There may come a time in a long haul trucker's life where he wants to leave the the simplicity of being a company driver, and to enter the exciting world of being an independent contractor. While a company employed driver is assured his miles and loads, pay and benefits, an independent contractor is his own business entity, whether incorporated as a Limited Liability Company, or doing business under his own name (Kostas, 2012). The first step in him becoming an independent contractor, in this case, is procuring commercial equipment adequate to his needs. This in and of itself is a difficult step, an obstacle to financial freedom, as attaining the necessary equipment can be a daunting task. Whether he decides to locate a lender, buy from a “lemon lot”, lease equipment, or lease to own, he may find it difficult to proceed successfully.
A common method for a driver to acquire his first truck is through a loan through a private lending organization, like a bank or an investment institution which helps to underwrite small businesses (Jacobson, 2008). The upside to this is that the equipment is paid for in full, so the seller is satisfied, and the purchaser needs only make his monthly payments on time. The downside to this is that lenders charge interest, and based on the borrower's credit rating, it may be prohibitively high, or require additional collateral or a cosigner. Additionally, due to the risk involved in lending for this sort of equipment, many smaller lending bodies may not actually lend for the purchase of a commercial vehicle.
Another method for him to attain his needed equipment is to find a “lemon lot”, commonly referred to as a “buy here/pay here” dealer (Jacobson, 2008). The upside to this method is that it may be easier to actually be given credit by the dealer, as many of them offer in-house financing options. Many do not check the borrower's credit. For these establishments, this is the best way to offer their product, as they earn based on both profits from the sale and the interest they charge for the credit they extend. The downside, however, is that these establishments, much like a used car lot, tend to offer older, well-worn equipment. Much of their stock may have mechanical deficiencies. With the driver responsible for the mechanical maintenance and upkeep on his equipment, this may ultimately become cost-prohibitive over time, leaving him with difficulty in making his payments, be they weekly or monthly. Additionally, due to the in-house financing option, the interest may be very high, or the down payment required might be beyond what the driver is capable of producing.
Some drivers prefer to simply rent their equipment. Leasing equipment might be a good option for a driver, when he has no money saved for a down payment (Barabas, n.d.). Leasing equipment can be done directly through a major carrier, if it offers a program, or through a third party leasing company. Participating in a lease program is a decent way for...