Do’s and Don’ts of truck financing: Don’t spend… invest
The overland transportation sector is one of the most competitive worldwide. Investing in the logistics industry requires knowledge of technical aspects that will enhance your offer. This type of entrepreneurship involves large investments, an excellent alternative to get them is to access small business financing to acquire the necessary equipment to compete with large national and international companies.
In particular, the trucking industry is one of the most profitable within the transportation of goods by land. As of 2019, this sector was worth $791.7 billion in the United States, according to Statista figures.
To start this type of business, the investment depends on the size of the project, if you are looking to start a small trucking company, the cost ranges between 10 thousand and 20 thousand dollars and to generate a larger scale company, the investment can reach up to 5 million.
Having these aspects clear, the important question is where will you get the money? Companies like Camino Financial offer small business financing and advice for you to consolidate your business model. We present the Do’s and Don’ts of truck financing. Don’t waste your money, invest it wisely.
Establish the necessary budget
To know the budget you will need, it is important to identify the type of service that you will offer. What products you are going to transport, insurance costs, taxes of the place where you will operate, and what type of transportation units you require to achieve it.
Research and analyze the best options
Before accessing any type of loan, we recommend you analyze all the options on the market. It is important that you choose the proposal that best fits your financial projections and above all, your ability to pay in case of low sales.
Pay your obligations on time
In any type of financing, it is essential to pay your monthly installments on time. In trucking financing, it is even more important since, in most cases, the transportation you acquire serves as a guarantee before the financial institution, in case you fail to make your payments, they have the right to make a seizure.
Have a good credit history before accessing financing.
The money down or deposit fees depend on your credit history, if you have a good record, you can avoid these payments. If this is not the case, the percentages of the amount range from 10% to 30%.
Don’t invest only in vehicles
A recurring mistake in trucking businesses is to focus only on the acquisition of vehicles, regulations, and technical aspects. As a result, when they start operating, they find themselves with a lack of workers and training problems. Anticipate this situation from the beginning.
Don’t let your investment stop generating
To achieve a successful business in this industry, your capital (trucks) must not be stopped at any time. Get solid agreements that allow your investment to work every day.
Don’t buy damaged units to save money
Entrepreneurs starting out in the trucking business often buy used units to save capital. If this is your case, make sure that the characteristics and condition of the vehicle meet your needs. If you require capital, you can always resort to small business financing to get the best equipment for your company.
Financing directly with dealers may have limitations that affect the operation of your business. An alternative is to access small business loans such as those offered by Camino Financial and manage the loan as you wish and according to your needs.
According to Markets Insider data, the trucking industry moves 71% of total loads and generates 6% of full-time jobs in the United States. The possibilities when investing in this sector are endless, it is important to note that until 2018 there were 947 thousand truck drivers, and with this figure, the demand in this trade was not covered.
Take these facts into account when starting your company, research the industry in-depth, generate excellent recruitment processes, training, and access to small business financing to realize the entrepreneurship of your dreams. What is the reason that you would like to invest in the trucking industry?
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