BEST LEASE PURCHASE??? (to head me towards ownership)

Wow! Thats about 2500 mi a week....Where do i sign up?

 

If you can put $20,000 together, you could use that money to pay cash for a good used truck rather than as a down payment. If you have an additional $15,000 for you rmaintenance account, that is about what you would need to do an inframe with most engines. Or you could take that $20,000 and use $10,000 for a down payment on a $30,000 truck and keep the rest for you maintenance account. There are some good trucks around in that price range. There is no need to start out spending $50,000 or more for a truck when you can find good trucks most anywhere for half that amount. I am a firm believer that it is a good idea to let the business pay it's own way. You don't need to start out driving a Cadillac when a Chevy will do the job. You can always trade up as your business and savings grow. Once you buy your truck, start saving something out of every check. What you don't use for maintenance could be used to purchase your next truck. I have known some owner operators who regularly trade every 2-4 years. They keep trading up until they finally buy the truck that they want.

We live in somewhat uncertain times. The less debt we have, the better. I usually caution any new potential owner operator about getting too heavy laden with debt. Although money is tight with most lenders, there are still those who will make loans for class 8 equipment. It is much easier to survive in a troubled economy when you have little or no debt. Those who have high debt are usually the first to fail when the economy is down. It also takes a lot of pressure off when you have low or no payments and can afford to wait for better paying loads.

 

Other than http://www.thetruckersreport.com/tr...-operator/13608-so-you-want-own-your-own.html , I have not seen too many people posting their business in detail on this forum. I am glad that you could navigate the website and find my posts in the Prime threads. Anyone can go there and read my posts. Maybe some will find them helpful, although most of the posts are informative posts for newbies.

I am not here to advocate for leasing or lease purchase programs. 75% of them are either corrupt or just crappy. There are, however, some good programs out there that can help a driver achieve ownership. That's 25%. Of that, about 80% of all new business owners fail. That really stacks the odds against ANYONE who is starting out, whether lease, lease purchase, or straight purchase of a used truck and getting yourself on the road. In all scenarios the odds are stacked against you. It is proven that at 600k miles, trucks start to deteriorate and can cost up to $40k a year to keep on the road. Add to that a lack of mechanical knowledge and you increase your odds of failure. Nobody talks about the mechanic shops out there fleecing the O/O's who don't know better. Just a constant attack on anyone who brings up a lease or lease purchase option.

Now, if I am successful (yes, I am fully aware that I may fail) I will have paid $117,000 for a brand new '12 Freightliner Cascadia that I picked up with 42 miles on it. All miles are mine, along with a few students. As a 20 year mechanic/maintenance manager, I have a good idea about how it's put together and how things work on it. I can do alot myself, but without a shop, I am at a disadvantage. I can't wait to pay it off and tweak the engine the way I want, and with students on my truck the 10 speed eaton trans will be wasted by the time I do get it paid off. I want a 13 speed anyway, and will have $15k set aside when it does go. I am not ready to dive into the world of brokers and finding loads, it's a headache anyway. When I am ready I will look for going independent, getting my authority (already have a company with an old DOT) and setting up a few contracts IF I can find them. That's a long way down the road, but if I can make 6 digits at prime running under their authority and freight system, why would I want the headache, except for the challenge.

 

Just a couple things silenteagle:
Where did you come up with the 75% number of lease programs are setup are corrupt or just crappy? Also wondering where you got your 80% of new business owners fail. There are many different definitions for success.

Another thing - If a truck is costing $40k a year to keep on the road that is a $3333 per month expense. That buys a heck of a lot of truck.


I could make 6 digits under someone else's authority also. However, after looking at the small amount of paperwork for getting my own authority the choice was clear. I can now earn the same money while working less (if I want). I am still young and go-go-go-go-go. I also like the idea of if later in life I want to have drivers driving my trucks, that option is there. Also I am not under any dispatchers thumb as to when I work or where I will go. I could never go back.

 

Really? I have a truck that has 1,200,000 and change on it and has not cost me anywhere near that. In fact, I would put my maintenance costs up against any new/newer truck on the road. So please, enlighten me, where do you get your numbers from?

 

The choices available are there because people will find success in various ways. The 80% fail rate comes from the small business administration. The 75% is a guestimate for me based on research of leases & lp's offered in various publications. I just advocate that we can facilitate success, rather than bash people and ideas just because we don't agree.

The 600k figure comes from a FMCSA study of maintenance requirements at various truck life milestones. O/O's will achieve better results because they have skin in the game that company drivers don't. Most used trucks became used by those company drivers.

Hey, you all asked me to share. My experience is not universal, and many of you have found your success or are working toward that success. Some of you just want to be ball busters and tell others you are great, or question everything someone posts in an attempt to discredit them. I'm not here for that

 

I for one appreciate it anytime someone shares a story of either good or bad in this business. It helps others make more informed decisions in one way or another. I was not bashing you for being a L/P thru Prime, lord knows I want to see everyone succeed. I've just seen and heard of too many guys doing terrible there, but they may not have had the business mentality to begin with. To succeed in a L/P you really need to know all the hidden quirks, and understand that you will be running your butt off for a few years till you get the truck paid for, and hopefully the company works with you in that aspect to do so. I personally know of 2 drivers who completed a L/P thru JCT and are doing very well now. During their L/P tho, it was not so great, but they had planned for that. Their payments were over $3,000 month but they got the miles and made money doing it. They had to stay out for weeks on end, and go where ever the loads took them, but they did what needed tobe done and now both of them own a Peterbilt they hold the title to. One of them is still with JCT, and the other is over at QC pulling tankers now. It can be done, just the majority don't make it

 

I have never seen any figures as to the percentage of those who fail doing a lease purchase, but I would say that a success rate of 25% would be high. I would think that it would be closer to 10% success rate, based upon speaking to so many who have tried them over the years. I would like to see actual figure on success rates of those doing lease purchase.

According to the SBA, 80% of all new businesses fail. I don't know that they have it broken down as to specific industries.

I thought that Prime only leased trucks without you being able to purchase them? Does the $117,000 you mention include any baloon payment?

If I am reading your post correctly, the reason you did well with Prime is primarily due to your receiving money for training new drivers? Just trying to gain some clarity.

As to spending over $40,000/year on maintenance per year, I have never spent that much on any truck that I have owned. I know many owners and don't recall any who have even come clost to spending that much on maintenance in a single year. I think the most that I can recall spending on one truck in a single year was about $11,000. Now that doesn't include having to replace an engine, but that would be a one time expense. Anyone who spends $40,000 on a truck in single year is doing something wrong. That is enough to buy 2 trucks and pay cash.

 

Prime does do a lease purchase, but you have to put a down payment of $10-13k. The balloon payment is a whopping $1.

Good example of how you twist things is the training comment. I only said that I have trained a few students, not that my intcome is based on their training. Sure, the income is better training, but it is not my reason for succes. Nice try with the twist though......

As to the figure on maintenance, it is from a study on fleets. You can continue to throw this up, but it is just a study. You say that you have never spent that kinda money. Where is the "bare your soul" threads that tell about new O/O's getting fleeced by shady truck sellers or mechanics? not too many of them here because it is hard to air your own mistakes and foolish decisions. It's easy to whip on the post that has been set up by everyone: IE - lease programs.

 

From Prime's website


How does the purchase program work?
There is an option to purchase the tractor after it has been in service for 104 weeks. The purchase price declines each week the tractor is leased after that.

I am not twisting anything. I made comments based upon what you posted. I wish everyone who decided to lease a truck was successful. Unfortunately, that is not the case. There are more who fail than complete their lease. Most over estimate their revenue and underestimate their costs.

A study should be reasonably accurate and reflect the facts. I don't know where they came up with the numbers, but I can rebuild my engine, transmission, clutch, both rears and still have spent less than $40,000. There are shops that are more than willing to take your money in this business. Many are truck dealers. Even so, it would be difficult to spend that much on maintence in the normal course of business. If that was true, few would be able to own a truck. The maintenance would be higher than new truck payments.

You did get my curiosity up talking about all the money you have been making with Prime, so I checked their website and will have posted the numbers below. I would expect that the numbers are similar to other that I have checked.

From Prime's website:

Recent current weekly earnings per mile per dispatched truck were as follows:

• $1.469 for the Flatbed division
  
• $1.499 for the Refrigerated division
  
• $1.704 for the Tanker division
  

Weekly average revenue per truck was as follows:

• $3,490 for the Flatbed division
  
• $3,645 (solo)/$5,950 (team) for the Refrigerated division
  
• $3,375 for the Tanker division

How many miles can I average per week?

On a seven day week, Prime units average 3,200 miles. This includes singles and teams. Running teams can average over 5,000 miles.

Operators sign lease contracts with Success Leasing for their tractors. Lease payments ranging from $648-$910. Payment is based on type of truck available. A standard 4.5¢ per mile mileage charge is also applied to each lease.
Prime independent contractors in this new program also enjoy a simple, easy to understand fuel surcharge program that holds the cost of fuel at $1.20/gallon at six miles per gallon (HHG miles).
How much are the truck payments?

Tanker: Starting at $740 per week, truck payments will vary based on the specification and age of equipment. This includes physical damage insurance, Qualcomm and other safety equipment, if equipped. As the truck ages the payment will drop slightly.

Flatbed: Starting at $740 per week, truck payments will vary based on the specification and age of equipment. This includes physical damage insurance, Qualcomm and other safety equipment, if equipped. As the truck ages the payment will drop slightly.

Refrigerated: Starting at $798 per week, truck payments will vary based on the specification and age of equipment. This includes physical damage insurance, Qualcomm and other safety equipment, if equipped. As the truck ages the payment will drop slightly.


I have not whipped up on you or anyone who has posted anything about their mistakes. I have made plenty of mistakes myself. On the other hand, I will question anyone on what they post if I think that they are wrong or misleading. If that is a problem, then don't post. When you make comments or post numbers, you should expect them to be scrutinized. Most of us are here to help others to not make some of the mistakes we did. I have seen too many who have mislead others in the NET income they make.

Looking at the numbers that Prime posted on their website, I don't see how anyone could come out on the numbers. By posting the actual numbers from their website, anyone who chooses can run the numbers for themselves.