Need Advice on becoming an O/O

I have looked into this whole thing with leasing to own with companies, and I have gained alot of good advice about not doing it. So I have did my research diligently and I found a company that leases trucks called Main street. Now they only deal with Bay and Bay and D&T trucking. I don't like the pay scale that Bay and Bay offers, but I have looked at what D&T offers. So here it is:

1) Lease a 2007 Freightliner Century 500,000-550,000 miles.

2) No down payment, no credit check
$1700 a month for 30 months with a balloon payment of $6,000 (Lone mountain wants $4400 down with payments of 1525 a month for 42 months on a 2009 cascadia, so this lease works backwards then what lone mountain offers) That makes the truck payment $425 a week with a total purchase price of $ 58,000 verses lone mountains $68,000. So I did a payment calculator through a finance company, and being charged on the high end of 21% the interest alone would be $17,000, so to me its a better deal for someone that has bad credit.

3)No $3000 escrows (most lease to purchase companies require security escrow, base plates and permits and insurance escrow, along with maintenance escrow, and monthly rental for qualcom or peoplenet) the only escrow required is maintenance of .10 cpm. Insurance is paid up front the first year along with base plates and permits, and then deducted out of weekly payments of $100 each until paid in full, so both last just over 4 months worth of deductions. (plates and permits 2250 and insurance is 2200).

4)The company pays 70% of the linehaul along with 100% fuel surcharge, 100% of any detention time, and 100% of any extra stops. He is responsible for tolls and scales which are tax deductible. They have a tax company that we can use for $70 a month, and we would send in all receipts to them to file the quarterly taxes. They would in return send us a P and L statement. The Passenger policy is $20 a month for ages 8 and on up, and it can only be one person at a time to go out. This is fine with me because my kids want to go out and spend time with their dad one on one, and then I usually go for 1 week just to have alone time with him along with a vacation from the kiddo's.

5)Since they mostly run the I-70 and I-80 corridor it would give him an opportunity to stop through on the way to a facility and on the way back to MN which would greatly help me out. He would be out 10-14 days with 2 days off at home. They also go east of I-35 to, so they run mostly the upper midwest, north, and northeast corridor(no New york and no canada). They haul candy, produce, and jeni-0 products which is a pretty good chance of keeping busy.

6) No tractor rental fees for the use of their trailers.

So, I have looked every where on this thread about D & T trucking in St. Cloud, MN, and there is no information about them. I guess from an owner operators stand point of you leasing on to a company as a O/O would you find that they are competitive with what other companies offer. The average would be $1.80 per mile to $ 2.00 per mile. I know it is on the low side, but it is much better then what some companies offer (1.00 and below per mile and fuel surcharge of .41-.43 cents per mile).

Let me also say that the reason why we have bad credit is because we had to file bankruptcy in 2010. The reason for this was because we both lost our jobs in December of 2009, and I had medical bills that were over $150,000. So we had to surrender everything, and start all over again. Now to answer your question..yes he has 17 months experience being a company driver, but his father was an owner op and he has been around trucking his whole life. I worked in the transportation field for 7 years, and I prefer a % based off of the linehaul verses a cpm. I think both of us has a better advantage of turning this into a successful business given the fact that we both have experience on our side and we are not complete newbies that just want to own a truck.

Any advice would be greatly appreciated.

 

Yes Skateboardman it is a lease purchase, but it is probably one of the better ones that I have found compared to these big companies. Main Street owns the truck, and the payments are made to them and not bay and bay or D & T. No I don't have a down payment yet, because I am waiting on disability, and it takes a long time before the backpay comes in, so I am still looking at another 45-60 days before it comes in. Lone mountain is to far away from us to purchase any truck from them, so the closest one would be Kentuckiana Truck Sales. The key is that the trucking company doesn't own the tractor the lease company does, so the trucking company can't take the title and use it on something else as collateral. (This keeps it from getting repossessed because the trucking company went in to default) Bottom line..this is probably one of the best lease purchases because it is with a small company instead of a big company that wants $3000 in escrows, plus base plates, insurance, maintenance, and security deposit. I understand the risks, but really you have to start somewhere.


What I am trying to find out from an owner operatives stand point is with the linehaul, fuelsurcharge, base plates, permits and insurance stand point is it a better deal then other companies that offer cpm pay? Would they lease onto a company as an O/O with what D&T is offering?

 

Thanks Pedigree Bulldog, To answer your question Pedigree, I would prepay the balloon payment or take the money and have them hold the balloon payment in escrow until it was due. Now for the Maintenance question, yes repairs can be costly, this is why you use the maintenance escrow for costly emergencies and repair the ones with out using the maintenance escrow, but I would also take money that is received after deductions and set aside money every week in an account that can be transferred over to use for the costly repairs along with the maintenance escrow.

I have ran a business before, so I already know the components involved in running a business, and I have filed the taxes under Schedule C when we ran a construction business for 8 years, so I know what deductions can be done with taxes. I do have a degree in Business Management and Supply Chain Logistics, plus I have worked this industry...I already know what I am up against. It's the knowledge of running a business, buying fuel that is cheaper in an area then in an area that is more expensive, try not idle (having an APU is helpful), along with not eating in truck stops and having a truck payment that is not $600-800 dollars a week along with $3000 dollar escrows coming out up front every week.

I am still waiting for someone to answer my question (not about lease purchase)..do you know anything about D&T trucking and if as an owner operator not a lease purchase operator would you lease on to a company like that for what they are offering you as an owner operator?