Financing a New Mobile Veterinary Clinic
October 9, 2023 | 0
It’s been a while since we’ve written about the ins and outs of financing a mobile clinic. A long, long while. At the time of our last blog about financing, we had just emerged from the aftermath of the global financial crisis and rates were starting to inch up. Many of us assumed that rates would go back to historical averages, similar to what they were in the mid-2000s perhaps. Little did we know what was to come. In the years that followed, the U.S. experienced one of the longest stretches of relatively low interest rates in modern history. Millions of people started or expanded businesses during that time, including many La Boit clients.
And then something happened that none of us could even come close to predicting, the COVID-19 pandemic. Throughout the pandemic, interest rates were incredibly low. Some were able to refinance their homes or other assets into very low interest rates. Today, those historically low interest rates are over. For those who waited, they may feel like they missed out.
But in reality, interest rates are now back closer to historical averages. Businesses are still able to finance large purchases, such as a new specialty vehicle, just like they financed large purchases in the decades before 2008.
To help our potential clients better understand the nuts and bolts of financing a new specialty vehicle, we wanted to give a couple examples. So we reached out to our friends at Highway Commercial Services to talk about current rates and how they affect monthly payments. La Boit has partnered with Highway Commercial Services for decades, and they have helped hundreds of La Boit clients get behind the wheel of a new specialty vehicle.
For the purposes of this blog, we’d like to focus on veterinarians, primarily because they are the ones that are the most sensitive to interest rates and the eventual monthly payment. Customers who purchase mobile veterinary clinics are typically private practitioners. They aren’t part of large corporations, non-profits, or government entities, who often use grants or other fundraising dollars to purchase their vehicles.
Let’s start with a well-equipped mobile veterinary clinic for a price of $300,000.
Based on current interest rates, Highway Commercial says that they can offer a lease on new La Boit-built vehicle for about $5,300-$5,500 per month with their two payments down program, which has a residual of 20%.
For a vehicle price of $350,000, the lease would be about $6,100-$6,500 per month on the two payments down program, again with a residual of 20%.
Of course, these ranges depend on a variety of factors about the individual applicant, such as credit, deposit, and experience. To help pin down some real numbers, we asked Highway Commercial to give us a “middle of the road” analysis. Calculations also do not include sales tax.
Now we’ll compare this to a used vehicle. In order to finance a used vehicle, clients would typically do one of two things. In the first option, they would refinance an existing asset, such as real estate, to purchase a used vehicle. The real estate would act as collateral for the loan, which can be risky if they’re using their primary home as the collateral. The second option would be to get a standard business loan from a bank. Those loans typically have shorter terms and therefore a higher monthly payment. Let’s look at an example.
Say there was a used mobile clinic listed for $120,000. If a bank financed that for a standard two year term for a business loan, the payment is over $5,800 per month. And that’s assuming the client could find a bank that would finance it for them at all. A brand new veterinarian just starting out or someone without a lot of assets could have issues securing financing from a bank. Not to mention that used vehicles are often a big question mark when it comes to ongoing maintenance costs.
When making the choice to go mobile or expand your fleet, we encourage mobile veterinarians to weigh all the options before making the jump. Write a business plan. Come up with a budget. And consider your unique market. Of course, feel free to contact La Boit at any point during the process. Our sales staff has spent over 25 years helping mobile veterinarians realize their dreams. We’d be happy to help you too.
About La Boit Specialty Vehicles
La Boit Specialty Vehicles president Gil Blais first started La Boit in his garage in 1981, where he hand-made organizational boxes for traveling veterinarians. Fast forward to today, La Boit Specialty Vehicles is now a leader in specialty vehicle manufacturing for the Veterinary, Spay/Neuter/Adoption, Dental, Medical, Command, and Bloodmobile industries.
La Boit Specialty Vehicles offers a variety of vehicles to suit your needs, from 18ft pull-behind trailers to 40ft drivable coaches, none of which require a CDL to drive. Best of all, our vehicles are commercially-built from the chassis up for your specific needs, and are never converted RVs.
Helping professionals around the world confidently deliver a higher level of service to their local markets by providing the highest quality custom mobile units in the industry!
We welcome your feedback and questions. Please contact us anytime or leave a comment below.