How Much Does It Cost to Start a Trucking Company With No
Money?
The initial cost for starting a trucking company can be
anywhere between $10,000 to over $20,000 – but this doesn’t include the cost of
the commercial trucks themselves. Trucks can cost anywhere from $40,000 on the
low end to over $200,000 on the higher end.
Trucking companies require more of a significant upfront
investment compared to other types of businesses. By far, the biggest expense,
in the beginning, will be purchasing the trucks.
On top of this, you’ll also need to manage ongoing
operational costs that can greatly eat into your bottom line. For these
reasons, the trucking industry, as a whole, tends to have smaller profit
margins.
According to data from New York University’s Stern School of
Business, the trucking industry in January 2022 saw net margins of 1.85%.
Despite relatively modest profit margins, trucking companies can command a
significant amount of revenue.
The trucking company, Cargo Transport Alliance, has publicly shared that the average gross revenue for most of their trucks is between $4,000 to over $10,000 per truck.
Should You Finance or Lease a Commercial Truck?
Most businesses prefer to finance a commercial truck
rather than lease it. Financing allows you to build equity in an asset – your
truck. Most trucks have longevity and can be used for years to come, even after
you repay your loan.
And while you will have to pay for repairs, you’ll also be
able to sell your truck when the time comes to upgrade. In short, commercial
truck financing can be a smarter financial move in the long run.
Nevertheless, there are still scenarios where commercial
truck leasing may make more sense. For starters, commercial truck leasing is
more flexible. There’s no long-term commitment, and you’re typically able to
upgrade to newer models every 2 to 3 years.
Plus, commercial truck leasing has significantly lower
upfront costs than commercial truck loans. You won’t have to make a down
payment, you won’t need to cover repairs, and your cash won’t be tied up in an
asset for a number of years.
Commercial truck leasing also tends to come with lower
monthly payments. It’s ideal if you’re a startup, struggling with cash flow, or
just want smaller payments. So, if you are looking to start a trucking company
with no money, this should be something that you will need to consider.
How to Apply for a Commercial Truck Loan
If you are looking to start a trucking company with no
money, you can apply for a commercial truck loan. The process of applying for a
commercial truck loan can be broken down into a few simple steps.
- Gather
Paperwork and Apply – Once you’ve selected the commercial truck
you’re hoping to finance, it’s time to prepare your paperwork and
documents for the application process. At a minimum, you should have
information on the vehicle’s model and make, the dealership you plan on
working with, and your business plan.
- Collect
Your Down Payment – Although the vehicle itself will serve as
collateral for the loan, your lender may also ask you to provide a down
payment. Some lenders may be willing to offer you commercial truck loans
without a down payment, but you’ll typically need to have good credit for
this.
- Submit
Applications to Your Lenders of Choice – Each lender has their
own requirements, so make sure to discuss the specific documents you’ll
need to provide before submitting an application. Ensuring you have all
the correct forms will help you avoid mistakes and make the application
process run smoother.
Compare Loans
Your lender may offer you more than one option for financing
your commercial truck. There are also various different types of business loans
to choose from. Plus, you may be able to select from different funding amounts
or repayment terms.
It’s also helpful to keep in mind that you’re not tied down
to working with a specific lender. In fact, you may want to take some time to
explore your options. Make sure to use National Business
Capital as a resource and for browsing multiple financing offers
at once.
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