Advice On Financing Tractor Trailer For My Son....

Good morning. New here and not very familiar with trucking. My son (28) lives in Ohio and has his own semi and trailer. He has been driving semis for good while.....about six or seven years but this is his first year being an owner-operator. He works A LOT. He hustles and is able to get his own work and stay busy. He's struggling financially just starting out. He started on with someone who cheated him out of a lot of money and then repairs that took forever on the truck and he was out of work for two months. Needless to say his credit took a giant hit. The semi is financed with a ridiculous payment (2,300/mo) and the trailer is leased through Mac (1,800/mo). The lease is coming to an end and he is going to purchase a trailer. Lender had the idea to put truck and trailer into one payment and he would be saving about $3,000 monthly. That's where mama comes in. It's all going to be in my name and he is "leasing" it back from me. I trust him to make payments, etc. That isn't at all my concern. I'm just wondering, other than financial liability for the payments should he not make them , what else should I be concerned about? Insurance will be on him, in his name. I've made sure he gets life insurance should something ever happen so I'm not left with a giant truck that I have no idea how to operate. I'm so clueless about all of this I'm not even sure what questions to ask. I'm just looking for some advice and trying to make some smart decisions here for us both.

My advice is to never cosign for anybody. You say your son ran into issues and his credit took a hit, meaning he was 30+ days late with some payments. How are you so sure this won't happen again?

If you're not able or willing to make the payments without him, you may want to rethink this.

Hi Nicole! You ask in your posting what you should be concerned about. The answer is : EVERYTHING!!!!

There are sooooo many red flags about what you two are planning on that there is now a nationwide shortage of red flags. Not to be dramatic, of course.

You need to put the brakes on this potential disaster plan until you can figure out just how fraught with danger it really is.

There is an alternative for your son. Sell the truck and trailer, or don’t buy the trailer if it isn’t bought yet. Both you and your son will be much better set up if he becomes a company driver. Even if the sale results in some loss, your son can start to rebuild his credit and finances as a company driver.

I hope others will be commenting here on the pitfalls of your plan. We have one member here who is an owner operator. I believe he does OK, but he is very experienced and very savvy with years of learning the O/O business. Your son is none of those things right now. Please wait and think this through as Banks suggested.

He's struggling financially just starting out. He started on with someone who cheated him out of a lot of money and then repairs that took forever on the truck and he was out of work for two months.

Hi. Sorry to tell you this, but he doesnt have enough knowledge in this industry. Rather than being out of work, he could have rented a Penske truck to keep working. He started on with someone who cheated him... why? When i hear this it is usually about having speeding tickets or accidents which prevent him from going to a good company.. or just lack of knowledge. Now is absolutely the worst time in history to be an owner operator.

Needless to say his credit took a giant hit. The semi is financed with a ridiculous payment (2,300/mo) and the trailer is leased through Mac (1,800/mo).

That payment is actually cheap which means it is an older truck, probably without a warranty or from a company like Lone Mountain that seems to be hit or miss with my friends. A brand new Prime truck goes for about $5,000 per month lease now. Or purchase it with a $14,000 downpayment. But would have full warranty and no trailer payment.

The lease is coming to an end and he is going to purchase a trailer. Lender had the idea to put truck and trailer into one payment and he would be saving about $3,000 monthly.

The lender is concerned about getting a commission., not about protecting you.

That's where mama comes in. It's all going to be in my name and he is "leasing" it back from me. I trust him to make payments, etc. That isn't at all my concern. I'm just wondering, other than financial liability for the payments should he not make them , what else should I be concerned about? Insurance will be on him, in his name. I've made sure he gets life insurance should something ever happen so I'm not left with a giant truck that I have no idea how to operate. I'm so clueless about all of this I'm not even sure what questions to ask. I'm just looking for some advice and trying to make some smart decisions here for us both.

Taxes is a big one. and the fact that you are the owner, insurance or no insurance.

You would be owning a commercial vehicle and in a business transaction would then be receiving an "income" of the payment. Then the payment wpuld be an expense of your business. If he kills someone... do you think you wont get sued as the owner?

I would stay far far away from this. I usually tell my students not to go lease/buy a truck unless they have $50,000 in the bank. Right now with the feight issues, i would recommend more.

Took the words right out of my brain.

Don't do it. You are about to be up a creek without a paddle, and neither of you truly understand WHY.

He's struggling financially just starting out. He started on with someone who cheated him out of a lot of money and then repairs that took forever on the truck and he was out of work for two months.

Hi. Sorry to tell you this, but he doesnt have enough knowledge in this industry. Rather than being out of work, he could have rented a Penske truck to keep working. He started on with someone who cheated him... why? When i hear this it is usually about having speeding tickets or accidents which prevent him from going to a good company.. or just lack of knowledge. Now is absolutely the worst time in history to be an owner operator.

Needless to say his credit took a giant hit. The semi is financed with a ridiculous payment (2,300/mo) and the trailer is leased through Mac (1,800/mo).

That payment is actually cheap which means it is an older truck, probably without a warranty or from a company like Lone Mountain that seems to be hit or miss with my friends. A brand new Prime truck goes for about $5,000 per month lease now. Or purchase it with a $14,000 downpayment. But would have full warranty and no trailer payment.

The lease is coming to an end and he is going to purchase a trailer. Lender had the idea to put truck and trailer into one payment and he would be saving about $3,000 monthly.

The lender is concerned about getting a commission., not about protecting you.

That's where mama comes in. It's all going to be in my name and he is "leasing" it back from me. I trust him to make payments, etc. That isn't at all my concern. I'm just wondering, other than financial liability for the payments should he not make them , what else should I be concerned about? Insurance will be on him, in his name. I've made sure he gets life insurance should something ever happen so I'm not left with a giant truck that I have no idea how to operate. I'm so clueless about all of this I'm not even sure what questions to ask. I'm just looking for some advice and trying to make some smart decisions here for us both.

Taxes is a big one. and the fact that you are the owner, insurance or no insurance.

You would be owning a commercial vehicle and in a business transaction would then be receiving an "income" of the payment. Then the payment wpuld be an expense of your business. If he kills someone... do you think you wont get sued as the owner?

I would stay far far away from this. I usually tell my students not to go lease/buy a truck unless they have $50,000 in the bank. Right now with the feight issues, i would recommend more.

I was thinking more avout this. And basically this is a new sale or perhaps a refinance. Either way... to reduce that truck payment, they are going to extend the loan and the interest rates right now are through the roof.

So say he owes $10,000 paid off in 1 year. They are going to refinance it, lower the payment, extend the loan to 2 years and make bank on the interest. If your son doesnt realize this... he shouldnt be in business.

I saw on Reddit that 20 somethings bought cars during covid at peak prices. The payments were $700+ per month for 7 years. Now the values dropped and they are in negative equity. So they are refinancing the cars for lower monthly payments but the loans are 5 years. So basically, they are paying 12 years in over inflated car prices and interest.

And the lender/seller is getting paid well.

There's a huge potential for lots more liability and loss. Assuming that he's already shown a lack of judgement and business acumen by getting involved with a less than reputable carrier, purchasing a truck at way too high of a price, taking two months to get repairs done, that I'm assuming we're not under warranty, it leaves the question of why would you subsidize bad decisions.

Parents need to learn how to let their children get a bit banged up, it falls under an expression we heard a lot growing up: "Bet ya won't do that again".

Since he has no funds and prudent reserve to cover breakdown, no back up for a replacement/rental truck when his is out of service, no lines of credit, probably no working business plan and no operating capital for fuel and consumables, much less insurance, GL, regulatory fees and licensing, how again is his business with your overpriced asset supposed to succeed? I'm not asking this to be mean, it's just that these things need to be addressed.

I'd recommend cutting the losses short, let the lease expire. Sell the truck. If he's intent on developing a business as an owner op, look into saving up enough to cover the things I mentioned in the above paragraph and perhaps once done, purchasing a truck under warranty and leasing it on to a larger stable carrier, running under their authority, reducing his liabilities while learning the business end of this. The potential for income is less but so is the potential for harm.

If you really want to help him, letting him learn from his mistakes and building a solid foundation is invaluable.

Sorry to double dip on this, but for reference. My wife offered to buy a truck for me out of the procedes of one of her houses and me pay it back to her.

This was a 2023 kenworth t680 with 100k on the clock, 6/600k warranty left. With a payment to her of 250 a week, zero percent interest. I have the resources, credit and funding to run, have my own authority and have for 4 years. I would have leased it on to my present carrier where I get abundant miles and high revenue loads, would be running under my present DM and Terminal manager.

I still chose not to and explained to her why we wouldn't.

The money isn't significantly more than I make as a company driver. Roughly 15 percent more before taxes on a good month.

The headache and expense of regulatory burden, the potential liability and headache of running a business while doing the work.

The historically bad freight market and economy coupled with insanely high fuel costs and volatility.

No health insurance, benefits and retirement plan.

Reading your post I’m kinda confussed. Did a company he pulled frieght for screw him or a customer, or broker?

Does he have his own authority or is he leased onto another company?? Is he leasing the truck also or did he purchase it.

If he has a Mac trailer I’m guessing it is a flatbed. And a very nice, but expensive one. They also make ag trailers.

Flatbed rates have been in the toliet along with other types and things have been this way the past 2 years. That said if he got his own authority a year ago, that was a bad move from the start.

There are a ton of other questions/potential issues with the situation depending on his exact business model at this time.

I just rented a awesome stepdeck trailer for a specific job and a monthly rental was only 1500 a month.

2300 for a truck payment is steep and its probably a 15-19 yr model as a guess.

I had an expensive repair when I lost a turbo and other parts as a result of the turbo failure. I was down 1 week.

2 months to repair anything is ridiclious. Sounds like either a really major repair and parts were unavailable or some other factors keeping the truck down that long. There have been alot of parts shortages for the last 3-4 years.

I have to agree your son needs to turn the trailer in and sell the truck. We are likely looking at a minimum of 2 more quarters before we see any relief. Capacity is still way to high, resulting in rates staying low.

During the pandimic rates were abnormally raised and alot of people purchased their own trucks/trailers and had high payments. Also paid too much for the equipment. When rates went into freefall and fuel skyrockted there business was unsustainable.

Anyone pulling strictly broker freight, will go broke. You need your own customers for outbound loads from home, then use brokered loads to get back, rinse and repeat.

Without some specific info I can’t give you much more advise at this point. If you have some directed specific questions ask and we’ll see where that goes.

As an O/O I do feel for your sons situation.

Hello Nicole, and welcome to our forum.

As you see... nobody thinks well of your plan. I get the feeling you may be very surprised by the comments. Maybe you're disappointed. We can't tell if you don't respond.

Let me just say as a long time parent, and a long time business owner, I appreciate your willingness to help your son. The problem with this whole thing is that the trucking business is just plain tough. There's no getting around that. What's weird is how almost everyone who tries this career thinks they can do better at it if they own their own truck.

This business has left a lot of people heart broken and completely separated from the money they spent decades putting together. I don't want to see that happening to you.

Look at what it's already done to your son. He's desperate. His desperation is the only thing that would motivate him to bring you into this terrible feeling of drowning without a lifeline to grab. You'll both regret taking this plunge.

There was one sentence in your post that jumped out at me. Here it is...

He's struggling financially just starting out.

What makes that statement frightening is it illustrates how little he and you realize what's going on. His struggles aren't even related to trying to get started. This business is harsh, and very competitive. He is getting a good taste of what it's like to be a minnow in a tank filled with sharks. Unless he is a very savvy minnow, he's better off working for the sharks. He simply cannot compete with them.

The large trucking companies focus on leveraging their economies of scale. That's where they squeeze out the independent operators. Your son can't survive on the types of freight and rates that dominate the load boards. He simply doesn't have the experience or the contacts to develop his own niche market, yet that is the only path he can make work.

You are kind and generous to be so willing to help. Each of us admires that. We just don't want to see the two of you bitter and angry with each other, and we sure don't want to see you losing the savings you've worked hard for.

Please don't make this mistake. If a bank saw this as a profitable venture they'd be more than glad to throw some money his way. Let the bank do their job. You are the mom. The best thing you can do is help him realize when it's time to throw in the towel. Don't extend his pain and then get drug into the struggle yourself.