Is buying an 18-wheeler a good investment?
June 25, 2021
Purchasing, whether new or used, is one way to obtain a semi-truck as an owner-operator.
Whether you’re a recent company-driver-turned-owner-operator or a long-time owner-operator looking to purchase for the first time, you’re probably wondering if buying an 18-wheeler is a good investment for your business.
While there’s always potential risk in purchasing a semi-truck, there’s also potential for it to pay off in a huge way.
Is owning a semi-truck profitable?
Like all big purchases, buying an 18-wheeler can be a good investment as long as you put in the work ahead of time to make sure you’re making the best financial decision for your business.
There are things you can do to make owning a semi-truck profitable, including:
1. Purchase your truck from a reputable company.
This is especially important if you are going to buy a semi-truck that is used.
Buying your truck from a company that isn’t known for selling quality equipment could mean spending thousands on unexpected maintenance and repairs in the future.
Whereas purchasing used equipment from a reputable company known for maintaining its trucks to a high standard is often the way to go. It could mean spending more on the truck up front, but it can pay off in the long-run when you’re driving down the road in something that’s high-quality and requires fewer trips to the shop.
2. Follow the right steps when buying your truck.
When purchasing your truck, don’t just jump right into it; take the necessary steps to ensure you invest in the right piece of equipment for your business.
Following a checklist is especially important when buying a used truck. You’ll want to do things, such as running a history check on the truck and assessing the truck’s current condition, to make sure it’s a high-quality piece of used equipment.
And setting a budget is one of the most important steps of the truck buying process. A used truck typically costs anywhere between $45,000 and $100,000, while new trucks can cost about $125,000-$150,000, depending on the make and model. You need to determine what you can afford as a down payment and in monthly payments, as well as the costs of ownership.
Buying more truck than you can afford can limit your business’ profitability.
3. Buy a semi that's backed by a warranty.
Things will go unexpectedly wrong when you own a semi-truck, which is why it is vital to have a safety net in place.
Purchasing a truck that comes backed by a warranty will prevent you from dealing with out-of-pocket expenses on many truck maintenance issues. You’ll drive down the road with confidence knowing your truck is covered.
You may even be surprised to know some companies that sell used equipment, like Schneider, offer manufacturer and/or aftermarket warranties on their trucks.
Additionally, whether or not the truck you purchase is backed by a warranty, it’s still important to have funds set aside specifically for maintenance. Have your maintenance fund set up before purchasing a truck. Major breakdowns and costly repairs can happen at any time, and not being prepared could result in loss of revenue for your business.
4. Understand your cost per mile.
Knowing how much you spend per every mile will help you determine how much revenue you need to generate in order to run a profitable business. If you earn less than you spend or break even, your trucking business will not be successful.
Before purchasing a truck, determine how much the monthly payment on it will be (if you finance it). This amount will be part of your fixed costs when determining your cost per mile.
Is a trucking company a good investment?
After thinking about how much it costs to buy a semi-truck and the risks associated with purchasing one, you may be wondering if owning your own trucking company is truly worth the investment. Here are a couple final things to consider:
1. Potential to earn a higher revenue.
Although the up-front costs of becoming an owner-operator are extensively larger than those of a company truck driver, owner-operators who run successful businesses have the opportunity to earn much more in revenue in the long-run.
- According to the Bureau of Labor Statistics, the median pay for tractor-trailer truck drivers was $47,130 in 2020.
- Many owner-operators who do business with Schneider are averaging $250,000 per year in revenue, and the most successful owner-operators are exceeding $7,500 each week.
2. Opportunity to build equity.
Just like monthly payments on a house, each time you make a payment on the truck you bought, you are building equity. Once your payments are complete, you own the truck outright.
You can then continue to drive the truck payment-free or use the equity you built up to trade in your current truck for a newer truck.
Ultimately, it is up to you to decide as an owner-operator if buying an 18-wheeler would be a good investment for your business.