A question for drivers in a lease purchase?

Mr. Hollywood · Jan 8, 2016

Captain Zoom said: ↑

I could include a spreadsheet with all the facts and figures you just requested, but to be honest I think you've already done your homework (good on you BTW; you're already miles ahead of 99.9% of people who go into a lease anywhere).

Your conundrum doesn't appear to be a question of money. You're smarter than the average bear and if it were an automatic loser you would not even be considering it. It seems to me you are looking for a reason to justify taking on the risks and costs associated with leasing versus what appears to be a sweet deal with whatever company you're at now.

So:

When you lease a truck through a company lease purchase program, you are not an owner operator. They will call you an independent or owner operator but you are actually tied to that company. You generally cannot take your football and go play in somebody else's yard (there are exceptions but I talking about the norm, here). They'll tell you you have right of refusal if you don't like a load but it generally doesn't make sense to turn down loads unless they really lose money (and even then you might need to take a hit to get out of a consumer market and into a production market where the profitable freight is). Your mindset should be that you are in fact a company driver who had been given more pay and a little more freedom in exchange for taking on the financial responsibilities of running that truck. In general you WILL NOT, NOT, NOT, I SAY AGAIN YOU WILL NOT MAKE MORE MONEY than you are currently making as a company driver. You will have more obligations and less freedom to take time off (they will tell you you can take off when you want but the truck payment is still due).

So why do it?

1) Tax advantages. As a small business owner you still get many more tax breaks than a company driver. Your fuel, insurance, tools, even truck payment are deductible. You have to file self employment taxes quarterly but a good accountant can help you set up a plan so it doesn't hurt, and you'll likely get a lot of that back at year's end.

2) A decent lease purchase plan ends with you owning the truck. I have several friends who have gotten their titles to their trucks by completing lease purchases (one at Dart, one at Prime, two at John Christner). They each went through a different plan, they all hated it sometimes, and they all stuck with it and saw it through. Each of them had a goal of truck ownership and saw the program for what it is--a path to ownership. It is difficult, it is aggravating, it is an uphill battle, but it is paying your dues and for some the end result is worth the heartache. There are some who trade out every two years because they don't want to own the truck--they figured out the system in their company and just want a new truck every two years (I have another friend at Dart who does that). It all depends on what your end game is. Stirling Moss once said you can have anything you want in life if you're willing to give up what you must to get it. For my friends with their titles, it was worth giving up the money/security/freedom for a few years to own their trucks (all but the Prime driver are still with their companies--the Prime driver retired last Thanksgiving after a few years without a payment).

As I said before, you already have an idea the numbers and they don't look great compared to company. But if you're looking to own a truck, you have to look beyond the numbers to whether the end goal is worth the cost. Without a clearly defined goal, you'll just end up like 99% of all lease drivers and turn your truck back in. I kind of think you should be focused on finding the lease program/company you can live with since they're all slightly different.

I was leasing from Risinger Brothers before health concerns forced me back to a corporate environment (insurance--yet another consideration). I was averaging around $1200/wk before taxes pretty consistently. I NEVER turned down a load, and stayed out 4 weeks at a time, and only went home 2-3 days. While they were not very nice to me when I left, in fairness I have to say they are a good company overall, regardless of my personal feelings about them.

I would be interested in seeing your progress on your journey--try to keep us all posted on what you decide to do. There are many here who will appoint themselves your personal Shepherd and flame you for not obeying them, but in the end you're the one (and your family) who must live with your decision.

Good luck!
Click to expand...

Captain Zoom said: ↑

I could include a spreadsheet with all the facts and figures you just requested, but to be honest I think you've already done your homework (good on you BTW; you're already miles ahead of 99.9% of people who go into a lease anywhere).

Your conundrum doesn't appear to be a question of money. You're smarter than the average bear and if it were an automatic loser you would not even be considering it. It seems to me you are looking for a reason to justify taking on the risks and costs associated with leasing versus what appears to be a sweet deal with whatever company you're at now.

So:

When you lease a truck through a company lease purchase program, you are not an owner operator. They will call you an independent or owner operator but you are actually tied to that company. You generally cannot take your football and go play in somebody else's yard (there are exceptions but I talking about the norm, here). They'll tell you you have right of refusal if you don't like a load but it generally doesn't make sense to turn down loads unless they really lose money (and even then you might need to take a hit to get out of a consumer market and into a production market where the profitable freight is). Your mindset should be that you are in fact a company driver who had been given more pay and a little more freedom in exchange for taking on the financial responsibilities of running that truck. In general you WILL NOT, NOT, NOT, I SAY AGAIN YOU WILL NOT MAKE MORE MONEY than you are currently making as a company driver. You will have more obligations and less freedom to take time off (they will tell you you can take off when you want but the truck payment is still due).

So why do it?

1) Tax advantages. As a small business owner you still get many more tax breaks than a company driver. Your fuel, insurance, tools, even truck payment are deductible. You have to file self employment taxes quarterly but a good accountant can help you set up a plan so it doesn't hurt, and you'll likely get a lot of that back at year's end.

2) A decent lease purchase plan ends with you owning the truck. I have several friends who have gotten their titles to their trucks by completing lease purchases (one at Dart, one at Prime, two at John Christner). They each went through a different plan, they all hated it sometimes, and they all stuck with it and saw it through. Each of them had a goal of truck ownership and saw the program for what it is--a path to ownership. It is difficult, it is aggravating, it is an uphill battle, but it is paying your dues and for some the end result is worth the heartache. There are some who trade out every two years because they don't want to own the truck--they figured out the system in their company and just want a new truck every two years (I have another friend at Dart who does that). It all depends on what your end game is. Stirling Moss once said you can have anything you want in life if you're willing to give up what you must to get it. For my friends with their titles, it was worth giving up the money/security/freedom for a few years to own their trucks (all but the Prime driver are still with their companies--the Prime driver retired last Thanksgiving after a few years without a payment).

As I said before, you already have an idea the numbers and they don't look great compared to company. But if you're looking to own a truck, you have to look beyond the numbers to whether the end goal is worth the cost. Without a clearly defined goal, you'll just end up like 99% of all lease drivers and turn your truck back in. I kind of think you should be focused on finding the lease program/company you can live with since they're all slightly different.

I was leasing from Risinger Brothers before health concerns forced me back to a corporate environment (insurance--yet another consideration). I was averaging around $1200/wk before taxes pretty consistently. I NEVER turned down a load, and stayed out 4 weeks at a time, and only went home 2-3 days. While they were not very nice to me when I left, in fairness I have to say they are a good company overall, regardless of my personal feelings about them.

I would be interested in seeing your progress on your journey--try to keep us all posted on what you decide to do. There are many here who will appoint themselves your personal Shepherd and flame you for not obeying them, but in the end you're the one (and your family) who must live with your decision.

Good luck!
Click to expand...

Captain Zoom,

Thank you for your input. I agree that two benefits lie in a lease purchase: 1. Tax advantages and 2. Possibly owning the truck in the end. It is because of these two benefits that I consider a lease purchase a viable option.

The main reason I have not pulled the trigger, to sign up for one, is because many of the companies control your loads through their dispatching. It doesn't make sense for me to make that move when the company has that control and not the lease purchase driver. In effect they control your revenue in the same way as they do when you are a company driver. Let's face it, there have been many weeks when they did not get me miles. As a company driver it sucks, but at least I don't have the added headaches of worrying about truck expenses and being in the hole.

Again, thank you very much for your advise. I believe that it is very good for would be independent contractors (as they call them).

Mr. Hollywood · Jan 8, 2016

Saturday said: ↑

I agree completely with Captain Zoom. I would go on further to say that after you've ran your numbers, and if it takes 2000-2500 or more miles a week to pay your bills as well as everything to do with the truck than don't do it. You know as well as I do how much the miles can fluctuate in this business. The only exception would be if you landed yourself a dedicated account where the paid miles are the same always.
Click to expand...

I agree with both of you. Thank you for your advise.

bavarian · Jan 8, 2016

I've stopped reading after post#7 from captain zoom.

All I can say about is WOW. Head-on.

There might be only two things to add if not already mentioned.
As a lease operator, you're only a company driver with a *.
You're not making more money than a company driver but by the end of the lease you can call the truck your own and that's worth of how many $$$$ of resale value.
This amount can be added now to your income during your lease. That's what you worked for.

mnmover · Jan 28, 2016

Then research the formula of getting a truck-tractor from another source and be free to switch companies if necessary. Look for a specialized company that offers services unlike others. Just pulling a van or reefer has too many competitors. Or perhaps working with a company that moves it's own products. I loaded at Nestle two weeks ago and they were advertising for owner ops, Sherwood Williams leases oo's as well to deliver paint.

bomoto · Jan 29, 2016

I leased my first year aka rental truck with prime. Netted 80k. I saved 20k and I put down 15k on a lease purchase that I will own at the end of 3 years no balloon payment. My numbers are simple. 1k per week truck payment 200 for truck insurance, taxes ect. 300 a week for tire fund and repair accounts. I choose and turn down loads to maintain a 1.35 a mile average on all miles. I do just fine. I'm not a fan of per mile leases. I know I'll get bashed for this but that radio guy Kevin Rutherford is correct that 1.30 plus a mile is a liveable rate. Now it is not by any means where I'll stop growing. A year or so into this purchase I do plan to get my own authority and give the load boards a run when I get 6 months of expenses banked. I don't believe in lease programs that you pay way more than the purchase price. What I have learned is a fair lease purchase with a percentage based pay combined with good fuel and insurance discounts equals a good deal. And hell no I don't want a old used truck but in a few years my shiny new one will be old and paid off and yes I'll take great care of it and drive it till it dies truck payment free.

RERM · Jan 31, 2016

bomoto said: ↑

I leased my first year aka rental truck with prime. Netted 80k. I saved 20k and I put down 15k on a lease purchase that I will own at the end of 3 years no balloon payment. My numbers are simple. 1k per week truck payment 200 for truck insurance, taxes ect. 300 a week for tire fund and repair accounts. I choose and turn down loads to maintain a 1.35 a mile average on all miles. I do just fine. I'm not a fan of per mile leases. I know I'll get bashed for this but that radio guy Kevin Rutherford is correct that 1.30 plus a mile is a liveable rate. Now it is not by any means where I'll stop growing. A year or so into this purchase I do plan to get my own authority and give the load boards a run when I get 6 months of expenses banked. I don't believe in lease programs that you pay way more than the purchase price. What I have learned is a fair lease purchase with a percentage based pay combined with good fuel and insurance discounts equals a good deal. And hell no I don't want a old used truck but in a few years my shiny new one will be old and paid off and yes I'll take great care of it and drive it till it dies truck payment free.
Click to expand...

I read about all these .8 cpm to 1.30 per mile leases and I'm forced to wonder....HOW???

I have an honest question.....How do you get your cost down to 1.30 cpm???

I don't lease, but I financed my truck
payment is $301.73 a week
bobtail is $50per month
comprehensive is $200 per week
$46 per month HUT
$150 per month Plates
$150 per month truck parking
$17 per month for LLC fees
$150 per week maintenance fund
$155 per month for telephone
$25 per month for truck wash
$200 a month for accounting + payroll
$49 per month for attorney retainer
My fuel cost per gallon for 2015 was $2.16

My MPG and repairs last year were high, I bought the used truck in 2014 and the repair bills, even after a mechanics PPI were high (Over $25k and I'm still hunting down issues just ran the overhead and did an injector cut out test due to poor mpg's ) so I kept them out due to being abnormally high. Also did not include tolls....but they were .04cpm last year and will be cut in half this year.

I took 2 weeks vacation and was down for about 3.5 weeks due to truck repairs....and 2 weeks off because of illness.

That all comes out to $1.55 per mile including a 30K salary on 74K miles

All miles 2015 was $1.79, for a $15,500 profit...

Now, please tell me where I can lower my costs....looking for advice here,

Jakebrake950 · Jan 31, 2016

Mr. Hollywood said: ↑

Allow me to start this thread off stating the following: "I am not opposed to a lease purchase."

I want to know what the benefit is in doing a lease purchase, with any company, that pays you 1.00 or less per mile plus a small fuel charge of .17-.23 (lower fuel costs) per mile. I know people will get on here, from both sides, ranting and raving about how there are no good company lease programs to crying and boohooing about everyone hates lease programs. That is not what I am looking to accomplish with this thread. I want to see true discussion about what is good about that type of pay being offered for a lease purchase program. Recruiters and boosters don't come on here and give bogus inflated numbers.

I have a few specific questions and I am aware that there are variables depending on the company. 1. With the above stated rates, what is the maximum revenue a driver may expect to earn in a week? When you give an answer to this question please, break it down to the amount of miles run for the week and don't use the high end of your fuel surcharge chart (be realistic to today's fuel cost). 2. What are the expenses (fixed and variable) that a driver is looking at with your program. Please, base these numbers off the same mileage used to derive your income amount? 3. What is the net income (to include personal income tax) a prospective lease purchase driver can expect to make. Please break your answer down to cents per mile.

Company comparison based off my cents per mile. I make .51 per mile so if I run 3000 miles every week (we know that doesn't happen) I make 1530.00 gross with a net of approximately 1162.00 (24% tax).

If you are considering a company lease purchase I hope you will receive true, relevant, and unbiased information. Let the numbers speak for themselves because numbers don't lie while people do. I am tired of seeing companies advertise .89, .90, .92, .95, .97, 1.00, 1.02 (get the point?) per mile plus fuel surcharge when you will be taking on all the costs and risks of doing business. Remember, when you enter a lease with these companies you transfer all that risk and cost from them to yourself. You are not a company driver anymore so when you have a low mileage week it really affects you but doesn't matter to them because all the business costs are yours and not the company's.

This also brings up a few additional questions. 4. Are all those risks and expenses worth the difference in the bottom line between a company driver and lease purchase driver or should there be a larger gap in that bottom line? 5. If you think or argue that it is worth the risk, wouldn't you rather have control of your business by dispatching yourself? Heck, you assume all the risk. Why should you be routed by a person who routes company drivers that don't assume any risk (keeping those costs and risks at the company)?
Click to expand...

Jakebrake950 · Jan 31, 2016

x

Mr. Hollywood said: ↑

Allow me to start this thread off stating the following: "I am not opposed to a lease purchase."

I want to know what the benefit is in doing a lease purchase, with any company, that pays you 1.00 or less per mile plus a small fuel charge of .17-.23 (lower fuel costs) per mile. I know people will get on here, from both sides, ranting and raving about how there are no good company lease programs to crying and boohooing about everyone hates lease programs. That is not what I am looking to accomplish with this thread. I want to see true discussion about what is good about that type of pay being offered for a lease purchase program. Recruiters and boosters don't come on here and give bogus inflated numbers.

I have a few specific questions and I am aware that there are variables depending on the company. 1. With the above stated rates, what is the maximum revenue a driver may expect to earn in a week? When you give an answer to this question please, break it down to the amount of miles run for the week and don't use the high end of your fuel surcharge chart (be realistic to today's fuel cost). 2. What are the expenses (fixed and variable) that a driver is looking at with your program. Please, base these numbers off the same mileage used to derive your income amount? 3. What is the net income (to include personal income tax) a prospective lease purchase driver can expect to make. Please break your answer down to cents per mile.

Company comparison based off my cents per mile. I make .51 per mile so if I run 3000 miles every week (we know that doesn't happen) I make 1530.00 gross with a net of approximately 1162.00 (24% tax).

If you are considering a company lease purchase I hope you will receive true, relevant, and unbiased information. Let the numbers speak for themselves because numbers don't lie while people do. I am tired of seeing companies advertise .89, .90, .92, .95, .97, 1.00, 1.02 (get the point?) per mile plus fuel surcharge when you will be taking on all the costs and risks of doing business. Remember, when you enter a lease with these companies you transfer all that risk and cost from them to yourself. You are not a company driver anymore so when you have a low mileage week it really affects you but doesn't matter to them because all the business costs are yours and not the company's.

This also brings up a few additional questions. 4. Are all those risks and expenses worth the difference in the bottom line between a company driver and lease purchase driver or should there be a larger gap in that bottom line? 5. If you think or argue that it is worth the risk, wouldn't you rather have control of your business by dispatching yourself? Heck, you assume all the risk. Why should you be routed by a person who routes company drivers that don't assume any risk (keeping those costs and risks at the company)?
Click to expand...

No break down needed u pretty much answered ur own ? at .51 a mile as a company driver is not bad. As a lease OP you have tax write offs and you may end up with the truck. Lease OP is amt per mile x miles driven minus 1000 to 1100 for truck payment and deductions minus fuel as for me I would take the .51 per mile

bomoto · Feb 1, 2016

RERM said: ↑

I read about all these .8 cpm to 1.30 per mile leases and I'm forced to wonder....HOW???

I have an honest question.....How do you get your cost down to 1.30 cpm???

I don't lease, but I financed my truck
payment is $301.73 a week
bobtail is $50per month
comprehensive is $200 per week
$46 per month HUT
$150 per month Plates
$150 per month truck parking
$17 per month for LLC fees
$150 per week maintenance fund
$155 per month for telephone
$25 per month for truck wash
$200 a month for accounting + payroll
$49 per month for attorney retainer
My fuel cost per gallon for 2015 was $2.16

My MPG and repairs last year were high, I bought the used truck in 2014 and the repair bills, even after a mechanics PPI were high (Over $25k and I'm still hunting down issues just ran the overhead and did an injector cut out test due to poor mpg's ) so I kept them out due to being abnormally high. Also did not include tolls....but they were .04cpm last year and will be cut in half this year.

I took 2 weeks vacation and was down for about 3.5 weeks due to truck repairs....and 2 weeks off because of illness.

That all comes out to $1.55 per mile including a 30K salary on 74K miles

All miles 2015 was $1.79, for a $15,500 profit...

Now, please tell me where I can lower my costs....looking for advice here,
Click to expand...

1.35 is my average pay per mile.not including fsc. A new truck lease with all fees cost me about 80 cents a mile. Yes it's about the same as a company driver but I'll own it in 3 years still under warranty and I'll get a few years payment free under warranty. Your paying way to much for fuel. My fuel costs per mile ranges 10 to 15 cents per mile after discount at 8 miles per gallon but I average high 8 to low 9s. So on a good light load I can almost fuel for free with the fsc. I accept the higher payment in exchange for less breakdown time and cost. 5 year 500k warrenty will last me well past the 3 year payment. Total cost of truck with title is 170k. I can take it anywhere I want and plan to do so in the future when I get my last few ducks in a row. I don't think any lease program is viable unless it's percentage based pay with fsc and a good fuel discount. Would I like to be full owner op.... yes I do but I'm doing it carefully in steps. I got nothing against buying old trucks and having no payment but I'm not into spending my hometime working on it.

Rooster1291979 · Feb 9, 2016

Whats your goal here? Is it to own a truck or make more money?

I am a fan of leasing. I lease but I do not lease purchase. There is a significant difference.

If you want to make more money, don't lease from a company that pays .90 to 1.00 per mile. Those wages are hard to turn a profit on. Look for a company that pays on % rather than cpm. Companies that allow you to broker your own freight. Anytime I hear someone say "I have to run 2500 miles a week before I earn a profit" will have a hard time with that business plan in my opinion.

If you want to lease purchase a truck I think there are better ways of ownership. I have heard good things about Sammons, but that's about the extent of my lease purchase knowledge.

Log in or Sign up

Forums

Find Trucking Jobs

A question for drivers in a lease purchase?

Mr. Hollywood Bobtail Member

Trucking Jobs in 30 seconds

Wait, employers can't reach you!

Mr. Hollywood Bobtail Member

bavarian Heavy Load Member

mnmover Road Train Member

bomoto Light Load Member

RERM Road Train Member

Jakebrake950 Bobtail Member

Jakebrake950 Bobtail Member

bomoto Light Load Member

Rooster1291979 Road Train Member

Trucking Jobs in 30 seconds

Wait, employers can't reach you!

Log in or Sign up

Useful Searches

Find Trucking Jobs

A question for drivers in a lease purchase?

Mr. Hollywood Bobtail Member

Wait, employers can't reach you!

Mr. Hollywood Bobtail Member

bavarian Heavy Load Member

mnmover Road Train Member

bomoto Light Load Member

RERM Road Train Member

Jakebrake950 Bobtail Member

Jakebrake950 Bobtail Member

bomoto Light Load Member

Rooster1291979 Road Train Member

Wait, employers can't reach you!