- May 9, 2022
- Posted by: admin
- Category: Blog
When you own your own truck, repairs can be costly. Depending on the cost of the repair, you may not have that kind of money available in one lump sum. And if your truck won’t run, you can’t earn any money, setting you back even more. You may think you’re stuck, but there are financing options to make semi truck repairs more affordable.
Is semi truck repair financing worth it? Here’s what you need to know about your options and how to pay for necessary repairs.
Working Capital Loans
One of the best ways to finance repairs is with a working capital loan. Working capital refers to the money a business needs to conduct day to day operations. A working capital loan is ideal for businesses that don’t have a steady cash flow or for whom business tends to eb and flow. This can often be the case in the trucking industry where you may have periods of time with plenty of work and other times when there isn’t as much available. Supply and demand plays a big part in trucking, which is always a fluctuating part of the economy.
A working capital loan can be a line of credit, a small business loan, or a truck repair loan from a leasing company. Another option is factoring, which isn’t a loan at all, but an advancement on your current invoices. There are pros and cons to each option.
Line of Credit
An open line of credit is like a credit card with a certain limit. You can use up to the limit of the loan until you pay it back. As you make payments on the balance, more funds become available. You will be required to make regular payments, usually daily, when you have a balance on the line of credit.
One of the biggest benefits of an open line of credit is that you can use it over and over again as needed when you have repairs or other expenses that come up. The only risk is that you must continue to generate income in order to make your payments, which should be no problem once your truck is repaired.
Small Business Loan
A small business loan gives you a one time lump sum to use for your necessary repairs, which you then pay back in monthly installments. Small business loans provide you with funds quickly and the rate is typically lower than what is offered on an open line of credit.
The biggest drawback is that once the loan amount is issued to you, no additional funds will be available. You will need to finish paying off the loan before you can take out another small business loan. This is less ideal for working capital, since you will often have expenses that come up.
Loan From a Leasing Company
Some truck leasing companies provide loans for working capital. One important factor in this type of loan is both a pro and a con: your truck will be used as collateral. This may allow you to get approval much more easily, however, if something goes wrong where you are unable to pay back the loan, you could lose your truck.
Another option to generate working capital is not a loan at all. Truck factoring is a process where you sell your unpaid invoices for a percentage of what they are worth in order to get an advancement on the payments. You may get anywhere from 85%-97% of the value of each invoice, but you get it right away rather than having to wait to collect payment from the customer. This gives you the cash you need for truck repairs now.
10-4 Financing Provides Semi Truck Repair Financing
Is semi truck repair financing worth it? Absolutely. When you need to generate working capital to get your truck repaired, financing is one of the best ways to do it. You can’t make money if your truck isn’t driveable, and getting back out on the road sooner rather than later makes it easier to pay back whatever truck loan you choose. An open line of credit is typically the best option for repairs because it becomes available to you again and again for future repairs and expenses.
10-4 Financing provides semi truck repair financing and truck factoring for your working capital needs. Apply now.