Why All Semi Truck Financing Loan Options Aren’t All The Same

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Why All Semi Truck Financing Loan Options Aren’t All The Same

owner operator lease to own

As a company inundated with requests for semi truck financing – there is one overarching question we get all the time.  Why American?

After all, a simple Google search of semi truck financing companies reveals that an owner operator can find financing options galore.  What’s more, most dealers who sell class 8 trucks and heavy trailers also offer in-house financing or manufacturer financing options from companies like Daimler and Paccar.  What makes us most unique is that we pride ourselves on being a ‘one stop shop’ for semi tractor financing – a single firm that caters to all different credit types, allows you to buy used, and understands the unique needs of owner operators versus fleet operators.

One Size Semi Truck Financing Doesn’t Fit All

Years ago, I had the opportunity to sit down with a respected local dealer of over the road trucks.  He explained that he was constantly frustrated by the programs available to truckers because of the so called ‘funding gap.’  The funding gap is a huge middle of the road space where there are no viable options for good credit owner operators that fall just shy of qualifying for bank rate programs, but who are over qualified for the high-rate, large down payment offerings of many asset-based lending alternatives.  At the time, the market was saturated with funding sources happy to occupy either extreme, but with no one willing to work the middle.

American understands that owner operators don’t all belong crammed into one program.  Our semi truck financing programs evaluate industry and driving experience, savings and cash on hand, homeownership and other metrics that help us place middle of the road customers into a fair program where the structure and terms more accurately match the risk inherent to the deal.  What that means to our customers is we won’t place a 660 credit score customer who shows good experience and reserves into the same program as a 400 credit score first time owner operator.  It also means we are able to offer financing options that help owner operators build their fleets over time, and graduate from starter programs to better terms as they improve their personal credit, cash flow, and commercial pay history over time.

American Equipment Finance understands that there are a lot of options, but as a direct lender that has in-house financing programs alongside two dozen outside funding source relationships, we are very often the only option a driver needs.

New or Used – You Decide

Many manufacturer and bank programs restrict what semi truck an owner operator can buy.  They require a truck be either physically on the lot, of a certain make or variety, or be new (or relatively new).  American finances new trucks, but what really sets us apart is our willingness to finance used semi trucks and trailers.  Not all trucking applications require a brand new truck, and most of our customers have figured out that you can make the same gross revenue with a used truck as with the more expensive new one.  Moreover, while many manufacturers offer 0% financing and other seemingly attractive options, customers are wising up to the fact that these companies make all of their money on markup in the price.  Thus, a 15% financing option on a used truck can often pencil out to be cheaper than the 0% option on a new truck, such as in the below example:

New truck sale price: $135,000                                                                    Used truck sale price: $55,000

Sticker markup on truck at dealership: $6,000                                                  Depreciation in year one: $4,800

Depreciation in year one: $29,500                                                                    Interest expense in year one: $6,550

Interest expense: $0                                                                                         Total costs of ownership in year one: $11,350

Total costs of ownership in year one: $35,500                                                  Market value of asset after year one: $50,200

Market value of asset after year one: $99,500

Since most of the depreciation is front-loaded when an asset is newer, many used trucks retain more of their value over time and require less time to payback.  American gives truckers the flexibility to buy new or used, and for better credit profiles, we can finance trucks that are 15, 20, or even 25 years old.

We Put the Owner Operator First

American helps owner operators in ways that go beyond just providing a simple truck loan or lease.  We help with financing for APU’s, engine rebuilds, and even fabrication projects such as converting a daycab truck to a dump body or adding a drop axle.  We have programs where your down payment goes entirely to the dealer to help reduce how much you borrow, and offer terms as long as 60, or even 72 months for certain newer truck models.

Once of the key ways that we can be competitive is through our Build a Fleet program.  American allows a customer with twelve on time payments to come back to finance a second truck – while most competitors require you to payoff your first loan before you can qualify for more funding.  Thus, by the end of a four year term, a customer can be operating a three truck fleet.  We believe in transportation customers and recognize trucking as the backbone of the American supply and logistics chain, and in many ways, the backbone of the entire economy.

We’re in it for the Long Haul

American Equipment was formed when two companies that had already been in business for 30 years decided to get together, combining speed and technology with customer-first values.  We put owner operators first from the time we receive an application until your final loan with us is paid in full.  So, yes, there are a lot of semi truck and trailer financing companies in the market, but there’s only one American Equipment Finance.  While anyone can lend money for a truck purchase, the ability to provide flexibility and service have consistently made us the premier truck and trailer financing company, and the choice of dealers, private sellers, auction houses, first time owner operators and large commercial fleets – not to mention truck listings companies like Commercial Truck Trader and Trucker to Trucker.

We’re here to prove semi truck financing doesn’t need to be complicated to cater to the needs of our customers.  We’re American and we’re in this for the long haul.

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