One-truck independent Andrew Brooks has monthly payments on both his truck, a 2017 Volvo VNL 780, and his trailer, a 2019 Utility flatbed. Before the freight slowdown began in March, the Florida-based owner-operator ran regional flatbed loads that kept him on the road for a few days a week and allowed him to come home for a few days, too.
Now, however, “I haven’t been home since April,” he said last week. He loaded up his wife, Sara, their 7-year-old daughter and the family’s two dogs last month, and they’ve been living on the road out of Brooks’ Volvo since. “We’re just running from one place to another,” he said, trying to log as many miles as possible to make up for poor rates and lost revenue.
Trying to strike relief for his trailer payment, however, wasn’t as easy. He called that lender, separate from his truck lender, when he was two weeks behind on his April payment, and they offered him a deal to pay $1,500 then to satisfy his April and May payments. Brooks took the deal to stay caught up, but he still isn’t sure about the fate of his monthly trailer payments upcoming.
The lender that holds Brooks’ loan on his 2017 Volvo approved his request last month for flexibility on making his monthly payments after he called them. “They said we can take it month by month depending on what happens with the economy and the pandemic. It went really smooth,” he said. Despite the lack of a written agreement, “they act like I’m not going to get any charges from them.”
Lenders have expressed an interest in working with owner-operators on monthly truck and trailer payments to help them survive the COVID-19 economic fallout, and many owner-operators have reported contacting their lenders and asking for relief from monthly payments or to work out a deal. According to recent Overdrive surveys, about one in every five owner-operators and small fleets say they’ve contacted their lender to ask to delay truck or trailer payments.
Results of requests, however, haven’t always been successful. Also, some lenders have reportedly left truckers dangling for weeks before following through on promises to provide relief.
“I called my lender, and they said, basically, I still have to make my payments, so that’s what I’m doing,” said Roy Taylor, a one-truck independent based in Sacramento. He only has six payments left on his 2012 Peterbilt 386 and five payments left on his 2017 Hyundai dry van trailer.
“I was fortunate to have savings, but they’re all gone now,” he said. He has a steady run heading up the West Coast hauling Pepsi products under a contracted rate. “But I’m taking it hard coming back south,” he said. “They only want to pay me 80 cents, 90 cents a mile to go from Washington to California.”
Kevin Irvine, a tank hauler out of Moab, Utah, had to jump through hoops with his lender over the course of several weeks to finally secure payment relief. “I’ve never asked for anything like this before and I’ve never been behind on anything,” he said. “I asked for just one month, but it sounds like I’m getting two to three months of deferments, which is fine.”
Payment deferments generally refer to lenders allowing monthly payments to be skipped and made up over time or for those payments to be simply be added as extra payments to end of the loan.
Irvine has two truck loans and two trailer loans all with the same lender. He runs a six-truck fleet and runs loads of fuel and milk. The fuel loads dried up in the downturn, so he’s tried to pick up extra loads of milk to keep the fleet running.
When he called his lender in April, they told him the only step he could take was to stop automatic withdrawals from his checking account. “They weren’t really willing to work with me,” he said. A few weeks later, however, he received emails with the necessary paperwork to go through with the payment deferments.
TruckLendersUSA has offered its owner-operator customers 60 to 90 days of payment deferments already, and they’re likely to soon extend that for several more months, said Jason Spates, director of finance. Many “haven’t paid since April and probably won’t until August,” he said. “We’re doing everything in our power to make sure these businesses survive.”
Eastern Funding, which issues truck and trailer loans through its Specialty Vehicle and Equipment Group, is also offering payment deferrals on a case-by-case basis. “We do have programs in place to help our customers. We are mainly working with our borrowers on deferments to help them through this unprecedented crisis,” said Pete Ferrara Jr., national sales manager.
Two other lenders Overdrive contacted for this story declined to be interviewed about payment deferral policies.
Many lenders are struggling with their own cash flow and liquidity, said Rob Misheloff, head of Smarter Finance USA, a brokerage that focuses on lending for commercial equipment. The issue is twofold, he said. Because of the economic uncertainty, lenders aren’t able to as easily package and sell bundled loans to other banks, which is a source of revenue that they use to issue new loans. Secondly, with many customers unable to make payments, “lenders are stuck,” he said.
Likewise, he said, there’s no clear consensus on how lenders have handled payment deferrals since the onset of the economic slowdown.
Shirley Rodriguez, who runs the one-truck Jade Transport with her husband Pedro Leiter, was able to strike an informal deal with their lender for the payment on their 2015 Kenworth T680. “We just got this truck a year ago, so we have four more years to pay,” she said. Though their lender wouldn’t provide them with payment deferral options, “they said just make payments of whatever we could each month.” The lender said they wouldn’t charge a penalty for the missed payments, but she and Leiter are getting further behind on what’s owed, Rodriguez said.
“We’re barely operational. It’s been really tough. He’s not been able to get out on the road much,” with freight hard to come by and rates so cheap. And on a recent run, Leiter had a breakdown and needed a clutch repair. The carrier he leased to recently loaned him the money for the repair at 12% interest. “So they want him on the road so they can recover the money,” she said. “I’ve explained to them it doesn’t make any sense — how are we going to make payments? It’s not enough money,” she said of what little profit can be made under the current rates environment.