Moving up a gear and expanding your fleet is a bold step for any trucking enterprise. If you’re looking to expand your commercial truck fleet there are several tips you should keep in mind to ensure you secure the finance you need.
6 Tips for Expanding Your Fleet
#1 Determine the business’s capacity for additional trucks
It’s essential to assess the business’s capacity to support additional trucks. This includes factors such as existing demand, routes, and staff. Expanding the fleet without a thorough evaluation of these factors can lead to underutilisation of the new trucks, resulting in financial losses.
- Evaluate existing demand: A trucking business needs to have enough demand to justify adding more trucks. Review the current demand for the business’s services and assess whether there is potential for growth. If the business has idle trucks, it may indicate that there is a lack of demand for their services, and adding more trucks could be counterproductive.
- Assess the existing fleet’s utilisation rate: Evaluate how well the existing fleet is being utilised. If the current trucks are running at full capacity and the business is turning away business due to capacity constraints, adding more trucks could be a viable option.
- Determine the availability of drivers: Adding more trucks also requires additional drivers to operate them. Assess the availability of qualified drivers and whether the business can support the additional staff. If there is a shortage of drivers, adding more trucks could lead to increased costs and reduced efficiency. This is especially true in WA right now where we are still short on qualified drivers post pandemic.
- Review the current routes: Evaluate the current routes and assess whether the business can add more trucks without significantly altering their existing routes. Adding more trucks could require additional infrastructure and resources, such as parking facilities and maintenance centres.
- Analyse financials: Evaluate the business’s financials, including revenue, expenses, and cash flow. Assess whether the business can support the additional costs associated with adding more trucks, such as maintenance, insurance, and fuel costs.
#2 Assess the quality of the existing fleet
Evaluating the condition of the current fleet can help businesses identify which trucks need replacement or upgrades. This will help to avoid unnecessary purchases and ensure the business is investing in the right trucks.
- Review maintenance and repair records: Reviewing maintenance and repair records can help you identify any recurring issues with your trucks. Look for patterns such as frequent breakdowns or costly repairs, as these could be indicators of poor quality.
- Evaluate fuel efficiency: Evaluate the fuel efficiency of your trucks. If your trucks are consuming more fuel than similar models, it could indicate that they are inefficient and may need to be replaced.
- Conduct a visual inspection: Conduct a visual inspection of your trucks to assess their overall condition. Look for signs of wear and tear, such as dents, scratches, or rust. Check the tires, brakes, and suspension system for any signs of damage or wear.
- Assess safety features: Evaluate the safety features of your trucks, such as airbags, seat belts, and collision warning systems. If your trucks lack these features or they are outdated, it may be time to upgrade.
- Consider age and mileage: Consider the age and mileage of your trucks. Generally, trucks that are older and have higher mileage are more prone to breakdowns and require more maintenance. If your trucks are approaching the end of their useful life, it may be time to replace them.
Assessing the quality of your existing fleet will also help you if you decide that you would like to trade in any of your trucks for newer models.
Trading in existing trucks can be an attractive option because it reduces the overall cost of the new fleet and simplifies the financing process. However, the amount you receive for the trade-in will depend on the condition, age, and mileage of your existing trucks.
#3 Research and compare different financing options
It’s important to research and compare various financing options from different lenders to find the best deal. Consider the interest rates, repayment terms, and loan amount, among other factors. This helps businesses choose a financing option that suits their needs and budget.
- Check for pre-qualification: Check if the lenders offer pre-qualification. Pre-qualification can help you determine whether you are eligible for financing and the interest rate you may qualify for, without affecting your credit score.
- Compare interest rates: Compare the interest rates offered by different lenders. Look for lenders that offer competitive rates and repayment terms that fit your budget.
- Consider fees: Consider any fees associated with the financing, such as origination fees, late payment fees, and early repayment fees. These fees can significantly affect the total cost of your financing.
- Look for flexibility: Look for lenders that offer flexibility in their repayment terms. Some lenders may allow you to customize your repayment schedule or offer deferment options in case of financial hardship.
- Read reviews and ask for recommendations: Read online reviews from other businesses that have used the lender’s services. Ask for recommendations from other trucking business owners in your network.
#4 Work with experienced truck financing professionals
Partnering with an experienced truck finance broker in Perth like Finance 48 can help businesses access specialised knowledge and expertise. They can also guide businesses through the complex truck financing process, helping them avoid common pitfalls and secure the best financing options.
#5 Plan for future maintenance and repair costs
The ongoing maintenance and repair costs of the new trucks should be considered in the overall investment. Businesses need to have a plan in place for future maintenance and repairs to ensure that they are not caught off guard by unforeseen expenses.
#6 Maintain open communication with the financing provider
Open communication with the financing provider is essential to a successful financing relationship. Regular updates about the business’s operations, revenue, and expenses help the lender understand the business’s needs and assess their ability to repay the loan.
By following these tips, businesses can make informed decisions and secure the best financing options to expand their truck fleet successfully.
Frequently Asked Questions:
What types of trucks can be financed?
Truck finance can cover a range of vehicles, including semi-trailers, tipper trucks, refrigerated trucks, flatbed trucks, and more.
How much can I borrow for a truck fleet?
The amount you can borrow will depend on various factors, including the number of trucks in your fleet, their age and condition, your financial statements and profitability, as well as income available to service additional debt after current commitments are met, and your creditworthiness.
What are the interest rates for truck finance in Australia?
Interest rates will vary based on the lender, the type of finance product, and your credit score. Generally, secured truck loans tend to have lower rates than unsecured loans. The age of the truck and the Net Amount Financed (after a deposit and/or trade-in) are further factors likely to impact your rate.
How long is the loan term for truck finance?
Loan terms can vary depending on the lender and the amount borrowed. Typically, loan terms for truck finance range from 1 to 7 years.
Do I need to have a deposit to obtain truck finance?
It is not always necessary to have a deposit, but having a deposit may help to secure better financing terms and reduce the amount of interest paid over the life of the loan.
Can I get finance for a used truck?
Yes, it is possible to get finance for both new and used trucks.
What documents do I need to apply for truck finance?
The documents required may vary by lender, but generally, you will need to provide financial statements, tax returns, bank statements, and identification documents.
What happens if I default on my truck finance payments?
Defaulting on your payments can have serious consequences, including repossession of your vehicles, damage to your credit score, and legal action by the lender.
Can I get a finance pre-approval before purchasing trucks for my fleet?
Yes, it is possible to obtain a finance pre-approval before purchasing trucks, which can help you negotiate a better deal with the seller.
Can I refinance my truck finance in the future?
Yes, it is possible to refinance your truck finance in the future, especially if you find a better interest rate or need to adjust your loan term.
Truck financing can be a complicated. If you have any further questions or concerns, please don’t hesitate to contact Finance 48, the number one truck finance broker in Perth. We will only be too happy to help guide you through the process and ensure you get the deal that is right for you and your business.