Got a balloon Payment coming due on your semi truck? Not sure how to pay it off? We get 100’s of calls a month from truckers looking for an answer to this question.
They financed or leased a truck from a company and now have a large payment that’s due at the end of the term. They want to keep the truck and not turn it back in.

This is a common scenario in the trucking industry. Most of the time the guy knows of the Balloon Payment but there is a surprising number of people who did not realize their agreement called for a balloon payment. They have years worth of payments into the truck and no way to pay off the end payment. Semi Truck Financing is tougher to get these days so what does a person in this situation do?

1) First thing I recommend doing is asking the current lien holder or leasing company to see if you can work something out with them. There are two ways they can do this. They may be able to extend the term out for a period of time so you can find other options. Or you might get them to refinance the balloon payment down to monthly payments. Many times these monthly payments will be less than what you have been paying previously. This is the best way if they will work with you.

2) If you can’t work something out with the current truck lender consider calling your credit union. If your not a member go see one. As I have mentioned in previous articles credit unions are one of the most aggressive sources when it comes to semi truck financing. Remember, you have two things going for you. First, you should have some equity in the truck. You have made payments for many months so there should be good equity. Second, you have a payment history (hopefully on time) and lenders like that.

3) Call an independent semi truck financing company. There are truck lenders that cater to all types of credits. We handle customers that have less than perfect credit history. There are companies that handle the good credits as well. You can find these companies online or call up your favorite truck dealer for ideas.

4) Turn the truck into the financing/leasing company. Many times the residual payment is set up in such a way where they give you credit for payments made and you can swap out the truck for a newer one. Not a bad deal if you don’t mind continuing making a monthly payment. Maintenance, repairs, and insurance can sometimes be a part of these agreements so they’re not a bad deal. Just be sure you read the fine print to be sure your covered on all the particulars.

5) If you are good at budgeting and you are aware of what the amount of the residual payment will be from the start of the agreement you can break up the balloon payment by the number of months in the agreement and just sock the money away each month. Sounds like a simple solution but we don’t think of these things when working out our monthly budgets. The residual payment is an expense in the future so we don’t think about it today. But, say for example you know you will have a residual payment of $20,000 at the end of 36 months, you would just break that down monthly and set aside $556 per month. When time to make the payment, your covered.

Too bad they don’t teach money management in truck driving school. But with a little planning a head of time you can avoid a headache down the road. If you do get caught in a pinch there are other ways to attack the problem. If you have any questions or want to run a scenario by me just give me a call. Happy trucking.