Most are scams in lease, purchase programs

My issue with lease purchase, Ive done one and completed it, is you take little to no risk.

Bought my first truck out of pocket and ran independent for two years. 07-08. The bottom fell out late 07 and I hung in till end of 08, nearly bankrupted because nobody were paying for 120-180 days. Even factoring companies were refusing freight bills. My truck was totaled late 08 by a driver that cut a turn to short, broke even.

L/P from Stoops Freightliner 2 year deal no walkaway. I completed it, but had to lease to one of theyre authorized companies.

Financed my current truck and leased to Mercer. I average $2.11/mi ld/emty. Pulling a step.

When you enter a walkaway lease, you are not taking any risk. You can turn the truck in and wash youre hands of it. You are renting a truck. Basically you make the payment for youre carrier, provide capacity and earn revenue for that carrier. Many do l/p with no money in the bank, no idea what it entails. I know some guys love it, and thats great Im happy for you. But I think it is predatory and takes advantage of drivers.

 

I disagree. There is great risk in any L/P deal because your name isn't on the title. If for any reason the lessor decides to terminate the contract, you have very little say in the matter. All they have to do is allege you violated a contract clause that allows them to terminate the lease, and you forfeit the truck and your equity. If the lessor files bankruptcy, even if you have complied with all conditions necessary to complete the purchase, you can loose the truck if you don't hold the title in your name; it can be listed as an asset of the bankrupt carrier. In the case of a purchase with bank-arranged financing this is not the case. Ask the Arrow (trucking company) L/P guys how that worked out for them.

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But that's a lease which means you're not intending to gain ownership...

Again, I disagree. You "rent a truck" for a short term to replace an asset, for example when your tractor is in the shop. A lease is a long-term commitment on the part of both parties to provide a business asset to generate freight revenue. All aspects of both the lease and operating contract must be examined closely to determine if the the agreements are in the best interests of all parties subject to the agreements

Therein lies the problem with all of this. First many drivers allow the promises of big $$$ to lure them into situations that are not in their best interest, without the business education to even up the odds of success, no preparation in terms of due diligence to ensure the situation is financially viable and no operating capital to ensure it will work. Second, less scrupulous carriers use this to their advantage paying substandard rates and bleeding the driver dry when they can't continue financially.

However, considering the unwillingness of banks to extend credit (now that we've bailed their loser ##### out of financial ruin) it is a viable entry point for those who prepare themselves properly for entry into transportation business entrepreneurship. Newbs 'n rubes don't need no stinkin' truck lease!

 

Most l/p deals are walkaway. Most people signing up do it with the purpose of ownership. That is what I meant.

I agree. Yes the title is not in your name until completion, but it is a 1% chance that they go bankrupt. Yes Arrow was an example, but that happens seldom. You can have a lease yanked for violating company policy, but that is on the person.

 

Yeah if your making your payments I don't see a company just being like "ok well your done turn the truck in and go home." They've already bought the truck, your just paying them back basically. It doesn't make financial sense to stop a person if they are successful in the venture.

 

CRE likes to brag on the amount of money they make off of failed leases.

 

That's the attitude of companies that approach truck leasebacks (that's what they're called in the aviation world) in one way. Not all do.

 

In agriculture,its called sharecropping.

 

In case you haven't noticed, we drive trucks not plows, the industry we're involved in isn't agriculture, and sharecroppers never own the land they work. Just want to make sure you understand what it is that we're doing.

 

And 80% of all L/P drivers never see the title to a truck.

 

Same as the failure rate for all new small businesses. That's 20% better than sharecroppers do...