Car Carrier Equipment Financing[yoast-breadcrumb]
Car Carrier Equipment Financing: What You Need to Know
So you’re looking to get into the car hauling business? As any experienced auto transporter can tell you, having the right equipment is crucial for success. But procuring those car carrier trailers, ramps, and other gear can require a significant upfront investment. That’s where car carrier financing comes in.At Delancey Street, we understand the costs involved in outfitting your fleet and getting your auto hauling business off the ground. We’re dedicated to helping car carriers like you secure the financing you need on competitive terms. Whether you‘re looking to finance your first rig or expand an existing fleet, we’ve got flexible options to fit your needs.In this article, we’ll walk through everything you need to know about financing car carrier equipment, including:
- The costs involved in launching or expanding an auto hauling business
- Different financing options for car carriers
- How to get approved for car carrier financing
- Tips for getting the best rates and terms
Let’s dive in!
The Costs of Car Hauling Equipment
Outfitting your car carrier business starts with the trailer. New car haulers typically cost anywhere from $60,000 to over $100,000 depending on size and features. Then you need ramps, chains, straps, and other gear to safely secure vehicles, adding thousands more to the total.Of course, you also need a suitable truck to pull that trailer. Used truck tractors can run $20,000 to $40,000 for a basic model. Brand new big rigs often cost $150,000 or more.Between the trailer, truck, and other accessories, the total startup costs for car haulers can easily exceed $200,000. And that’s before you factor in insurance, registration, maintenance, fuel, and other ongoing operating expenses.Even established carriers need financing to add capacity by purchasing additional trailers. New and used car haulers typically sell for $30,000 to $80,000.Bottom line: car carrier equipment is a major investment. Financing helps make those large purchases more affordable.
Financing Options for Car Carriers
Carrying a six-figure equipment loan on your books could put a strain on cash flow as a new business. That’s why most auto haulers turn to financing. Here are some of the most common options:
Car Carrier Trailer Loans
With a car carrier trailer loan, you borrow a fixed amount for your specific equipment purchase. The lender provides the cash upfront, and you repay the loan in monthly installments over a set term, usually around 5 years. Interest rates on car carrier trailer loans currently range from 5% to 15% or more depending on your credit.Trailer loans allow you to preserve capital, improve cash flow, and take ownership of your equipment. However, you’re responsible for the full loan balance if you sell the trailer before repaying the loan.
Car Carrier Equipment Leasing
Leasing is another popular option for financing car carriers. Instead of taking out a loan, you make monthly payments to essentially rent the equipment from a leasing company. At the end of the lease term, usually 3-5 years, you can purchase the trailer for its residual value, return it, or lease another rig.Leasing often costs more overall than buying with a loan, but monthly payments are lower. You don’t own the equipment during the lease. Upside is you can upgrade more easily and return equipment you no longer need.
The Small Business Administration guarantees loans made by lending partners to qualifying small businesses for up to $5 million. SBA-backed financing allows longer terms of 10-25 years and can offer lower rates than conventional business loans.SBA loans work for purchasing car haulers, but the application process is extensive. You’ll need a solid business plan and stellar personal credit to get approved.
Business Lines of Credit
Lines of credit provide revolving access to financing as you need it, up to a set limit. Rather than borrowing a lump sum, you can draw down incrementally for new equipment purchases. Interest rates are variable but usually lower than fixed-rate loans.Lines don’t work for buying carriers outright but offer flexibility for periodic upgrades and additions. Borrow only what you need when you need it.
Getting Approved for Car Carrier Financing
Qualifying for financing often comes down to your business and personal financials. Here are some key factors lenders evaluate:
- Time in business – Most want to see at least 1-2 years of operating history. New businesses may need an SBA loan.
- Business revenue and profits – The more profitable your hauling business, the better your chances.
- Personal credit scores – Your personal credit will be checked and needs to be in good shape.
- Down payment – Lenders favor borrowers who have skin in the game. Expect a 10-30% down payment.
- Collateral – The purchased equipment plus other business assets may be required as collateral.
Having reliable customers and contracts in place will also help demonstrate the ability to repay. If your auto hauling business is new or doesn’t meet these criteria, consider bringing on an experienced co-owner or guarantor.
Tips for Getting the Best Car Carrier Financing
Follow these tips when shopping for financing:
- Get quotes from multiple lenders – Compare rates and terms. Local and national banks, credit unions, and specialty lenders all offer car carrier financing.
- Consider leasing – Leasing often provides lower monthly payments than loans, albeit at a higher overall cost.
- Ask about discounts – Many lenders offer discounts for repeat customers or membership in trucking associations.
- Look for promotions – Manufacturers and lenders periodically offer low-rate financing on new equipment.
- Improve your credit – Better personal credit scores can save thousands in interest.
- Bring a down payment – Putting 10-20% down shows commitment and can help secure better rates.
- Use a co-signer – If your credit is lacking, a guarantor with strong credit can help.
- Compare total costs – Look at the total interest paid over the life of the loan, not just the monthly payment.
Let Us Help With Your Car Carrier Financing
As you can see, financing is critical for car carriers to acquire the necessary equipment. At Delancey Street, we have relationships with an extensive network of banks, credit unions, leasing companies, and other lenders.Our team has decades of experience specifically with car carrier financing. We know what terms, rates, and options work best for auto haulers. And we negotiate on your behalf to make financing your rigs quick and hassle-free.Ready to get started? Complete our simple online application, and we’ll match you with the ideal financing for your needs. Or call us at (800) 555-5555 to speak with a financing expert.We look forward to helping you get the carriers you need to take your car hauling business to the next level!