Your thoughts on a lease program

Discussion in 'Lease Purchase Trucking Forum' started by BigBadBill, Mar 1, 2013.

  1. trees

    trees Road Train Member

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    Oh, I agree.... most drivers enter into being an o/o with the idea that driving the truck is the single biggest factor between success and failure... and that's because as company drivers that's all they ever did, was drive the truck... "if I can drive the truck then I can succeed", I've heard a lot of people say this... leasing on and hoping to succeed, based on some numbers supplied by the prospective carrier, that's how the majority enter into this, it's how I entered in... What most fail to realize is this, the company who provided the lease was only really interested in the gross revenue generated by the truck, and not the net, but, as the owner of the equipment, or lessee, the only real concern is the net... I bought my first truck, financed it myself, spoke with the lender myself, prepared and submitted documents myself, obtained the loan and traveled to the truck, inspected and signed the agreement, and then leased on to a carrier who grossly misrepresented their rates... I almost lost my ##### on that deal....

    But, because I was the registered owner with my own base plates I had the freedom to cancel the lease, although the scumbags I was leased to kept my last check and the escrow I had built...

    so then,

    I took a leap of faith when I signed onto the group I'm with currently, my good fortune was talking to one of their drivers and getting the skinny on what he was really making, which was good money, and then signing on and learning, and I've learned a lot since then... at first they dispatched me, and I paid careful attention to how they did things.... because of the prior situation I was in some trouble financially, nearing the failure point, but I managed, I stuck it out, I did whatever I had to and eventually I made enough money to relax... I got to know them and became comfortable with them, and then they allowed me to deal directly with brokers off of the load boards... I had arrived at the point where all of the conditions were right to get in the water.... and I took to it like a fish to water... so from my perspective I understand what Bill is considering, and it makes some sense, except that I haven't met too many people in business who were genuinely interested in the well being of others, not in a personal sense, not to the point of being a facilitator, like Bill is considering...

    It's one thing if somebody already has a truck, another if you're the one helping them to get it.

    It would be easy for someone to feel that they had been taken advantage of, if they had been "encouraged" into the program and failed for some reason...

    Consider this, lease purchase started out as a marketing maneuver designed to appeal to company drivers who desired to become o/o's, a fat bait dangled on a sharp hook, luring them into a program under the guise of it being a lease "purchase", a truck give away scheme designed to keep the fleet supplied with warm bodies and trucks, and with the added benefit of shifting all of the operating costs onto the driver... a nefarious scheme hatched by the corporate execs of the major carriers....

    Unleashed upon the unsuspecting hordes who pined to be the proud owners of their own destinies...

    Enough apocalyptic language.

    The question is..

    Could someone grow financially, grow their trucking business, while at the same time helping, or "paying it forward" I think the term was...

    I guess, but that would be the exception, not the rule

    That would be a noble endeavor...

    And Rollin, I absolutely agree with you, negotiation has to be done without regard to financial pressures or burdens, if the rates on Monday suck, and it's highly likely they will, you have to be prepared to sit and wait it out... and sitting costs money

    How long do I sit??

    Until you can negotiate a fair rate., or until you find something that is worth dh'ing to...

    I've had my share of sleepless nights, wondering if the situation was going to improve, doubting myself, doubting my decisions....

    floundering about, trying to keep my head above water..

    Sink or swim is a harsh master.

    I learned to swim.

    But, man.... the thought of bringing others in, holding their hand and watching them take the plunge.... hoping that they can swim....

    I hope you know what you're doing Bill.
     
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  3. trees

    trees Road Train Member

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    1.Background check 2. Work history 3. Interview potential candidates 4. You can't assure the success of another, you can only provide a carefully presented opportunity to a well screened applicant
     
  4. trees

    trees Road Train Member

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    So, what's the upside of helping others to get into this business, purchase a truck, and to be successful?

    1. Loyalty, they, the lease drivers, would be grateful, I would think...

    2. Your business grows with dependable drivers groomed by you...

    3. You retire with a nice retirement account, and the satisfaction of knowing that you made a difference.

    I went back and reread your initial post, Bill, and I think it could be worth it.

    Honest representation and superb communication, combined with careful selection of the applicants.... this, I think, would be the cornerstone of your success.

    It could be a good idea.
     
    Last edited: Mar 3, 2013
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  5. heavyhaulerss

    heavyhaulerss Road Train Member

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    BBB. I just want to say imo over 95 % of the folks o here that have come to know you, wish you the best & I for one feel a sense of achievement when one of us makes it successfully. you are an inspiration to a lot of people.
     
  6. BoyWander

    BoyWander Road Train Member

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    My thoughts about this idea: (and sorry for the novel)

    We all know that the success rate of lease programs at mega carriers are pretty low, and Bill I think you mentioned that this is because they are putting the wrong people into these.

    I think you're right in that your requirements are going to have to be higher. But remember, these carriers make their money when people FAIL - because they can turn around and lease the truck to someone else, and make even more money. If someone happened to succeed, well then they pay off the lease, buy out the truck, and it's gone.

    If you're planning to have these people succeed, which of course is a very worthy goal, then I don't see how you would make a profit off of this, other than this just being another way to get another truck driving under your authority and getting your 10-20% or whatever you make.

    And also - I hear (read) people on this forum harp about new O/O going out and getting a fancy truck and then not being able to make they huge payments and then either fail, or not make enough money to make it even close to being worth it, get desperate and start taking loads for cheap. Cheap loads don't help you at all, because you make a %. Neither do drivers who fail. Now I don't see how it can be a good thing putting a new O/O into a truck with a $600/week payment and still having to pay maintenance and repairs.

    When I go over and over and over again all the numbers that would relate to me being a new O/O, I have in mind an amount of profit that I would need to make for it to be worth it to me to justify owning a truck. In order to get that, I'd need to have a truck payment somewhere around $150/week, not $600 and having to pay on it for 3 years. No, I need a truck that I can pay off in a year or less.

    There's no way I'd ever lease a truck. If I do get a truck, it would be somewhere in the range of $30k or less, and I'd make sure I pay it off in a year. If I thought I could afford an $80k truck, well then I'd better be able to pay cash for it right then and there, and I don't have that kind of cash yet.

    In my opinion, starting a business, you have to consider the (practical) worst case scenario, and then consider what kind of money you'd make if that scenario happened, and if you'd be happy with that. And if things go better than a bad start to your business, then that's sauce.
    A worse case scenario does NOT get better when you're dealing with $1000/week to pay for a truck and maint/repair account.

    Anyways, I'm getting carried away again.

    Bottom line is, if I were in your position, I'd be VERY picky about who I allow to lease to, and even then I would not do it often. And then I'd have to figure out if the profit I'd make would even be worth all the headache, and then think about if there are other ways I could make the same amount of more profit with less headache.

    I'm not going to comment about your motives for wanting to do this, but from one capitalist to another, for God's sake, I hope you're not considering doing this without making some good money on it. :biggrin_25525:
     
  7. BigBadBill

    BigBadBill Bullishly Optimistic

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    I guess this is one of those things that if it is said often enough that it becomes fact and people just accept it without challenge.

    I have never understood why smart people just accept this statement.

    A company leases a truck for 36-months for $2,000 (fictional number). At the end of that 36-months they can buy the truck (few do this) or turn it back in. But over that time they have to make all 36 payments and keep it insured, plated, etc.

    Now that company leases the truck out to drivers for what ever rate they decide. When that truck is not leased, a driver fails, they are making a payment but not generating any revenue.

    So how does a company make money when a driver fails? Even all the major carriers that are doing actual Lease Purchase where you can really own something at the end are structured that they want these trucks off their books and not sitting after a certain age. Only reason they do it is because they take a company truck, turn it into a lease and hope to make a little more than just turning it in to leasing company.

    I have no love loss for these company lease programs. But if we are going to help people understand what they need to avoid then we should at least be honest about what is really happening.
     
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  8. EZX1100

    EZX1100 Road Train Member

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    50 new people per week

    truck income is $900/week plus other charges

    the trucks dont sit
     
  9. BigBadBill

    BigBadBill Bullishly Optimistic

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    Based on what? Because that is what people are telling you?

    Again, no loved loss on these types of deals but when you really stop and look at what really happens you can't say a truck is leased 100% of the time. Even if you had someone drive a truck in and hand someone the keys. I have never reviewed a leased deal that starts charging anything but insurance before week 2 and most are week 3. So you are looking at 3-weeks of no income Minimum.

    According to BB&T (they hate these programs because they say they are money losers for companies) a truck lease last less than 11-months on average (based on publicly traded companies that have these programs). So over a 36-month lease that truck in turning 3x. We are up to 9-weeks of no revenue.

    So where is the data to support this.
     
  10. EZX1100

    EZX1100 Road Train Member

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    people are telling me? i went thru three megas, they need fresh blood, they cant keep anyone longer than a few months (no one can take that kind of pain too long)

    they treat their drivers like mules and they bank on a high turnover
     
  11. volvodriver01

    volvodriver01 Road Train Member

    Lease companies make more than enough off of a single truck that they account for the few weeks of no income. Just look at CRST Malone, they wouldn't be near as big as they are if they wouldn't lease trucks. The preach they are a debt free company and if so its because the lease so many trucks. In my own opinion I would say 60% of guys that lease trucks end up going back to being a company driver within the first year of the lease.
     
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