can fund a substantial amount of money to keep the business going.
- Operating Lease
With an operating lease, the loaning company is not required to put down or pay any initial amount to finance the business. Financing the business is approved, provided that the ownership of equipment used to operate the business (in this case, the truck), is given to the entity or company providing the operating lease. The lease is typically on a short-term basis, and it is also more affordable than other types of truck financing.
- Contract Purchasing
In a contract purchasing setup, the company in need of funding is given two possibilities by the time the agreement reaches its expiration. They can either choose to purchase the truck by paying the required amount or return it. Determining whether to purchase or return the truck should be based on the careful assessment of how greatly or poorly the truck’s market value will fair for the business in the future.
- Fleet Truck Financing
A fleet truck financing option is suitable for businesses that already have an existing array or lineup of trucks. It is an ideal option for commercial truck businesses for as long as the company that needs financing has a good track record of handling previous loans and other money-related matters. That said, when availing fleet truck finance, you need to ensure that the trucks used in operating your business remain in tiptop condition to keep the arrival of steady revenue going.
- Hire purchase
In a hire purchase setup, the additional costs and interest rates are covered. The best part about this option is the truck becomes the property of the company or business at the end of the payment term. That said, a one-off fee is needed to fulfil the transfer of the truck’s ownership from the supplier to the business. Most parties offering a hire purchase type of truck finance service require a specific deposit percentage at the beginning.
Starting a trucking company is a venture that needs careful planning, especially in terms of sustaining the business’s cash flow and source of funding. It also requires determining what types of trucks are to be used and for what purpose, to ensure that the financing option chosen will suit the company’s objectives and operational capacities.