For Truck Financing, Bank on a Transportation Expert

Q: What is the current market for financing and leasing commercial trucks and equipment?

A: Generally, the trucking industry is experiencing a favorable banking and finance market as most commercial banks continue to show relatively healthy interest in financing revenue equipment. Borrowing rates are near all-time lows, so locking in equipment financing today is appealing for most companies.

Nonetheless, economic uncertainty and higher new truck prices are causing more companies to consider used trucks, short-term leases, and rental options. In particular, it appears that truck leasing is poised for solid growth over the next few years: generally lower monthly payments via leasing allow companies to conserve capital. Additionally, increased maintenance costs and higher priced technology are pushing some companies toward leasing.

Q: How does this reflect the state of the trucking industry?

A: The trucking industry just pulled through several years of relatively low equipment replacement due mostly to uncertain economic conditions. Today, more companies are deciding to replace a portion of their older fleet out of necessity, leading to nominal growth in capital expenditure. This dynamic has created a relatively lower number of trucks on the road, which results in a favorable pricing environment. The improving rate environment benefits the trucking industry.

Q: What factors should carriers and private fleet owners consider when exploring financing partners?

A: Having an experienced financing partner is often more important than getting the best rate or terms on a deal. Many chief financial officers partner with a small number of financing partners who are consistent lenders to the transportation industry. It is important to partner with financial institutions that are in the market during each economic cycle and understand your business.

Q: How can a bank help a growing enterprise expand its fleet operations?

A: In the current market, banks can provide relatively low-cost capital to help finance a company’s growth. Banks that operate equipment finance divisions can provide a full array of financing options to fit the client’s needs. These options include operating leases, capital leases, and term loan purchase financing. Additionally, a transportation banking team can provide revolving credit facilities and guidance lines to accelerate new equipment funding as a client’s business grows.

Overall, having a financing partner that specializes in your industry is important because it means they will understand your capital needs, collateral values, and financing alternatives.

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