Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/535950
July 2015 | Overdrive | 35 are hitting the used market. They're more affordable and expected to get more so year over year as time goes by. It's also a better time for getting a truck loan. The cost of borrowing is gener- ally low, says Matt Manero, president of Commercial Fleet Financing: "Credit is somewhat liberal right now." He listed his company's guidelines for creditworthi- ness: "A" credit borrowers, 700+ credit score: If the piece of equipment makes sense relative to the owner-opera- tor's time in business – "the stability factor," says Manero – the borrower can get a loan at about 5 or 6 percent. "B" credit, 650-700 : About 7 to 9 percent. "C" credit, 600-650: Above 9 percent to the low teens. Below its "C" level, the "subprime" space, CFF usually doesn't finance bor- rowers. Measuring through the first quarter of this year, prices for two- to three-year- old sleeper tractors were down about 3 percent year over year, based on data in the May report from the National Auto Dealers Asso- ciation and American Truck Dealers. This illustrates a trend Meehan sees among his customers – the acceler- ation of trade cycles as new-truck fuel-economy performance continues to improve. "It started with the for-hire carriers, who figured it out pretty quickly" as the transition to selective catalytic reduction emissions systems was made and the new 2010-and-later emis- sions-spec engines were put into service. Then large private fleets took the same approach. Today, such entities are "putting 2013-'16 model years into service, and they're seeing such an improvement in fuel economy" that the movement of those vehicles through the trade cycle to the used market, as well as the trucks they replace, is accel- erating. "They may hold on to a tractor for four years," Meehan says, instead of the seven years that had become common. Meehan and Fleet Advan- tage are advising fleet clients with truck remarketing de- partments that now is a good time to consider getting more aggressive with trade cycles as used prices fall. Landstar-leased own- er-operators John and Jamie Bynum bought a second time from such a remar- keting wing in 2013. Their 2009 Freightliner Century, purchased in 2013, followed a 2006 Freightliner bought from Schneider National's truck sales arm, Schnei- derTrucks.com. At that time, they were close to the end of a lease-purchase when, Jamie says, they temporarily got out of trucking for personal reasons. As the Bynums, with a home base 40 miles north of Tampa, Fla., later considered buying a truck for John to begin driving solo, he men- tioned Schneider National, "knowing that they actually maintained their trucks well," Jamie adds. "We've talked to quite a few Schnei- der drivers." Max Heine Which of these best describes your last truck purchase? Source: All charted data, unless otherwise noted, from Overdrive's 2015 truck purchasing/leasing survey Bought used 60% Bought new 23% Leased/rented 4% Lease-purchased new, used or glider 10% Bought/built a glider 3% Owner-operator credit score distribution Leased/rented 4% 751 or higher 701-750 651-700 601-650 600 or lower I don't know 40% 16% 13% 12% 14% 5% Source: June 2015 OverdriveOnline.com poll