Lease purchase

While some (very few) think they do well on a lease/purchase, the fact is that you are simply renting that truck from a carrier. As a Lease/Purchase operator,you are assuming all the financial risk (truck payment, fuel, insurance, road/fuel tax, personal income taxes, personal health insurance expense [mandatory now thanks to Obama Care], maintenance, tires....shall I continue(?)....

Get your early years in and save every dime you can and get your credit good. Then buy/finance your own truck (and/or trailer) and do it the right way. It takes time to learn this industry, brokers, agents, good lanes v bad lanes, ... there is so much to know and understand to become and stay successful.

 

How is doing a 3rd party lease purchase different than financing a truck and trailer? Not much from what i can see, still on the hook for everything. Financially the financed truck could ruin you.

 

They are all close to the same. However, some will cause you to broke sooner than others

 

Very simple actually. The majority of the L/P plans require the operator to be limited to the freight and dispatch of the holder of the initial lease, i.e. the carrier (Swift, Prime, Stevens, Warner...pick a company). The operator is beholding to the carrier for the base plates and operating authority to start the list. The operator cannot up and move on to another carrier or gain his/her own authority and take the monies invested into the truck/trailer down the road (so to speak). The worst part, the carrier can at any given moment just up and take the tractor by terminating the lease for no real reason. At this point the operator is stuck in BF-somewhere with no or little options to get his/her belongings back to his/her home.

 

a third party lease is a lease from a company such as Quality leasing, loan mountain, or pathway. They are all companies who will lease you a truck and you go lease it on with one of the approved companies that they agree with.

 

All are 3rd party leases. Carriers lease from manufacturer, then lease to the operator. In any case, why would you want to "rent" a tractor and put 700k (often more) miles on it before you begin to pay towards ownership? The lease must be completed, or bought out, before the purchase end begins. Most warranties end at 500k miles....makes no sense to me not to begin the process at the purchase level.
Then there is the issue of being able to afford the unit. Most of the L/O on the road today are doing so because their credit isn't sufficient to purchase. That tells me that they are not a good candidate for becoming a successful business operator. If you can't manage simple credit issues like a credit card, or an auto payment, why would you think that that individual would be any better, or different when it comes to the payments of owning or leasing a truck?

 

Yep you got it down pat, ALL companies lease like this....no leases are different, they are all this way....

 

Ignore everyone who says you should "Buy" a truck. Buying with a regular downpayment and making payments like you would on a car is just plain bad investing. The only thing you can write off is depreciation for 3 years. The total write off is only about 60% of the cost (if you include interest). If you lease with a $1 residual then you write off 100% of your payment. You also have the option of doing a 10 or 20% residual. That works great if you know you will always be making a truck payment (which you will in todays trucking business). Gone are the days when a man would buy a truck with a 3 or 4 year payment plan and drive it for 20 years.
Just do a 90% lease then when you owe $15,000 or so you trade it in and they give you $30,000 for it. You have 15K equity and that is your down on the next lease... New truck every few years and write off 100% of every payment you ever make.

 

You deprciate 100% of the principal and deduct 100% of the interest ... there is no tax advantage for a lease as far as how much you can write off.