Becoming An Owner Operator Getting Started – Financing and Credit

Now that you know how much money you can really earn, (go to my blog for my previous post by clicking here): Income and Expenses, your next step, if you still think you want to be an owner operator, is to decide if you can afford it.

Do you want to be a truck driver, or a businessman? Most people think they can just buy a truck and roll, but there is a lot more to it than that. In the first place, a truck can cost anywhere from $30,000.00 for a used one to $150,000.00 for a new one. You have to look a your complete financial picture and figure out if you can even afford to purchase a truck, much less all the expenses that go along with it. First, you want your new business to be a money making enterprise, so you don’t want to start out too much in debt. Your truck payments will run from $1,000.00 to $2,500.00 a month. As you can see, you will have to have a good credit history before you can even buy a truck.

Many banks and credit unions will want a written business plan when you try to get a loan. This will tell them how you think you will be able to pay back the money you borrow from them.

The first thing you need to do is check your credit report and Fico score before even applying for a loan. Everyone is entitled to an annual free credit report from each of the three credit bureaus: Equifax, TransUnion and Experian. Check with all three, as they do not provide the same information. If you find any mistakes, have it taken care of before you try to get a loan. Banks will look at your Fico score. The credit bureaus will let you buy your credit score. These are not the same thing, but a credit score should give you an indication of your FICO score (if one is high the other should be high, and vice versa.

Before you try to get a loan, you need to get your business license, so that you can get a business loan. I will write about setting up your business structure (sole proprietor, partnership, LLC, or corporation) in a later post. I was going to do that in this post, but decided to wait because if you can’t buy a truck, there isn’t any reason to start a business, so we need to concentrate on financing before we start talking about ways to make money. In a way, it is just like the old saying, -You have to have money to make money.-

When we bought our first truck, we paid $3,000.00 for it and the person we bought it from financed it for us. Boy! Are those days ever gone. Diesel was 34 cents a gallon, milk was 50 cents a gallon, and I walked 5 miles to work, uphill, both ways, in the snow, winter and summer.

Seriously, though, we went into debt to get our first truck, and so will you. In planning how much you need, don’t forget all the other expenses. If you don’t buy a brand new truck, you will probably have to put some maintenance into it before you can put it to work. If you are lucky enough to find a truck that really is ready to go on the road, you still aren’t out of the woods. On your very first trip, all kinds of bad things can happen, and you need to be prepared. You may blow a tire and have to replace it (cost about $250.00), or you may blow an engine (cost $10,000.00 and UP). Not only do you have to have the money to pay for these things, you will have to have the money to live on while you are getting the repairs done. If you blew an engine, it can take a week or more to have it repaired or replaced. Don’t forget that $1,000.00 to $2,500.00 truck payment. If you are down for a week, you still have that payment coming due (and other fixed expenses like owner operator insurance, taxes, and licenses) – and you are not only spending money for repairs, you are not making any money. The moral is, you need to have some extra money in the bank to fall back on.

Anyone can have breakdowns, anytime, for any reason. I knew a guy once who bought a brand new truck and he had to have the engine replaced 3 times in a year. Yes, it was under warranty, but as I said above, he still had payments coming due, and no income each time it was in the shop having the engine replaced.

Of course, he had a lemon, and it is unusual for something like that to happen, but it does go to show, you just never know. I would like to say the best way to not have a breakdown is preventive maintenance. I can’t stress that enough. If you hear a whistle in the turbo, don’t just sing along with it until it becomes a scream. Have it fixed at the very first chance you get. Believe me, it will pay off in the long run.

If you can get the financing, in a way now is a good time to buy a truck. Many truck drivers are selling their trucks because of the bad economy, and you may be able to find one cheaper than you could have a year or two ago. For some reason, though, truck prices haven’t dropped very much – but the freight has. As more and more companies are laying off workers and cutting back on production, they aren’t making as many goods, so they don’t have as much to ship. You may be able to buy a truck, but you may not have anything to haul. Like almost everything else today, truck driving jobs (even owner operator trucking jobs) are hard to get.


SCORE: This is an excellent resource, and best of all, it is entirely free! They have mentors, online or in person to answer your questions and help you make business decisions. They have online workshops, including one titled, -Can you afford to start?- which will help you answer a lot of the questions raised in this post. If you are serious about starting your own business, don’t skip this website.

SBA (Small Business Administration): They have information about all kinds of things to do with small businesses, as well as online training about how to start a business and how to write a business plan. They even give loans.

OOIDA (Owner Operator Independent Drivers Association): They give out tons of advice, publish a magazine, make equipment loans, and sell owner operator insurance and truck insurance.

An accountant: They can do tax consultation as well as bookkeeping.

Your local bank or credit union: In addition to making loans, some have legal departments which can help you set up a LLC or corporation. If you have a favorite resource, let us know and share it with others.

About the Author

I have been driving a truck for 42 years. I have been an owner-operator for 37 of those years. I have owned 21 tractors and 5 trailers. I have driven in 48 states and Canada. My wife keeps the books and does our taxes.

Visit my blog at: Owner Operator 411 – Welcome

Other Topics:

Owner Operator 411 – Welcome

Income and Expenses

Operating Authority or Leasing?


How To Do Bookkeeping and Other Necessary Paperwork

What You Need to Know About Loadboards

Idling Regulations


Blackrock Auxiliary Power unit (APU)

Interactive Cost per Mile (CPM) Calculator Spreadsheet