Owner-operators hoping to purchase a truck likely will now face new hurdles, as lenders in recent weeks have begun stiffening credit standards for equipment purchases, especially for one-truck operators, says Rob Misheloff, founder of equipment leasing and finance brokerage SmarterFinanceUSA.
Lenders’ moves are the latest shift amidst a cooling truck market, with 2019 ushering in a freight slowdown and cheaper rates, especially on the owner-operator-heavy spot market. What’s more, some analysts predict that the Class 8 sales market is nearing a cliff, coming after record-setting order numbers in 2017 and 2018.
Misheloff works between buyers and lenders to find financing for equipment purchases. What was recently a hot market — lending to owner-operators for truck purchases — has dried up, he says. “There was a boom for smaller carriers. Small, private lenders had an appetite” to sell those loans, says Misheloff.
Recently, however, he’s having trouble finding lenders that will work with single-truck owner-operators, with many requiring buyers to operate at least three or five trucks before they’ll issue a loan. Other lenders have tightened standards around truck age and mileage, he said, requiring operators to buy newer models with fewer miles.
“If one or two [lenders] make a change, that really doesn’t mean that much. But when they all start making changes in a short window,” it signals a trend, he says.
One lender, who traditionally has required 20 percent down on a truck purchase, is still working with owner-operators, says Mischeloff — but they’re now requiring operators to put an additional 20 percent into a maintenance account before issuing a loan.
“It’s a cyclical market,” says Mischeloff, referring to the recent quick-up, quick-down trucking’s seen over the past two years. Some creditors are preparing for a wave of defaults on truck loans, he says. Anecdotally, he’s heard lenders mention “rising delinquency and rising default rates” on such notes.
