How to Become an O/O
Buying the Truck
When finances matter, your first vehicle as an owner-operator is likely to be a used one
Choosing your first truck as an owner-operator is important. While new trucks look great, prices well north of $100,000 make new impractical.
Buying a used truck presents its own set of challenges. Buy the right one, and your new business will have a better chance of succeeding. But if you buy a headache that increases your expenses, you may struggle to compete.
A new truck might fit the bill for team company drivers who want to make the move to driving on their own, says Bill McClusky, maintenance management service consultant at financial services firm ATBS. “They are more able to handle higher truck payments of $3,000 or more a month,” he says.
For the first-time owner-operator, the more affordable choice will be a used truck. The payments of $1,500 or less a month will leave more wiggle room for other expenses. “For a lot of guys who have been company drivers who jump to the owner-operator side, it’s kind of a rude awakening as to expenses they see for fuel and maintenance,” McClusky says. “Drivers are really surprised when I tell them to figure about $1,000 a month for maintenance.”
Know your financial status by preparing a thorough budget, advises Eddie Walker, president of Best Used Trucks. Estimate your monthly revenue and expenses, how much you have for a down payment and what monthly payment feels comfortable. “Know you’re financially capable or have sufficient credit to buy,” he says.
One of the first things you should do is decide what niche or type of hauling you intend to do. Once you decide to go over-the-road or regional and pull a dry van or flatbed, you can zero in on the specs that match up with your hauling choice. McClusky advises not to rush through searching for the used truck that has the specs you want. You’ll likely pay the price down the road if you choose a truck used in heavy haul for your line-haul ambitions.
Your search should be methodical. Take time to have tests done on the vehicle to help guard against engine problems. Tests such as a fluid analysis and a dynamometer test will provide crucial information. Many dealers get used trucks from carriers that often aim to keep maintenance costs down. “A lot of things don’t get done to those trucks,” McClusky says.
When it comes to evaluating a warranty that could cost $4,000-5,000, Walker advises to “plan for the worst.” Ask what would happen if certain mechanical issues arise under a warranty. If the salesman can’t answer your questions, walk away, Walker says. “Negotiating the warranty is just as important as negotiating to buy the truck,” he says.
Walker recommends reading the warranty’s fine print. Look to see what the warranty doesn’t cover more than what it does cover and that the warranty’s second year coverage matches the first year. Also, understand the process for dealing with a breakdown before you incur expensive repairs that aren’t authorized, he says.
Other questions to ask include how long the truck sat on the lot. In a truck that’s been sitting a long time, water settles in the fuel tank at a higher rate and could lead to algae growth, McClusky warns. “I talked to an owner who bought a truck in Maine and was on a run to Denver and had to replace nine fuel filters on the trip,” he says. “At the dealership they found algae growth and had to pull the tanks and flush everything out. He found out the truck had been on the lot for nine months or more.”
When closing the deal, know the market value of the truck you’re buying. If you like the truck but have found flaws, be prepared to justify why you should pay less than the salesman’s asking price.