Notes on the No. 1 reason for a truck repo — and going out of business

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Updated Aug 18, 2019
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Truck operators report more problems with newer model engines.

Following up on last month’s news item about lenders tightening credit standards for owner-operator truck purchases, I spoke with Jason Spates, director of financing for TruckLendersUSA, to gain another perspective.

He indeed sees the same trend that article highlighted: In recent months, it’s become much tougher for small fleets — especially single-truck owner-operators — to purchase equipment. Lenders are requiring “more paperwork and more money down,” Spates says. They’re also more frequently requiring trucks to be equipped with GPS trackers in case they need to be repossessed if a borrower defaults.

TruckLendersUSA’s in-house lending strategy leans conservative, Spates says. The firm generally doesn’t loan to single-truck operators, but it works with banks that do. Over the past six months, the approval rate for long-haul single-truck operators has dropped from about 40% or 50% to around 15%, he says.

He blames the trend on climbing default rates, which he said have been high since late last year.

Spates blames earlier loosened standards – mostly among finance brokers, subprime lenders and newer lenders – as the culprit. Those lenders issued loans to unqualified buyers when the market was hot in late 2017 and through 2018, he says, leading to the wave of delinquencies and defaults.

What’s more, he offered this nugget: Where’s the top spot for truck repossessions? The shop. “The No 1. place when someone stops paying me is when the truck is at a repair shop,” says Spates.

Add to Spates’ account of truck payment delinquencies another take, from Brent Hutto, chief relations officer at He spoke before a Senate panel last month, where he relayed a starkly similar message.

He posed a question to the Senators on the highway-focused panel: Do you know the No. 1 reason an owner-operator goes out of business? “Of course they don’t know,” he said, recounting his exchange in an interview the next week. “The No. 1 reason is a major mechanical failure.”

That wisdom obviously isn’t lost on most owner-operators, who have either faced the issue themselves or seen friends lose their small trucking business due to a major breakdown. It’s obviously not just the  repair costs that factor into losses during breakdowns  — it’s also the lost revenue caused by the downtime spent in the shop.

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In fact, as regular readers know, Overdrive via its Partners in Business program promotes that owner-operators should dedicate a portion of their per-mile revenue to a maintenance account, based on the schedule available at this link.

How’d you ward off your last major mechanical problem? A dedicated maintenance account? A loan or credit line? Good fortune? Sound off in the comments below.