5 Factors to Consider Before You Buy a Tow Truck
In the United States alone, there are approximately 47,618 tow businesses, and globally the towing market will reach $38.5 billion by 2028. So, if you’re running a tow truck business, you need to have everything in order to stay competitive.
This also means knowing what to look for when you buy a tow truck. If you’ve never bought a tow truck before, it can feel a bit overwhelming. However, you just need to learn what factors to consider before you buy, and you’ll be helping customers with your new tow truck in no time.
Keep reading this guide to learn five essential factors to consider before buying a tow truck.
1. Figure Out What Kind of Tow Vehicle Meets Your Needs
The first step to buying a tow truck is understanding what types of tow trucks you need for your business. You need to figure out how much you’re regularly towing to do this.
You must be aware of the tow truck’s gross combined weight rating (GCWR). GCWR is the maximum weight for both your tow vehicle and trailer. This weight rating determines how much you can safely tow.
Exceeding your GCWR can cause significant problems for your vehicle. It strains your engine and transmission and causes accelerated brake and tire wear. You can also get in trouble if the police pull you over. This can include fines, your truck can be deemed unroadworthy, and you may also face insurance problems.
Knowing your GCWR also helps your form a more accurate business plan and ensure you buy the right truck for the services you plan to provide.
2. Find Out Your Best Financing Options
Tow trucks aren’t cheap, so you need to figure out the best financing options if you don’t have cash on hand. First, you should take a look at tow truck financing. The two main tow truck financing options are tow truck loans and tow truck leases.
A tow truck loan gives you the money to buy a tow truck outright. You’ll get a loan that allows you to repay the money over a specific period. With leasing, you’ll sign an agreement with a company to lease the tow truck for a particular period.
Tow truck loans will impact your credit more, so you must look at your financial situation first. Do you have enough money for a down payment? What kind of interest rates can you get?
Leasing allows you to use the truck for a fixed period, but you’ll have to return it when the lease ends. In some cases, you may be able to purchase the tow truck at a reduced cost, but you’ll need to find out more information.
Overall, if you don’t have a good credit score, you’ll be looking at higher interest rates. You also need to have bank statements and income statements available. Remember, some companies will consider you if your credit score isn’t the best.
3. Know What Expenses to Expect
It’s essential to understand your monthly expenses before you buy a tow truck. This is especially true if you’re starting a new business and this is your first major purchase.
First, you must ensure you budget enough money to cover your monthly payments for your tow truck lease or loan.
You must also consider additional expenses if you have employees operating the tow truck. This includes wages, fuel, and insurance costs.
If you run your business alone, consider all your monthly expenses, like rent, electricity, and trash. You’ll need a storage facility or garage to keep your tow truck safe and secure.
Obviously, financing a new truck will give you higher monthly payments, and you’ll likely need more insurance coverage. You can also buy a used tow truck to decrease your monthly expenses.
In general, ensuring your monthly business budget can handle the costs of a new tow truck is essential.
4. Know Your Insurance Needs
Insurance is necessary for tow truck owners but can also come with a high cost. Anybody running a tow truck business will need a solid insurance policy with coverage for things like roadside assistance and repair shops.
While you don’t want to pay for more insurance than you need, you will need basic coverage. Finding an insurance agency in your area is best to see if you can customize a plan.
You’ll typically need property insurance that covers equipment like trucks and other supplies. General liability insurance is also necessary. Liability insurance will protect you if someone is injured and needs medical treatment. It also protects your business and drivers if you have to go to court.
Usually, this includes auto liability insurance which will cover you and any other passengers in your vehicle. Physical damage insurance will cover damage to your truck and other vehicles.
You also need to consider workers’ comp if multiple employees work for you.
It’s crucial not to underestimate insurance expenses or cut corners when trying to save money for your business.
5. Find a Reputable Tow Truck Dealer
Finally, it’s well worth investing time in finding a reputable tow truck dealer you can continue to use.
Do your research to find the top tow truck dealers in your area. Quality dealers should have many different tow truck options you can choose from. Be sure to read Google reviews to discover how their past customers have felt about the overall experience.
The Better Business Bureau (BBB) will also give you access to reviews, ratings, and complaints. This will help determine how well a tow truck dealer handles customer complaints.
Finding a dealer with tow trucks in stock that can deliver immediately is crucial. You should also look for pre-configured tow trucks already equipped for your towing needs. This way, you can buy the truck and start using it immediately.
You can check out these tow trucks for sale to get a good idea of what to look for.
Consider These Factors Before You Buy a Tow Truck
Considering these factors before you buy a tow truck will help you find a reliable tow truck that you can afford.
Remember to do your research to find a tow truck that meets your needs, and don’t settle for less. If you feel rushed through this process, take a step back to evaluate your business plan.
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