Buy A New Van Right Off the Bat?

[Phoenix4774]

Hi, I have read on here such advice as to drive for someone otr a while to see if you like it, or buy a cheap used van for 5-10k to get started.

While I concur the first advice is good, I am unsure about the second. It seems if someone has low cash capital to begin with, there is a fairly big risk of purchasing a lemon and having to eat unforseen repair expenses.

The positive I see about purchasing a new vehicle is that the first 100k miles will be under warranty. If one averages say 1200mi/week, that is the first 83 weeks under warranty, a bit over 1.5 years. I am using as an example an extended 2010 Chevy 3500, which runs $32k new. At a 60 week loan, that is a $530/mo. payment, minus any trade-in value. Sure that is steep, but you aren't paying the 5 to 10k upfront on a used one that may or may not give you problems sooner than later.

It depends on your other expenses I suppose. I don't have a house payment, but also do not have a lot of cash. If I bought new I could trade in my 2002 truck and eat a monthly $500 car payment plus insurance and gas, etc. This seems to me a way to hedge risk to my low cash capital in the short term (being under warranty for the first 100k miles), but it goes against popular advice so it would be nice to hear opinions about it.

The danger is that it craps out soon after 100k miles and I have maintenance plus a car payment! And with a 5 year loan, that one would be paying on it until its demise is likely.

 

[moose]

No ...
Drive for an Owner 1st... ,(and look on it as a paid tuition)
you will learn a lot in a short time ,& will have an opportunity to speak with tons of drivers out there ,as well as underspending how to spec your van ,and where to buy ,& so mach more ...

if all possible .make it to the upcoming expo .(B4 you buy!)

Good Luck.

 

[Dakota]

A van payment is almost a sure recipe for failure if you don't have a hefty saving account to back it up, the van plus high insurance will kill your profit. Much better to have a paid for van and put aside the money for repairs down the road. Even new vans breakdown and require regular maintenance items not covered by warranty, plus any breakdown will cost you when your wheels aren't rolling aka fixed cost. A high van payment means higher fixed cost.

 

[Wolfeman68]

I agree with Moose. Drive for an owner before you buy to make sure you like the lifestyle and gain some experience.

Again agreeing with Moose, attend the Expo in Wilmington before you do anything. Finding the right carrier is just as important as the vehicle you drive.

 

[Dakota]

One other thing that brand new $32,000 van will be worth alot less in one year then your loan would be worth, much better to buy a one or two year old van then to take a huge depreciation hit. Yes you can use that depreciation as a tax deduction, but wouldn't you rather keep the money for yourself in the first place

 

[guido4475]

I still think the best way to go is to buy a good used van from a reputable place like Ryder, that offers a nationwide warranty for 30 days on the van.Go over it with a fine tooth comb from a mechanic of youre choice, and chances are, they will fix everything you find wrong with it.I got a good one for 5k, and had no major problems to speak of, other than normal maintenance.

 

[Turtle]

The deal is, buy a used van for $5000, immediately put another $5000 into it for maintenance to replace anything that is likely to go wrong and for outfitting it for expediting (like insulation and a bed), and then have another $5000 in the bank.

If you buy a new van, you'll still need to put a few thousand into outfitting it, and you'll still need $5000 in the bank before you start.

Another point, if one average 1200mi/week, one is not gonna last 6 months out here, unless the van is fully paid for. With deadhead, one is more likely to average 1500-2000 miles a week, around 80,000 to 100,000 on the odometer by the end of the first year.

 

[nightcreacher]

One other thing that brand new $32,000 van will be worth alot less in one year then your loan would be worth, much better to buy a one or two year old van then to take a huge depreciation hit. Yes you can use that depreciation as a tax deduction, but wouldn't you rather keep the money for yourself in the first place

interest and depreciation should be more than his truck payment.put as little down as you can,save the rest for rainy day

 

[greg334]

interest and depreciation should be more than his truck payment.put as little down as you can,save the rest for rainy day

Steve, if you are not generating an income, then you can't make your truck payment.

The following makes more sense than anything else.

The deal is, buy a used van for $5000, immediately put another $5000 into it for maintenance to replace anything that is likely to go wrong and for outfitting it for expediting (like insulation and a bed), and then have another $5000 in the bank.

If you buy a new van, you'll still need to put a few thousand into outfitting it, and you'll still need $5000 in the bank before you start.

Another point, if one average 1200mi/week, one is not gonna last 6 months out here, unless the van is fully paid for. With deadhead, one is more likely to average 1500-2000 miles a week, around 80,000 to 100,000 on the odometer by the end of the first year.

 

[chefdennis]

And you also want to watch that interst write off and depreciation this year also...when barry lets the Bush tax cuts expire, also written into the new bill will be new limits on depreciation and tax and deduction changes...

This will affect everyone in business in different ways, but it will affect all businesses:

Six Months to Go Until<br> The Largest Tax Hikes in History

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

 

[OntarioVanMan]

And you also want to watch that interst write off and depreciation this year also...when barry lets the Bush tax cuts expire, also written into the new bill will be new limits on depreciation and tax and deduction changes...

This will affect everyone in business in different ways, but it will affect all businesses:

Six Months to Go Until<br> The Largest Tax Hikes in History

of course that is assuming that with one stroke of a pen, things change...

 

[Phoenix4774]

No ...
Drive for an Owner 1st... ,(and look on it as a paid tuition)
you will learn a lot in a short time ,& will have an opportunity to speak with tons of drivers out there ,as well as underspending how to spec your van ,and where to buy ,& so mach more ...

Thanks for the replies, I was just being contrarian to flesh out the issue a bit. I agree with the above, that it would be silly to buy new without enough capital and experience.

 

[kwexpress]

I think the correct answer really depends on each individual.it can go bad both ways but if you have other streams of income that can cover your van payment then I see nothing wrong with starting out with a new van.a van payment is what like $500 a month even if you dont make it as an expediter the van may come in handy.but if you are broke dont buy a van thinking your carrier will take care of you and make sure you make enough to cover those payments.
the most profitable truck I ever owned was one I got used only cost me 5k it paid for itself in less than 2 weeks had 700k miles on it when I got it had 1.2 on when I got out. it was a 10 wheeler with a 24' box volvo with detroit 60 430 hp 10 sp. but I was independant and that was before fuel cost $2 per gallon.

 

[guido4475]

Dont get me wrong, new is nice,but when times are slow, then it isnt so nice having that payment sitting out in the driveway, generating no money.But instead, that large 400# woman in a black dress from Operation Repo(otherwise known as birth control in a black dress) is knocking at your door wanting that vehicle back.

Give me a 5k vehicle paid for any day.Just as, if not in some cases, more reliable than a new one to begin with.The one problem with this is,the age limit some companies impose on vehicles.

 

[Turtle]

The tax deduction and depreciation is all fine well and good, but I'm with Guido, mostly. My first van was for $5000 cash, and then I put a few thousand more into for repair and maintenance getting it road ready, then some for outfitting it. Drive it for a long time paid-for, and saved for a new-ish one. Was gonna get a new one, with all the desired bells and whistles just like I wanted, but there was going to be long delay in custom ordering it. I found a used one, with 4100 miles on it, that had been sitting there for a year. Got a killer deal on it, put a snotload down, and paid if off within 2 years. Not having to worry about making a van payment far outweighs any tax deduction I might lose. It puts me, rather than the bank, in control of me.

An old time trucker once told me, "You won't really start making money with your truck, or have any freedom, until you have it paid for." There's something to that.

 

[greg334]

Well it won't make any difference because unless you know how to handle the money, learn how to be an effective expediter, and all that good stuff ... paid or not paid... deprecation or interest ... means nothing.

I have met some who have been at their best with used older equipment, they sock money away (by budget) for repairs and replacement then when the van gives up the ghost, they buy another used van and still make a crap load of money.

The same goes with trucks by the way.

The key is simply not to be in a hurry and to stick to the same procedures as if you were buying a truck.

 

[xiggi]

I know two people who between them had 3 vans reposed this year. each was bought new and used in expediting. I do not know anyone who had a 5000 dollar van reposed. Both of these people had been in expediting for several yers and these were not their first vans. It's tuff out here even for the experienced.

 

[Turtle]

Yeah, I cringe every time I see someone new to this business driving a brand new van, or especially a brand new Sprinter. But whether it's a van, Sprinter or a truck, it's all the same, just a matter of scale. Like Greg said, the procedures are the same regardless.

 

[letzrockexpress]

Starting a business requires a alot of things, primarily initiative and capital. It is very difficult, if not almost impossible to make an actual living driving someone else's van in this business. If you do not have much capital, it doesn't seem very wise to me to purchase a new van when you have no working experience in Expediting. Having said that, I did it back in 2004. Though I had the funds to carry me through at that time, I would not do it again. The learning curve in this business is not that long, but it is long enough to make it difficult to make a payment on a new van when you aren't sure what you are doing. I am with Turtle on this. Buy a $5,000.00 van and put a few bucks in it. You will be way ahead of where you'd be if you purchased a new one. The discomfort of driving a used van for awhile will not last nearly as long as an I-9 on your credit report due to a repo! Learn the business in a clunker and then go buy a new one....

 

[geo]

my first sprinter van i bought use from a person who found out this is not for me and he was paying over 500 a month for it to sit in yard for almost a year before i bought it had less than 600 miles

my second sprinter is a lease one and 48 months of payments
and each payment is a write off and you would be able to get in for less down
and at the end of 48 months van will be mind in aug 2011
and write it off for a couple of more years