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CFF-TV Ep. 3 |CFF-U: Get Approved To Grow Your Fleet With Kindra Bierly Pt. 2

Welcome to CFF-U!

Matt Manero:

Welcome to CFF-TV with your host, the Founder and President of Commercial Fleet Financing in Dallas. I’m back in the studio with Kindra Bierly one of our super successful and experienced salespeople. Kindra killed it for eight years! I mean, what a run it’s been over the last eight years, it’s been fun and we’re just getting going. But Kendra is in the studio laying down her expertise for you. The last video that Kendra and I did was, you know, really what does your credit need to look like? How do you improve your credit? What are some of the strategies? What are we as a finance company look like, look for today. I want to talk about specifics for people who are looking at buying a truck, a trailer, or a piece of equipment for their business, and really what does it take to get approved today?

What To Expect With Good Credit Financing

Matt Manero:

So many people, especially on social media, everybody’s telling you how easy it is. And the reality is there’s a lot of money to be lent for good credit qualified buyers. Yes. Right. It’s always that, that, you know, w a C at the bottom of every ad with approved credit. And so I think a lot of customers don’t even understand what terms look like, what structure looks like. And so today’s video is to give our customers an idea of really what they should expect based on their credit. So why don’t we start with just talking about the age of the vehicle?

Kindra Bierly:

Yes. The age of the equipment is, is really the heartbeat of the deal. Believe it or not, uh, of the loan, because the age of the equipment is going to drive the term. If you are looking to get a 2012 Peterbilt, you know, with 965,000 miles, 60 965,000 miles, excuse me. Uh, you don’t expect, you can’t expect a 60 month term. You can’t part of it is because of the depreciation of the equipment. Uh, and not to mention the fact that if, if that truck hasn’t had an overhaul, what’s going to happen in 10,000 miles, it’s coming, and it’s not an, if it’s a win and you have to be prepared for that.

Used Equipment Financing

Matt Manero:

Yeah. Now, one thing that I love about our finance company is we actually do understand used equipment probably better than just about anybody. And we understand that in certain applications you don’t necessarily need to buy new equipment. A perfect example is when we finance tow trucks, a heavy duty, the picture, just the biggest tow truck you’ve ever seen going up and down the highway. It’s rare that that customer is buying a brand new chassis and a brand new body paying sales tax, paying federal excise tax at 12% on that as well. And before, you know, it, you’ve got a $750,000 truck going up and down the road that will do the same job as a $350,000 used truck. And what we see in that world is a lot of people will put a new bed on the back of a used chassis. So we do understand that.

Matt Manero:

We’re wide open to talking to you and listening to you about that. What Kendra was mentioning a minute ago, though, was we also don’t want to help you get into this repair and maintenance trap. You saw a good deal on that nine year old piece, that in your example, 985,000 miles on it, and you think it’s the right fit to get to add to your fleet. And we’re going to say, are you sure it’s the right fit? Because it’s going to be a shorter term. So your payment’s going to be higher. The, um, rate will most likely be a little bit harder, the interest rate being charged. And what do your cash reserves look like? Because in a very short period of time, you’re going to have to rebuild that engine or do real repair maintenance, which is going to take it out of service, which is going to impact your driver satisfaction, which is going to impact your service to your customer. And it’s going to cost you a lot of cash and it’s going to lose the revenue because you can’t be putting that truck to work.

Kindra Bierly:

Yes, that’s absolutely correct. I’ll be honest. If they are a one truck shop, I dissuade it highly dissuaded because how are you going to pay your bills? If your truck is in the shop, you can’t, you absolutely cannot. If you’re, if you have a fleet of trucks and this is a spare, or if this is something that’s going to be used for a specific purpose, sure. You have a backup plan. But if you are coming into the business brand new, you haven’t really done your due diligence on trucks in general. I would never, ever, ever recommend putting a customer into an older truck like that. I just, I don’t feel right doing it because I know what’s going to happen.

How An Approval Looks Like For Commercial Truck Financing

Matt Manero:

Yeah. I mean, that’s the difference of working with a company that’s experts in transportation and just somebody who’s a generalist. You know, I mean, if you call the same company that finances, restaurant equipment to buy your class a big rig, you’re going to get a very different answer. The answer can be no, of course we’ll do it. Right. You call our office, we’re going to work with you and consult you on what’s the right decision. So as we’re talking about what to expect, let’s talk about time and business, right? Uh, I’m a startup I’ve been in business 10 years. Let’s talk about the difference of how that approval looks. Okay.

Kindra Bierly:

Well, if you are a startup, uh, you’ve got your, you’ve had your CDL for how long that, because I’ll ask you that question.

Matt Manero:

Yeah. I’ve had it F w I’ve been a company driver. And so I’ve had my CDL for five years, but now I’m just buying my first truck to go into business for myself.

Kindra Bierly:

Wait, I will say fantastic to him because he’s, he’s willing to take the leap from working for the man to being his own boss. And that’s scary. That’s a scary thought, especially if you are purchasing used equipment, because you don’t know how that piece of equipment was treated. I mean, you have to do your due diligence on that diligence on there. So what I highly suggest is having a mechanic go out there and check out that truck just to make sure it’s sound, uh, do a Carfax, just to make sure it hasn’t been any accidents. I’ve seen so many of those, they’re just completely unaware.

Pro-Tip Buy A Truck From Your Last Job

Matt Manero:

And we’re still kind of talking about used equipment. Maybe you want to buy a vehicle from the fleet that you’ve been driving for. Cause they, you know, they’re repairing maintenance and you know, their schedule and all that sort of stuff. And maybe, you know, you can buy as they’re trading, you might be able to buy one of those. I mean, we would suggest and kinder correct me if I’m wrong, but we would suggest if that’s the move you’re making, try to get that truck with 400,000 miles on it, a hundred thousand miles of warranty still left on it. Right? So, you know, you’re, you know that you can run another 600,000 miles, which is three years, four years without big problems

Kindra Bierly:

And with some protection. So

Matt Manero:

Back to the time and business thing, how does whether they’re buying newer used, how does time and business impact there?

Kindra Bierly:

Uh, big because the customer or the underwriters don’t know what you’re about yet. Uh, when you’re a startup, it’s a huge risk. Um, how many businesses, what’s the percentages of businesses that fail in the first year,

Matt Manero:

50% in the first year, 90% by year five.

Kindra Bierly:

Perfect example. So underwriting is going to step back, see what you’ve done previously. And then, I mean, it’s, you’re not going to get a 5% rate on that. You just can’t, it’s not reasonable with the risk that is being done by you being a startup in the industry. Now, no, you’re not a startup in the industry. You’re, you’re a startup as an owning your own company. You’ve never done your own, you know, taxes for your company. You haven’t paid all your bills for your company. It’s a lot of work.

Matt Manero:

Yeah. It’s a different life to move from getting your guaranteed check, to finding your check and finding your freight and all that stuff. But we approved startups. We do. And we approve them with good terms. Yes we do. So let’s give people an idea down payment, monthly payment, you know, let’s say a hundred thousand dollars deal. What do you think? Is that a that’s, you know, a $2,000 a month payment? Probably.

Kindra Bierly:

Yeah. I will say this underwriting wants you to meet them halfway. I Mel, maybe at least 20, 20% of the way, because they want you, they want to see your commitment. They want you to invest in your company so you can count on for a startup about a 20% down payment. And so, and that’s to make them feel a little bit better, but it’s good for you too, because it gives you a little bit of equity in that truck.

Matt Manero:

I hate it. After six months with a 20% down payment, you can get out, right.

Kindra Bierly:

Because you can actually resell it and maybe put a little change back in your pocket.

Second Example of An Approved Business – Startups

Matt Manero:

Okay. So let’s move on to, I’m no longer a startup. I’m actually two years in business now, does it matter the size of my fleet?

Kindra Bierly:

It can. It can, if you want to, if you want good terms. Um, but oftentimes though we can get a single owner operator done at a reasonable rate. And I say reasonable between probably six and 8%. And that’s even on a used piece of equipment map.

Matt Manero:

No that’s strong. Um, you know, that, that connects back to credit score too, which was the previous video we’re going to pull your personal credit. Um, so let’s say that I am three years in business. I have five units in my fleet, but my credit score is a six 50. What’s going to happen to me,

Kindra Bierly:

Count on a down payment. Absolutely count on a down payment. Um, I’ll probably ask if you’re a homeowner or a renter, because again, underwriting wants to see stability. Yeah. Okay. Are you going to move every five months or do you own a home where you are not going to run anywhere except for home,

Matt Manero:

Right. Right. I mean, what Kendra is saying there is you have to understand underwriting is concerned about how do we get our asset back if the payments stop and if you’re a homeowner, um, they know they can come to your house and maybe the trucks in front of your house. And if the truck’s not in front, maybe you’re in the house. Right. I mean, they, they need to have that comfort level that you’re not gonna skate on the deal,

Kindra Bierly:

Uh, depending upon the truck mat, because the truck has to value.

The Chip Shortage Is Real!

Matt Manero:

Yeah. Which is weird because in today’s marketplace, use truck prices are so hot because we can’t get new trucks because the chip shortage and just pure demand,

Kindra Bierly:

I’m scared to death about that. To be honest with you, because what’s happening is the supply and demand. What happens when there’s not enough supply prices go up and what happens when now we’ve got the chips for the trucks and we get a whole bunch of trucks, what’s going to happen. The valuation of the trucks, what happens. And when you go to trade in that truck, are you upside down? This is why a down payment, a good down payment is so important to keep you above.

Matt Manero:

Yeah. That’s why super long terms for financing are dangerous as well. Right? I mean, some competitors will do 84 months. Well, congratulations. If you do an 84 month deal with no money down, you will not be in an equity position on that vehicle until probably year five. That truck will be pushing 700,000 miles on it. And if you time the cycle, right, maybe you’ll sell it for top dollar. If you time the cycle wrong, you could get your clock cleaned on it.

Kindra Bierly:

Yeah. I’ve seen many, many, unfortunately. Yes.

What Are The Terms

Matt Manero:

So what kind of average term are we recommending right now for a customer they’re buying a, let’s say they’re buying a new truck and they’re going to put, um, 10% down payment. What are you saying? Three years, four years, five years. What are you recommending?

Kindra Bierly:

I recommend going any higher than a five-year term on a, on a brand new truck, because you’re looking at 150 to $170,000. That’s a nice piece of change. And that’s going to bring your payment to 3000, 4,000 a month. Now, if you are hauling heavy equipment or a lot of refrigerated goods or something, that’s odd, something that pays a lot. Sure. You can potentially afford that. But if you have a drive in, if you are, you know, just flatbed, if you are pulling general freight, you are not going to get the same as the ones that are hauling the others. Right? So you cannot, unless you’ve put away for it and plan for it, you shouldn’t purchase on a three or four or five year because you will go what I call truck broke. Yeah. So, and I never want to see that I want you to thrive and I want you to be able to put money away. So when the time comes and you need to trade that truck in, you will be prepared regardless of where the market is right now.

Use The CFF Budget Builder Tool – You May Be Surprised!

Matt Manero:

All right. So, um, we have a great tool on our website. If you go to CFF, nationwide.com, upper right-hand corner, click budget builder, and a lot of the things that Kendra’s talking about behind the scenes become very explanatory for you. You simply type in the amount of revenue every month. What your primary expenses for your driver, for your insurance, for your fuel, what your reserve account was going to be. We always recommend that you save at least a thousand dollars in a repair and maintenance reserve account hit calculate. And it’s going to tell you what the, roughly the gross profit of that vehicle is going to be. And we always say here, never buy a piece of equipment until you run it through the budget builder.

Kindra Bierly:

Oh yes, absolutely. But here’s the catch. Here’s the thing. If your growth is there, if you have the financials and if you’ve got the work is one truck enough. Yeah,

Matt Manero:

Yeah, yeah, no, that’s right. And we’ve had that happen so many times when we run the customer through the budget builder and it says, they’re going to make $10,000 a month. And the question becomes, why are we only doing one deal? Why don’t we put two trucks to work or three trucks?

Kindra Bierly:

Yep. We’re here to help you grow. We’re not here to just do a loan for you.

Terms On Buying A $150,000 Truck

Matt Manero:

Let’s talk about real terms on buying $150,000 truck. Um, I’m going to give me my terms. I’m going to, my rate’s going to be what, and my down payment is going to be what, and I’m a good credit customer. That means I’m over 700. I have say three years in business. I got five units in the fleet. So I’m a qualified buyer. What can I expect?

Kindra Bierly:

So there’s the recommendation. And then there’s what truly could happen. I always recommend doing a down payment again, it’s going to protect yourself how, whatever we do have zero down approvals available. You know, I’m not going to tell you not to do it. If that is something you really want to do. So I you’ll get up to, and again, this is going to be your choice on what the best case scenario is. You can get up to 72 months on a term you could do anywhere from on a good credit customer. Well-qualified it could be anywhere from five and a quarter to seven. Let’s call it that.

Matt Manero:

All right. So, so the math on that, let’s say we did $150,000 on a 60 month term, zero down, uh, and say the rate was five and a half. That’s going to drive this off the top of my head here, but that’s going to be somewhere around probably 3000, 250 bucks a month is the monthly payment on that. You know, so, you know, you really need to make sure that you’re generating 15 to $20,000 a month in revenue, which is call it 180 to $240,000 a year in revenue, um, to be able to justify that purchase. What’d you say this reasonable? Absolutely say so.

Kindra Bierly:

Yeah, somewhere there.

Matt Manero:

In that hundred and 80 to, I mean, I can remember, you know, in the early days of commercial fleet, where if a truck generated 125 to $150,000 a year in revenue, that was considered pretty good. And you could make money on that today with the cost of new equipment and just the cost of everything in general, you really need to be in that 15 to $20,000 a month range to really be able to operate your trucking company profits.

Kindra Bierly:

Yes, that’s absolutely correct. But you need to do that anyway, because you do need to feed your family. It’s not just the expenses that you’re what you’re talking about. You still need to allocate funds. Mama needs a new pair of shoes. You know.

Advice For Fleet Owners

Matt Manero:

You don’t buy a piece of equipment until you run it through the budget builder and get an idea of what the gross profit will look like on that vehicle. It’s free CFF, nationwide.com, upper right hand corner, click budget, builder, any final takeaways of what somebody can look for when they’re, when they’re purchasing a piece of equipment from us or any other finance company. I mean, it kind of goes back to our first video, which is be prepared. Let’s get our bank statements ready if needed, let’s get our tax returns, let’s get copies of the contracts, let’s get our credit tight and then present as a super quality, make our job a little bit easier, right? We all will fight for you, but just help us fight with you.

Kindra Bierly:

Absolutely. Uh, you as an astute businessman or woman need to know and understand all aspects of your business, because we’re not going to understand that. I mean, you, it’s your job to tell us. So we have a clear picture on the, on the story that we need to tell underwriting. So make that story crystal clear for us.

Matt Manero:

Yeah. Help us help you. Yes. All right, Kendra, as always. Thanks. Great information. Super professionalism. Give Kendra call. If you’re looking for that next piece of equipment, commercial fleet financing at a Dallas, Kendra. Thank you.

Keep tuning in at CFF-TV. We’re just getting started.

We’ll see you down the road.


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The experts at CFF answer the most commonly asked questions about financing, including refinancing, which is better loan or lease, and how credit is measured for a company.

About Commercial Fleet Financing, Inc.:

At Commercial Fleet Financing (CFF), our pros have given smart advice to fleet owners and owner-operators in the transportation, moving, towing or construction industries for more than two decades. With CFF, finding the right financing solutions is a phone call away and most borrowers secure commercial vehicle financing with ease. To talk directly with one of our finance pros and get started with credit approval in as little as two hours, CFF’s phone number is (469) 281-2962.

2021-05-10T11:01:41-05:00
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