Why are drivers conned by lease purchase

Most NMD/no credit check leases will do nothing positive for your credit rating, and some will hurt it.

These leases do not deal with financial institutions at all, since the company owns or leases the truck themselves already - you will be "subletting" the equipment and only dealing with the company - not any bank.

The company is the "creditor" and can and often will give you a bad credit report for breaking the contract.

And in a sublease situation, if the company defaults on their own lease - you will lose your truck and equity (if equity is provided contractually, but that is rare).

 

Won't put me in a W9? Now, there's a big loss. (Note sarcastic tone) Actually, that's what was reserved for me and I said no thanks, I'll take the Prostar.

 

You are correct in that, the lease itself is rarely, if ever, (I have not seen or heard of a "leasing company"...i.e. Swift, England, or the likes...) report positive payment to any credit reporting agency. so the lease itself will not improve the credit standing.

However, the increased income (weekly settlement pay) can enable an individual to get any credit issues squared away as long as the individual will pay his/her outstanding debts on a regular basis. By cleaning up arreared debts, and maintaining a regular payment schedule...and utilizing some new credit options (high interest rate credit cards) and maintaining the on time payments. During the course of the lease, (usually 4 years) the individual can get to the end of the lease in much better credit position than when the lease was entered into.

But, as I said before...it requires the individual to maintain a payment schedule, living within a budget, and above all, paying the taxes that aren't deducted from settlement pay and income is reported by 1099 from the company. Too many get "shiny object syndrome" from the close to doubling the "take home pay" that comes in the working driver's new income bracket.

 

Let the driver make the payments and insurance plus the escrow account and the moment you didn't allow him enough freight to make the lease payment, repo the truck!

This is just like GM getting into auto financing. When you can make more profit from financing the car than building the car? You follow the money. When you can make more by leasing a truck than you can hauling freight, you become a lease agent with a freight broker attached to it.

 

Don't get bogged down in the details. The companies control the freight rate you are paid. It is held low for their profit and so you will haul the cheap fill in stuff.

 

Thanks Emulsified!
I think I am an example of a lot of guys that are falling out the bottom of this terrible economy. I owned my own truck (w/bank), I worked for over three years with the same carrier and did make a decent profit. Along came the "Recession" and this company started having trouble. As far as contractors were concerned it started with missing settlement dates. Then on to short payments and eventually missing settlement dates entirely. Each time we would get a token payment with a multitude of excuses and a "New Plan" to straighten things out. Always with a reminder of how good it was and they were capable of getting things going well again.

As it turns out they strung most of us along to the point where they sold the company stating that the new buyers would handle all back monies due us. This in fact was false and eventually it was discovered that the couple who "owned" the company were crooks! To the point it was discovered they did not even have legal possession of the business, still in is fathers name. So as it goes the sale was illegal, with the courts vacating the sale, now we're all lost in the confusion. I, like others, lost our trucks and an average capitol loss of $65K to $75K. Not to speak of the devastation to our home side responsibilities.

At present I'm now close to being homeless and no family to rely on so a lease option plan is really the best alternative for me at this time. Please understand I am not blaming anyone for my situation. I made the choices that put me here and no one else. I am on in years and falsely held out hope it would all be okay not wanting to start all over.
I believe that these L/O plans are a chance to recover for those that are willing to hold the line on expenses , run the most they can and build as rapidly as possible back to independence.

 

Hi otherhalfw,
I read your post in "Why are drivers conned by lease purchase" . Good common sense advice. I spent several years doing the right thing i.e. budget, financial discipline, saving money etc. Unfortunately I succumbed to my own feelings and held on to a bad company way to long. Now I have spent the last 14 months paying for bad judgment.
I'm in a very precarious situation with debt and taxes. I see a L/O as helping me in a few ways. I'm 64 now and I'd like your opinion of my taking on a L/O. Been looking at Prime.

Regards,
"Stenniss"

 

Thank you Stennis...as for Prime, to be honest I just don't know! I have talked to some who say they are running on the shady side of legal and making good money...others say they can't get enough miles to take anything home. I think this proves the point that ALL the companies are the same (except for the color of the truck). To this point it really (in my humble opinion) comes down to the working relationship between DM and driver, and if the DM has a good rapport with planners, so the DM can keep his/her drivers happy making miles and money.

And the same "tales" of good and bad about Prime are present here on TTR. Especially this time of year...you have been around this block a few times...right now we are mostly moving fairly well, but the "slow down" is only a couple months away. With this in mind, would there be enough good freight time to sock away what will be needed to get through the slow session, we all know is just around the corner. That is a decision YOU will have to make for yourself.

Check out the different "Prime" threads on this forum...and weigh out the good and bad from them. Also, since you live in Olympia...take a little jaunt down to the Pilot (exit 99, I-5) and talk to some Prime drivers...face to face will get a more positive feedback...plus you never know, perhaps one of them will actually show you his settlements as verification of what he/she is saying about their miles.

As long as your DAC and DMV are in good shape...it sounds like you know how to work, and want to work...so you just need to find the FAITH...and just take a shot!

Good luck to you Stennis...hope your decision will be a good one!

OTH

 

Supreme desperation and high optimism without doing any real research on leasing.

 

To succeed in trucking, it sure helps if you can operate a calculator! No, you don't need calculus or algebra, but if you have basic math skills it sure helps. If you don't, then it is real easy to be taken advantage of!