Rates of Success

Last month, ubiquitous Freightliner LLC president Jim Hebe pinned the woes of North American truck manufacturers on the availability of financing at reasonable terms for small fleets and owner-operators (specifically, the lack thereof). The demand for trucks still exists, he said, but lenders’ stringent credit requirements and the size of the down payment necessary have made it virtually impossible for smaller companies to finance the trucks they want.

Hebe at least is putting his money where his mouth is. On March 21, he announced that Mercedes Benz Credit Corp.-Freightliner’s captive financing arm-has created a lending program for owner-operators and small fleets who otherwise can’t qualify for a truck loan. MBCC will finance off-lease trucks or repos for $999 down and as low as 6.99% over a 60-month term-an astounding rate on its own, but a mind-blowing one considering that credit for used equipment typically runs about two points higher than for new iron.

Apparently the risk of loaning 30 grand to a guy with low-grade credit or no business experience is less than having 40,000 used trucks on hand. (Mercedes Benz Credit Canada has yet to pick up this financing program, although Hebe says it’s only a matter of time. When it does, the interest rates are expected to mirror those in the United States.)

There are far worse ways for owner-operators to secure financing. Lease-purchase programs, for example, can be a well-intentioned plan by a carrier to help a company driver get into his first truck, or they can be scams. The trouble comes when a carrier tries to take advantage of its position as both lender and provider of revenue. Toward the end of the contract, the carrier cuts back the loads, repossesses the truck, and re-leases the rig to another unsuspecting driver.

Hebe says MBCC is assembling a team of advisors to help borrowers make good decisions about the direction of their busienss. No question, that’s needed. When the time comes-and it will, if you give money to guys who are already riding the rumble strips financially-I only hope MBCC’s consultants can dispense their wisdom free of any conflict they may feel as lenders. Sometimes the best advice you can give is to tell someone to re-examine their priorities and, if it feels right, to pull in the reins a little. Then again, if you have all these trucks to move…

I know a guy who is two and a half years into his truck deal-he’s a fall trade-and he’s not going to turn in his rig. Since he’ll be coming in for some repairs, he’s going to do a re-write on his note to lower his payments in his fourth and fifth years, and he’s going to cut back on his overall miles by about 12%. This guy has a two-and-a-half-year-old truck, it runs like a clock, he’s got extended warranties on it, and he knows what it costs to operate. In extending his financing arrangement and paring down his miles, he’s making a business decision and a lifestyle choice. He’s a good risk to emerge from this softening economy stronger than he went into it.

If he thinks he miscalculated, he can always change his mind. And Freightliner can offer him a really good used truck at a fantastic rate.

THE WILKINSON CASE

We knew Jim Park’s story about Don Wilkinson’s victory in federal tax court (Dispatches, March) would pique some interest, especially coming in the midst of tax season. Wilkinson is the Winnipeg-based owner-operator who argued that $33, the amount the Canada Customs and Revenue Agency allows transport workers under its simplified method for calculating meal expenses, isn’t nearly enough. He claimed $40 on his 1997 TL-2, got audited, and was penalized. Wilkinson appealed in a federal tax court-and won.

Readers from across the country have phoned us or sent e-mails requesting copies of Jim’s story and the 23-page court transcript. We’ve put the whole works online at www.todaystrucking.com/ mealtax.html.