The U.S. economy is on the bubble, according to Jim Hebe, Freightliner president and CEO. It is poised between a full-blown recession and a less-severe, less-prolonged slowdown. Either way, sales of new and used Class 8 trucks will be riding on the rims for some time to come.

Hebe said Freightliner is working with dealers and finance companies on programs to help owner-operators get into sound, affordable used trucks at financing they can live with. The company expected to unveil the plan sometime in March, after this issue of Road King went to press.

Hebe made his comments in late January at a State of the Industry briefing at the company's HQ in Portland, Ore. As he has in the past, Hebe admitted Freightliner and other builders erred badly over the past few "go-go" years by luring traditional used truck buyers into new rigs.

Those truck owners simply couldn't make payments of $2,000 or more a month once freight slowed and fuel prices rose. (FYI, your payment should be $1,500 to $1,600 a month tops, he said.) They weren't building equity in their businesses, just "working for the finance companies," he said.

As a result of so many truck repossessions and the effect on values, finance companies have tightened up on lending. So while truck prices are attractive, many smaller buyers can't get financing to buy them. This new used truck program, Hebe promised, will change that and break this cycle.

New vs. used
If financially strapped owner-operators are supposed to run used trucks, aren't they putting themselves at operational risk? Aren't used trucks inherently less reliable than new? Yes and no. Yes, because age brings breakage. Trying to run old, high-mileage trucks over-the-road is foolish, unless drivers are as handy at turning a wrench as spinning a wheel. If you can't fix the stuff that's likely to break along the way, leave such vehicles to the guys or gals who can.

No, because today's trucks last a long time -- probably twice as long as those built 10 or 15 years ago. Late-model used trucks (or older ones with low miles) still have a lot of life in them. Since the early to mid-'90s, major components have been made to go 750,000 to 1 million miles, and sometimes more. Warranties back up manufacturers' claims of long life, especially for engines and gearboxes.

Dealers know this and can arrange warranty protection for these components. Finance companies often require warranties "so they won't get back a bag of bones if the truck comes back as a repo," explains an executive at one major used-truck operation.

Somebody must pay for a warranty and that'll be you. The dealer can "throw it in with the deal," but of course he really doesn't. His selling price has to cover all his expenses, including that warranty, or he won't be in business too long. (This might not be so true with the glut of used trucks now out there, because dealers and truck manufacturers may be desperate to unload trucks, even at a loss.) Warranty costs can be financed, so buying a warranty can be relatively painless if you can afford the truck in the first place.

Types of warranties
A big diesel is the single most complex and expensive component on the truck, so it is the one (and sometimes the only one) usually covered by a used-truck warranty. Most engine warranties cover internal parts -- "hard metal" and many sensitive things like fuel pumps and sometimes electronics. But some cover more. Look for deals that an engine builder may have just announced; Caterpillar, for instance, recently extended the terms of its Truck Owner Protection Plan especially for used-truck buyers.

For used trucks there are several basic types of warranties:

Remainder of factory coverage: Younger trucks with up to 500,000 miles will almost always have some coverage still in force on the cab (paint and rust-through), transmissions and axles (lubricated parts), and sometimes engines. Dealers are aware of these and will usually point out what's available.

Factory warranties must be transferred to the truck's second or third owner, and that usually costs a few hundred dollars. That's cheap insurance, so get it even if you don't think warranties are worth their trouble. If nothing else, it can be a good reselling point.

"OE": Original-equipment dealers (OEs) or the OE's own used-truck lots (such as Freightliner's and International's) will usually offer an OE-sponsored warranty. A formal organization within the OE's corporate structure administers the warranty, and any dealer in the network will honor it. Some OEs arrange coverage through a third party but call it their own.

Private brand: If you buy from a major independent used-truck dealer -- Arrow Truck Sales, for instance -- you may be offered a warranty from that organization, but you'll go to a certain truck OE dealers' shops for repairs. Nothing wrong with that, and in fact it will give you many locations where you can get mechanical help if you need it.

Third party: Specialized companies market coverage, usually for engines, in most makes of trucks. Perhaps best-known among dealers is National Truck Protection Co., based in New Jersey (800-950-3377). Several truck OEs use NTP for their "own" warranties, and nearly any reputable dealer can obtain NTP coverage. Its program focuses on engines and requires inspections to ensure basic soundness.

"I'll back it": Some small used-truck dealers will promise to fix certain things if they go wrong within a certain time period. And some actually do. The trick here is to know which dealers mean it and which don't. Obviously, such a deal may not be worth much if you're hundreds of miles from Smilin' Sam when your truck breaks down -- unless Sam belongs to an association whose other members will honor his warranty (and he theirs).

Covering your assets
How old can a truck be and still get covered? For engines, that will be no more than 500,000 to 800,000 miles, with inspections required to qualify the engine for coverage. Other components may or may not be covered.

Expendables and frequent wear-out items like clutches, U-joints, belts, hoses, alternators, brakes and tires are almost never covered, but might be if you ask for them -- it never hurts to ask.

Before you buy a truck, get a DOT safety inspection, which covers many of those items, and demand that anything that does not pass be fixed. Arrange to have the minor but breakable items -- anything that will shut you down on the road -- replaced before you take possession of the truck.

Do you even need a warranty? Theoretically, if it's a good truck with good components that have been given good care, you shouldn't have to buy any coverage. If a warranty requires some kind of "certification" of an engine, which involves dyno and "blow-by" tests (pretty good indicators of an engine's health), why not just pay for the certification and be on your way, fairly secure in the knowledge that it's OK?

That might be a good idea if you have some cash put away for unexpected repairs. But things can go wrong with the best of equipment. Which would you rather spend: $1,000 to $2,000 for a warranty, or $5,000 to $10,000 for major engine work?

Of course, that warranty will be for a limited amount of time or miles, so you have to weigh the odds and take the appropriate route.

Remember that a warranty is an insurance policy that buys you peace of mind. You pay a "premium," then feel warm and fuzzy, because you know the warranty will pay for repairs on everything that's covered (as long as the backing's there, of course, and you have given the component proper care in the meantime).

The warranty organization is betting that it'll keep your premium money because its required inspection, plus experience with a given component indicates that little or nothing will go wrong with it in the stated time.

Because the company is right more often than not, it can afford an occasional hefty bill for a complete rebuild. So everybody's happy. Aren't you?