Most drivers dream of someday owning their very own truck. Some people are so caught up in this dream that they walk right into a predatory lease, which will ultimately leave them in debt and even further from their goal than when they started. It’s extremely common for lease-operator agreements to be highly profitable for the trucking company at the driver’s expense, and you absolutely must make sure you aren’t signing a contract that is designed to make you fail. TruckersReport forum member Rawze posted some great tips to help drivers identify rip-off leases:
Here is a list of some of the things to avoid the most…
- Any deal where you pay based on the miles driven. These are the worst of them all, but sadly the most inviting to newbies.
- Any lease where the term, interest rate, truck payment, and/or final asking price is not set in stone.
- Any lease that does not have a clearly defined payment schedule and a total asking price for the truck.
- Any company that does not give 100% of collected fuel surcharge back to its owner-ops, or that does not provide fuel surcharge. This will put you out of business fast.
- Any company that does not offer a fuel surcharge that is fairly close to the current average going rates.
- Any lease that has no defined ‘cap’ on maintenance or other escrow account withholdings.
- Any lease that does not allow you to pay off the truck early relative to what you owe.
- Any lease where the interest rate is high compared to the interest rates of other sellers.
- Any lease where the asking price, before interest, for the truck is higher than what the truck would sell for in a truck sales magazine.
- Any company that does not allow you to take the lease-purchase agreement to someone else for a second opinion.
- Any lease that forbids you having upgrades or improvements done to the truck to improve its fuel economy and/or lower its operating costs. It is ok for them to have an ‘Undo’ clause if you fail your lease, but limiting you from improvements is like saying that you aren’t allowed to make a bigger profit. This defeats the entire reason for owning the truck in the first place.
- Any lease that limits who does PM and/or repair work to your truck, especially if you are willing to pay for that work yourself out of your own pocket.
- Any lease that has large penalties for missing a truck payment.
- Any lease that has a lot of long term administration fees.
- Any lease that does not guarantee you a free and clear title to your truck at its end, especially if you are willing to make your ‘Balloon’ payment.
- Any lease that forces you to pay for a truck warranty, or that forces you to have all work done at the company shop. This is typically a scam to keep taking back the money you have earned from them already.
- Stay well away from companies that try to put students or rookie drivers into brand new, or fairly new equipment as lease-purchase operators. These are definitely slave labor companies.
- Run like hell as fast as you can away from companies that push their lease-operators to trade their truck back in and start over at the end of the lease. Not only will you end up perpetually leasing, but you will never have a truck to show for it.
- Stay away from companies that take fuel taxes out of your settlement pay based on ‘Average’ or ‘fleet wide’ rates. If you are going to be dumb enough to sign on with a company that makes you pay fuel taxes, then be absolutely sure you only pay fuel tax based on YOUR individual fuel purchases only. If you get really good fuel mileage, and the rest of the fleet does not, then you will end up paying taxes on their bad driving habits.
Thank you, Rawze!