Garbage Truck Loans

Trash, compost, and recycling pickup are essential services throughout Canada. That makes the trucks we use for garbage collection equally important, especially when you consider the sheer amount of junk even a single cargo container can transport.  

While rear-loading compactor trucks are what you’ll usually see in residential areas, some garbage trucks have side or front hydraulic lifts to empty bins into corresponding slots and dumpsters. Scrap yards and landfills may use grappler trucks and regular dump trucks to haul large items around, like metal, lumber, and old vehicles.     

If you’re interested in buying a truck for your private or public trash collection business, you should know that these types of vehicles can be very expensive to finance. Luckily, a loan can help make your garbage, recycling, or compost truck more affordable through equally divided payments. 

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Why Would Someone Want a Garbage Truck? 

As mentioned, most populated areas would not be able to function properly without the right sanitary measures in place, including periodic waste disposal. Here are some of the other reasons that someone, like yourself, might want to finance a garbage truck:

Trash, Compost & Recycling Contracts

Most cities hire regional or national garbage collection services on a contractual basis, while less populated areas may allow private companies or drivers to operate within designated limits. So, if you want to buy a garbage truck to become an independent contractor, you may earn a better profit by covering a rural or smaller suburban environment.

Business Trash Disposal

Some businesses produce hundreds, if not thousands of pounds of trash per week. When that happens, a basic compactor truck may not suffice. You might need a massive hydraulic system to lift heavy metal dumpsters all day long. If your trash disposal company lands a regular contract with one or more major businesses, it could make a decent profit

Specialty Item Pickups

You can also use a garbage truck to haul reusable, resellable and bulky materials, like broken appliances and scrap metal. With the right type of specialty truck, you could even dispose of wrecked cars and other heavy machinery to repair or harvest for parts. In addition, you may want a smaller truck to carry trash and items that are repurposable around your landfill or junkyard.

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Hazardous Waste Disposal

People and businesses may hire your trash removal service to get rid of toxic or environmentally unfriendly items, such as chemical, industrial, and medical waste. Since these items can be dangerous for you, your employees and the general public, you may want to finance a truck with a sealable rear container, a strong chassis, and excellent steering/handling.

How Much Does a Garbage Truck Cost?     

Any truck, even a second-hand model, has the potential to be pricey. This can be particularly true if it has any extra technology or attachments built in. For instance, a truck with a piece of construction equipment mounted on the back will likely be more expensive than a simple box truck with an empty cargo container. 

The same principle can apply to garbage trucks because they are specialty vehicles that generally require a lot of power and carrying capacity to get the job done. Here are the main costs to think about before you apply for a garbage truck loan in Canada:

Sales Price 

This depends on what kind of truck you want, where you’re buying it from, and what features it comes with. A brand new garbage truck made by a popular brand like Kenworth or Peterbilt can cost well over $50,000. Thankfully, if your trash collection business has been hired by the city, they may agree to fund a portion of your truck-related costs, including the purchase price. 

Loan Principal

If you’re financing your garbage truck with a loan, it’s important to figure out what your payments will cost you from month to month. While a loan from a lender allows you to buy a truck and repay them over time, you may also be able to get in-house financing through a dealership or manufacturer. All of these services can give you a loan cost or payment estimate upon request.

Interest Rates

Can vary based on your lending source, how much you borrow, the length of your loan term, and the health of your finances. They can be ‘fixed’ (won’t change during your term) or ‘variable’ (fluctuate with Canada’s prime rate). If you get a large garbage truck loan with a long term and you apply with a good income and credit score, you’ll often qualify for a lower, more affordable rate. 

Additional Loan Fees 

Don’t forget to factor in the fees that your lender, dealer, or manufacturer adds to your final garbage truck loan amount. For example, a lender may charge you for things like loan origination and document processing, while a dealer or manufacturer might add inspection and maintenance fees to their financing plans. Plus, penalty fees will apply for any late, short, or missing loan payments

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The Cost of Owning a Garbage Truck

Once your loan is approved and the truck is bought, you’ll also have to think about the standard costs that come with being a garbage truck owner or driver, such as:

  • Training & Permits – If you’re planning to drive your own garbage truck, you’ll need the proper training and licenses. The same goes for any employees that your trash collection business hires. Requirements may vary by province/territory.
  • Maintenance & Repairs – If you buy a new truck from a good company, you won’t have to worry about these issues for a while, at least until your warranty ends. However, a used garbage truck may need regular servicing and repairs.  
  • Fuel or Electricity – Diesel can be very pricey, especially if you or your drivers have large trash pickup grids. While many trucking companies are switching to electric vehicles, powering them can be almost, if not just as expensive. 
  • Insurance & Registration – Since it can qualify as a heavier, more costly and dangerous vehicle, insuring and registering your garbage truck can also be pretty expensive, particularly if it’s brand new or you’re a less experienced truck driver.  
  • Depreciation – Most vehicles lose resale value over time. Garbage trucks are no different, with the amount of wear and tear they can take on. Plus, you could end up with negative equity if you pay more for your loan than your truck is worth.    

How Do I Get a Garbage Truck Loan in Canada?

Due to the amount of financing and risk that may be involved for the lender, dealer or manufacturer, it can be tough to qualify for a large garbage truck loan with a low rate and appealing conditions, unless you’re properly prepared for the approval process. After all, your lending source must first confirm that you have the financial ability to make all your loan payments, no matter what your current personal situation is like. 

Don’t worry, there are a few things you can do to receive the best approval chances, loan amounts, interest rates and repayment terms available, including but not limited to:

  • Learn The Rules – Before you get started, figure out which federal, municipal and provincial/territorial regulations apply to your desired pickup zone. You may also have to deal with different kinds of taxes and environmental permits.  
  • Have a Steady Income – To qualify for most loans, you need a solid job for at least a few months (ideally years). If you’re financing your truck with a business or equipment loan, you may also have to showcase your company’s revenue. 
  • Have a Decent Credit Score – A high score (650 – 900) usually means you have a good payment history, so you’ll be considered less risky and may qualify for a better garbage truck loan. The same idea goes for your business credit score . 
  • Make a Down Payment – The more money you put down, the easier it is to qualify for a large loan with a low rate and reasonable payment plan. Normally, offering at least 10% – 20% of the truck’s sales price will yield the best results.
  • Get a Cosigner – If your income and credit aren’t great, someone with stronger finances can co-sign your loan and agree to take over your payments if you can’t afford them. This can also lead to greater approval odds, conditions and rates.
  • Provide Collateral – Your lender may require an asset (often the truck itself) as security to protect their investment. The more valuable your collateral is, the better. 

Where to Find The Right Garbage Truck Financing

When it comes to finding the right loan to purchase a garbage truck, there are your best options.

Banks & Credit Unions

Many truck buyers apply with their financial institution, where loans, interest rates and security benefits can be more tempting than other lending sources. Then again, banks and credit unions normally have strict approval requirements. Unless you’re a longtime member with a solid income and credit score, you may not qualify for an affordable vehicle or personal loan.

Alternative Lenders

Private lenders often have easier approval requirements and a faster, more convenient application process than most financial institutions. You may even qualify with bad credit and have the option of financing your garbage truck with an equipment or business loan. Unfortunately, alternative lenders charge higher rates and fees for smaller loans with stricter terms.

Find out if you should opt for a fixed or variable rate

Dealerships & Manufacturers

Some truck dealers and companies offer their own in-house financing. This will save you the trouble of applying and paying for a third-party loan. You may also be eligible for perks if you’re a preferred client, you make a large down payment or you buy a new truck. However, more service fees could apply for any preparations the truck goes through prior to purchase.

Trying to Finance a Garbage Truck?

Getting into the trash collection industry can be challenging and expensive but highly rewarding, if you know what you’re doing and have the right amount of financing in your bank account. Loans Canada can help you find the best garbage truck loans, lending sources and interest rates in your neighbourhood.  

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