Do you have some idle cash and you need investment ideas? If YES, here is a guide on how to invest in buying a truck and rent it out for passive income.
What will the world be without passive income? I mean, who wants to work the rest of their lives without respite just so that they can earn a living? This is why people are very keen on building up streams where they can earn added revenue without them having to break their back in hard work.
Passive income has been severally described as that income that comes in on the side without you working actively to earn it. When starting out, passive income may just be an avenue to earn a little something to pay the bills, but the fact remains that a passive income source that has been meticulously grown can turn out to be a major revenue earner. One of the passive income sources that have this kind of potential is truck rental.
Trucks are heavy duty hurlers (depending on the size), and they can fetch you a lot if they are put to good use. You can buy a truck and rent it out to other drivers who would use it and then you collect payments for it without you being actively involved in the hurling business. You can lease out your truck by yourself, and they are as well online and offline platforms that can help you lease your truck for a fee.
If this kind of passive income appeals to you, and if you are able to source the finance to purchase a new truck, then it is time you learnt how to buy a truck and lease it out so you can earn some good passive income.
How to Invest in Buying a Truck
For you to lease out your truck for funds, you first of all need to own a truck. If you do not have a truck, then you need to get one, and it would be in your best interest to buy a new truck. Though doing this would be more expensive for you, but it is in your best interests.
One of the reasons for this is so that you do not spend most of your earnings in the early stage of your business catering to repairs and other things that come with it. This is one of the reasons why you need to buy a brand new truck. If you are looking to get a new truck, these are the processes on how you can go about it.
Table of Content
- a. Look to Get a Truck Loan
- b. Research Different Truck Models
- c. Compare Prices Both Online and Offline
- d. Evaluate Truck Payment Methods
- e. Get Some One-on-One Time With Your New Truck Before Buying It
- f. Make your Payments
- How to Rent Out Your Truck for Passive Income
- How Much Can You Make Renting Out Your Truck?
- Let’s talk about the Risks of Renting Out Your Truck
a. Look to Get a Truck Loan
Trucks are expensive, this is a fact. It is also a fact not everyone can afford to pay for a truck from their present finances, that is why they need to source for loans. So, the first step to buying a new truck is to see if you can pre-qualify for a loan through a credit union or online bank.
Before you do this, you need to have an estimate of how much your truck can bring in every month. You also need to know what type of monthly payment you will have to budget for. Doing all these would help you know what your parameters are before you go out there and fall in love with a truck that is just too expensive for your budget.
The guiding rule is usually, if you cannot afford the payment per month on a 42-month loan, you’re buying more vehicle than you can afford. Taking out a longer loan to get a more affordable payment is a big, fat warning that you’re hurting yourself, harming your finances and limiting your options in life.
Keep in mind that dealers will typically mark up a loan by about 2% on the average truck purchase if you don’t prearrange your financing elsewhere. That is why you need to secure financing on your own when looking to purchase a new truck.
b. Research Different Truck Models
Next, for each of the types of trucks you’re considering, you’ll want to check the price of the truck, reliability and the cost to insure the vehicle. You can start your research from Consumer Reports yearly auto lists or their vehicle reliability studies.
For 2020, Lexus, Mazda and Toyota all have three entries in the Top 10. You can see other nameplates that are flagged for reliability here.
Finally, when it comes to determining the cost to insure a new vehicle, most big insurance companies make auto insurance coverage calculators available on their websites. That way you can start to get an idea of what you’ll pay to protect your potential new wheels. You’ll need to factor in the cost of insurance when you are looking at what you’ll be paying monthly for your truck.
c. Compare Prices Both Online and Offline
The third step to take when you are buying a truck would be to start comparing prices. Once you’ve narrowed your search to one or two vehicles and have the approximate cost of ownership for each, you should start shopping around for price quotes.
When shopping online for vehicles, try entering different zip codes in addition to your own. If the savings are large enough elsewhere, get ready for a road trip. Today you can buy cheap one-way flights very easily. Sometimes you’ll get the best price by making your deal in advance, flying to take delivery of the vehicle and then driving it home. The savings are yours to keep and they can be huge.
If you prefer not to buy online, use the online price quotes you’ve gotten as a guideline. Then call around to local dealers to see if they’ll match the price. You can also avoid dealing with salespeople in person by emailing the internet department at a dealership and negotiating with them over the computer.
d. Evaluate Truck Payment Methods
Gather information on dealer financing programs, financing through your bank or credit union and third-party financing plans. If you would prefer to pay cash, ask the dealer if he can offer a discount for reduced paperwork and processing time. Finally, consider a leasing program, if that would suit your purposes.
e. Get Some One-on-One Time With Your New Truck Before Buying It
Remember that it’s important for you to feel comfortable with what is bound to be a very large purchase. One way to do this is to look at trucks when a dealership is closed, so there’s no salesperson to pressure you. Another way is to set up your own zero-pressure test drive.
The best way to test-drive a car is to rent it for a day or two, if you can afford to. Whatever you do, don’t skip this critical step. It’s an important part of learning the best way to buy a new truck — especially if you are doing almost all of the buying process online.
f. Make your Payments
When you go into the dealer to sign the paperwork, make sure that what’s on the purchase agreement is what you’ve agreed to previously by phone or email.
If it’s not the same, do not go through with the deal. The best way to protect yourself in a dealership is to be willing to walk out. Check your financing one last time. If the dealership can beat the lowest rate you’ve already secured on your own and all the other loan terms remain the same, go with the dealer’s financing.
Consider skipping the extended warranty. Trucks are built so much more reliably today than they were a generation ago, which means you should be able to skip the extended warranty. But not everyone feels comfortable doing this, but the fact remains that there is nothing wrong with it.
The deal here is, if you can afford the potential cost of repairs, you should never buy an extended warranty. If, however, you can’t afford the cost of potential repairs, you may want to consider buying the vehicle manufacturer’s warranty.
Never buy an extended auto warranty from a third-party. If trouble happens, the manufacturer is probably going to be there to stand behind its warranty. A third-party company may not.
Watch out for last-minute junk fees. These so-called “packs” can include phony add-on fees for documents, vehicle etching, fabric treatments and things of that nature. It may sound silly, but could be charged $300 or more just for doing the paperwork on your vehicle or spraying some stuff on your car seats. Push back on anything that seems outrageous and ask to have it removed.
How to Rent Out Your Truck for Passive Income
Now that you have purchased a truck, it is now time to think of how to rent it out for passive income. There are a number of websites that can help you facilitate renting out your truck by giving you a free marketplace to list your wheels. A couple of the most popular websites are RelayRides.com and GetAround.com.
You’ll need to first apply by sharing the make/model of your truck, proof of ownership, and a schedule of when you won’t be needing your truck. Typically the companies will not allow you to list your truck if is in poor condition or older than 10 years old.
Once you are accepted, the rental companies do all the marketing and leg work. Each company is a little different when it comes to exchanging the keys, but some of them even install electronic devices that allow the renter access to your truck after they have made payment online and signed a rental agreement.
Aside from listing your truck on online renter sites, you can as well make your own rental arrangements. You can start from you immediate community and look out for people that want to go into hauling businesses but do not have their own trucks.
You can also take your search online to your social media sites. But know that you will be running some risk doing this. To reduce your risks considerably, you need to prepare your paperwork and get it notarized legally, but in such a way that you would not be accused by the state of running a business without the proper requirements.
How Much Can You Make Renting Out Your Truck?
Companies like HyreCar estimate that you can earn more than $14,000/year by renting your truck out for 10 hours a week. This number may indeed be large, but if you live in a large city with millions of potential renters, that could be a real possibility. However, even if you’re only earning a few thousand bucks, it’s certainly would make a good enough passive income.
The amount that your truck will earn per hour will largely depend on the type of truck and its age. If your truck is of good quality and it is new, you can get a good listing price per hour.
There’s never any cash exchanged between the renter and the car owner. The companies act like a middle man by collecting the cash and sending you a paycheck. By doing this, you basically do not have much to worry about. Your own is to make the truck available and be at hand to receive it back.
Let’s talk about the Risks of Renting Out Your Truck
Letting a friend drive your car is enough to make anyone nervous, let alone entrusting a complete stranger with your truck. Many of the rental companies available do take that concern to heart when crafting their rental agreements. To start – renters are required to buy large insurance policies, often in excess of $500,000, before renting your truck.
If you report that any damage has been done to your car, the renter is charged a deductible and the rental company sees that your car is fixed promptly by their insurance policy.
Renters who smoke in the truck or leave it dirty are also charged a fee to have your truck cleaned and detailed. In fact, it seems like most of the companies are hypersensitive to protecting truck owners from negative repercussions. So, relax, you are in good hands.