Semi-trailers form the most integral part of the trucking industry, and if you consider leasing one, then there are a couple of things you should initially consider. In our post today, we will share why semi-trailer leasing is the best option for your business. We will start from the benefits of leasing to the kind of equipment you need to the available options.
First, you should consider whether you are working with limited working capital. Several small to new trucking businesses operate under limited capital that restricts their chance to grow. It is because it involves a lot of money to set up a trucking business that becomes successful, and it costs money to get the best employees and equipment for this business.
The major costs of these two are the latter. Several trucking equipment are often like the good step deck trailers or semi-trailers as it is almost the expensive option of a business startup. It is why small trucking businesses cannot get the best semi-trailers for their operations from scratch.
Luckily, there are ways to overcome this kind of challenge. For example, some ways help you save money to increase your buying potential and business capital. For those needing better semi-trailers specifically, there is always the trailer leasing option.
Overview of a Semi Trailer
A semi-trailer is the freight trailer attached at the back of the tractor truck that forms what is considered a semi-truck. The semi-trailers are generally much larger than the standard ones and are used to transport larger cargo loads.
There are various different kinds of semi-trailers, and each one is designed under a specific cargo type. The common types of semi-trailers include dry van trailers, flatbed trailers, and tank trailers.
When leasing a semi-trailer, it is vital to consider the cargo that will get transported. Different kinds of semi-trailers have varied features and specifications that are well-suited for specific cargo kinds. For instance, flatbed trailers have an open deck allowing easier loading and unloading of larger items. In contrast, dry van trailers have enclosed ends protecting the cargo from weather and roadside debris.
It is a vital consideration for the size of the semi-trailers whenever trailer leasing is involved. Semi-trailers are available in varied sizes ranging from 28-footers to the larger 53-footers. The trailer’s size is based on the cargo required to get transported. The smaller trailer is sufficient for the less cargo, while the larger ones are required for cargo transportation.
Lastly, it is a vital consideration for the company you pick while leasing a semi-trailer, as online lenders like Trust Capital offer semi-trailer leasing and financing options.
Benefits of leasing the trailers
A trailer leasing firm can draw an agreement making sure you are covered for the long haul, whether the job involves a tractor-trailer for a year or more.
You understand that the costs will not fluctuate for the entire term, irrespective of whatever the market is dictating at once you have a lease set.
Leases can reduce the entire cost each day with the longer contract commitment leading to better costs in semi-trailer leases.
More Equipment Options
Since leasing often necessitates a deeper insight into the status of the lessee’s finances, those qualifying might have more product choices that include the latest technologies at your disposal.
Ability to Customize
You have greater options for streamlining your semi-trailers with the custom options designed under specific needs with long-term agreements.
Do you wish to have a fleet of 20 similar tractor-trailers that have your logo displayed prominently? Leasing will allow you to customize the trailers to build your brand recognition.
Renting appears on a first-come, first-serve while your leasing agreement makes sure that you have the right equipment you need in the right place whenever you require them.
Has your company recently won over a major bid? A long-term lease gets structured under lockstep with the upcoming project guaranteeing that you have covered the customer contract.
Common Mistakes When Leasing a Semi-trailer
Truckers make a couple of common mistakes while leasing a semi-truck. The following are the few mistakes you should avoid:
1. Failing to do adequate research
Before you sign a lease agreement, you must perform your research. Go through the whole agreement while asking the right questions if you fail to understand something before deciding on anything.
2. Failing to budget properly
Semi-trailer leasing is a huge financial commitment. Ensure that you have a better understanding of the monthly payments and other costs associated before signing on to the dotted lines. Furthermore, ensure to factor in maintenance, fuel costs, and insurance while creating a budget for the new truck.
3. Failing to check your Credit Score
Your credit score plays a key role in leasing. If your credit score is above 650, then you can get your monthly payments reduced. Sadly, if you have a credit score below 600, the payments are higher than usual. Ensure you check the credit score ahead of time to understand your expectations. Having a score between 600 and 650 is possible to still get an app only approval but you’ll pay higher rates. So boost your credit score above a 650 when possible. Have 5 open credit tradelines and installment debt 50% of the loan amount reporting.
4. Skipping the Test Drive
You must take time to test drive the semi-trailer before you lease it, just like any other vehicle of your choice. It offers you a better opportunity to ensure that everything is in working order and you are comfortable behind those wheels.
Tips to reduce the expenses
Therefore, now that you have a couple of concrete ways of reducing your expenses, it can help you. Luckily, there are varied ways to save money for these trucking companies.
You can make use of fuel-efficient engines to reduce the costs of gas, for instance. You might even check out the trucks that feel tough enough withstanding cheaper gas costs.
These are a couple of two of the several other possibilities. The following are a few of the ideal things the trucking companies they can do to reduce the costs of their daily operations:
Always hire drivers who are experienced
It is always recommended to hire drivers who are experienced. It would reduce the chances of accidents that consume a lot of capital for the trucking company due to the repair costs involved. You can lose your DOT number if you are receiving way too many violations. We have even found that startup trucking companies are hiring drivers causing real issues and losing their authority over their customers, killing the startup semi-trailer company.
Some experienced drivers can extend the life of your trucks, and you might not even have to hire the mechanics since most experienced drivers understand the importance of maintaining a truck.
Monitoring the expenses
Monitoring your expenses might appear like an overly simple tip. But, surprisingly, there are several trucking companies that you might overlook. Always keep a close eye on whatever expenditure you are making to help you in saving money, as it allows you to budget the working capital evenly.
You can even track the real cause of the budget instability specifically while trying to target the amount of money you are making or spending weekly or daily. Possibly try reducing the budget of the attributes of the trucking business consuming most of the working capital.
Aim to allocate your working capital evenly throughout the trucking business, as it would aid you in enhancing the business without experiencing any financial issues.
Maintain Your Truck Regularly
It is something that is more or less hinted at; however, truck maintenance is the other real tip to save money since trucks are costly. Replacing a single truck under your fleet would cost you a lot of money. Therefore, keeping your trucks in sound condition makes a lot of sense. Perform assessments regularly and perform the smaller repairs when you notice they have merited.
Maintaining your trucks can help prevent the smaller wear and tear from turning into the worst damage. It can reduce the need for major repairs of your semi-trailers which is costlier. Additionally, severe damages are one portion of the truck leading to drastic domino effects. Your costs, as a result, can balloon out of control.
For instance, a failed radiator or a fan can easily lead to overheating of your truck, which can damage the truck’s engine meaning that you will have two repairs to pay for.
With all being said, maintenance can help a lot. Equipment wears down to the point where keeping it operable costs more than simply replacing it at some point. You have no choice but to bite the bullet and buy a new truck whenever it happens. Luckily, the better you maintain your trucks, the longer it will take to replace them.
Additionally, once you purchase a new truck, you can understand that it needs less maintenance than older vehicles, which means that a new truck can help you save a lot of money.
Acquiring New Trucks For Your Trucking Business
As we have already stated, getting a new truck can be a cost-effective measure as it is also one of the bigger picks you might take to help keep the costs down for your trucking business.
In several cases, it is a closer need if you aim at expanding your trucking business. Enhanced capabilities are needed to take the transportation industry to the next level. The real issue is that not all trucking businesses can afford to buy new trucks instantly. As we have noted earlier, a new truck specifically arrives with major price tags, and it is where the truck financing comes in.
Paying the entire amount for it in one go causes a distinctive instability in your budget. In several cases, small trucking firms weather it by getting a loan that covers it. But the process of availing a loan from the bank is time-consuming and involves a lot of paperwork. There is also no assurance that you will finance your semi trailer at the end.
The smaller trucking companies might have to turn to other options, and one of the best is semi-trailer leasing.
Using Semi-Trailer Leasing
Leasing a semi-trailer is the ideal option for several trucking businesses looking for a new and used trailer for various reasons.
Trailer leasing does not involve massive money outlay upfront, unlike purchasing. It breaks up the cost of a new trailer into smaller payments, making things happen monthly.
Additionally, it would allow you to use the new trailer even if you can make those monthly payments. The monthly payments involved in semi-trailer leasing are quite affordable if you can avail yourself of a better deal. It will help you in preserving the working capital for businesses.
Trucking businesses can get semi-trailer leasing from a company offering trailer leasing. You can arrange versatile payment terms if you can locate a good company. But, these payment terms will often get affected by the credit score. If you have a credit score above 650, you can get fairly low monthly payments.
That said, business owners with a credit score below 600 can still avail of a leasing option for a semi-trailer. But these payments are higher than the usual ones, which will put a dent in your ROI. Therefore, boosting your credit score before applying for trailer leasing is a great idea. If its below a 600 be ready to supply healthy business bank statements.
A good equipment leasing company will allow you to pick whatever happens at the end of the leasing period of the semi-trailer. Mainly a leasing company will offer you an option of purchasing the trailer or leasing a new one at the end of the semi-trailer leasing agreement.
Get the Best Semi Trailer Leasing
To save money while you get a semi-trailer on the lease, check out a reliable equipment leasing company like Trust Capital. These reputed companies love offering these based on your business terms, as they can help you to pick the best semi-trailer to meet your specific needs.
A sound semi-trailer leasing firm can also make the process of approvals an instant and easier process. It is a striking contrast to the local banks that make you move through a dozen hoops for a simple trailer loan. For instance, Trust Capital has a single-page application for leasing a semi-trailer on its site. You get the approval in two to four hours after submitting the leasing application. You can even use the online calculator to check on the monthly payments and get the instant offering of a lease.
To speak specifically, avail of a semi-trailer is easier whenever you have a good credit score, as the semi-trailer leasing companies will instantly approve the applications from applicants having good scores.
However, we mentioned that a poor credit score would never automatically mean you cannot lease a semi-trailer. The applications are still approved by companies like Trust Capital, who will approve your applications from business owners having bad credit. You need to invest a lot and prove that you have more than enough cash flow to support the monthly payments. So, you have to stay prepared for the bit higher terms of payments.
In our post today, we have spoken about how you can save money with the help of semi-trailer leasing options. There are trucking companies that have to save a lot of money so that they can get the best equipment without having to encounter any kind of financial issues. Some semi-trailers are costly enough; for instance, it can lead to instability of the business budget. Consider leasing a used trailer still in good condition to achieve greater ROI.
Leasing a semi-trailer is the perfect answer here. The leasing will allow the trucking business to use top-quality semi-trailers without paying massive upfront money. You can start arranging semi-trailer leasing with monthly payments with the help of the equipment leasing company, as it would help you pay for or lease a new semi-trailer without facing any instability in the finances. You can even select an agreement of owning it at the end using the 10% to 20% of the TRAC lease, $1 buyout lease, or even the FMV lease option.