Are The Repairs Worth It?
I
Pash Brar
18
have encountered multiple clients receiving huge repair bills for their trucks in the last few months. The invoices from mechanics are so high, that they cost more than what the truck is worth. Truck maintenance and repairs are inevitable and unavoidable. A truck must be kept in good working order and proper inspections must be done to keep it on the road. This ensures everyone is safe and money can be made. But when the repairs cost more than the market value of your truck, do you pay that amount, or get a newer truck instead? One client approached me to finance his previously paid off truck and explained he
NOVEMBER - DECEMBER 2020
needed the money to repair his truck and pay the mechanic. When I looked at the repair invoices, they were triple the value of the truck. An independent appraisal was done on the truck and it confirmed the truck was no where near the value of the repairs, and even after the repairs were completed the value would never reach the invoiced amount. The bank of course only offered the amount of the appraisal and the client was stuck. The only money available was the equity in his home, so the client took out a second mortgage to pay for the truck repairs. I also recently had a mechanic who fitted a brand new motor in to a used truck. A client agreed to buy the truck, but first wanted other cosmetic work done. He requested the mechanic get the body redone, paint it all, add chrome and lights and make it into a show truck. The mechanic did so and added all the extra work done to the sale invoice. The client thought he could finance the whole thing. Unfortunately, all the extra work done put the invoice to almost the price of a brand new truck. The bank of course refused to finance the full amount and would only pay for the market value of the truck. The bank even suggested they buy a new truck with full warranty instead. The client wanted only the used truck and had to give a huge down payment and huge payments for the first year to bring the value of the truck to its market value. The client was warned, if there is an accident or anything happens to the truck in that first year, the loss will be their own because insurance will never cover the full amount he paid for the truck. I spoke to an insurance adjuster who handles heavy equipment accident claims and he confirmed the same. More and more truckers are paying too much into trucks that need to be retired and put to salvage, which are leading to significant financial losses. Trucking is a business and it is up to the trucker whether they want to repair a truck, sell it as is, or salvage it to buy something else. The insurance adjuster confirmed one person he knows only keeps trucks that are under warranty. Once the warranty is running out, the truck is replaced with another truck under warranty. His accountant advised him to do this and I believe it is good advice. He has never experienced any significant losses, so it is sound business advice. NATIONAL MAGAZINE
