Get paid .92cpm or a percentage?

I will second that
You need no less than 5k to use as a starting point as a reserve account ...

U need to build it to at least 10-12 k or more never hurts to have more

 

OK hypothetically, what if a guy had $45,000 cash money and wanted to buy a truck so he could lease it onto his carrier. He wants to do it this way because he is very new to the business, likes the way the carrier pays on time, takes care of getting the freight,trailers,logistics in general lined up because the new driver has no idea how to do that stuff yet. OK,

• Should he go out and buy a $45,000 tractor for all the cash,
• Should he put $10,000 down payment on a $30,000 tractor and hold back $35,000 for potential repairs, insurance,plates et al,
• Should he put $45,000 down payment on a brand new $135,000 tractor

 

You'll get conflicting answers. But I would agree with....

 

" i get about $1.15/mi "

Not worth putting the key in the ignition

 

Especially when he starts figuring up the miles they pay him and the miles he runs! Thats why mileage sucks!

 

I just checked the truck paper and they had a lot of 2005 and 2006 trucks for $32,000 or less and that is without any negotiating. I am sure that you could find something acceptable for at least in the low to mid $20's in those year models. Just because you pay a high price for a truck doesn't necessarily mean that you are getting a better truck than you could for less money. There are still good trucks out here for less than $20,000. I haven't been looking at many trucks to buy recently, but I do take my time and usually get a good deal. If you want to stay with Swift and need at least a 2005 truck, you should still be able to find something in the $20,000's.

To tell you the truth, if a carrier were only paying $1.15/mile I would not bother to buy a truck. You could make as much or more as a company driver. To give you some basic costs of running a truck:

$0.50/mile for fuel (this assumes fuel cost of $3/mile and 6 mpg)
0.20/mile for lease payment (assumes 2,500 miles/week w/$500/wk pmt)
0.05/mile for tires
0.025/pm's (oil changes)
0.08/mile maintenance
_____________
$0.855/mile costs*

$1.15/mile revenue
-0.855/mile cost*
________________

$0.295/mile net after basic costs.

This does not include insurance and other costs involved in running a truck.

Just looking at the basic costs above, you can make more as a company driver than leasing a Swift truck and leasing to them. You think that you will net as much as the guy who is getting $3.25/mile? Just plug in his revenue and use the same costs that I have listed and you can see a major difference. If they guy you mentioned can't make any money running for less than $3/mile then either he is in a very specialized area of the business (i.e- heavy haul w/multi axles) or he can't manage his money.

It doesn't make any difference to me what you do. I can only tell you what I would do. I would not lease to ANY carrier who only paid an owner operator $1.15/mile, especially when that includes the fsc. Keep in mind that if fuel goes down so does the fsc. A business should make money. I don't know of anyone who could make money running a truck for $1.15/mile these days whether you don't have any bills or not. I only put the basic numbers down in the above scenario. There are other costs involved in running a truck that I did not list.

I don't understand why someone would lease a truck or even buy a truck and lease it to someone with all the added responsibilities when they can't even net $0.30/mile. That is less than most carriers pay drivers with a couple of years experience. It also doesn't include any benefits offered by the carrier. Perhaps I am missing something?

 

Given your possible choices, I would go with #2. It would be foolish to go out and buy a new truck starting out, especially when you have no idea of how much money you will be making or what is going on in the economy. New trucks depreciate dramatically the first couple of years. You could buy a really nice truck for cash for less than you would lose on depreciation those first two years.

With your scenario it would be better to put $10,000 down on a $30,000 tractor and keep the balance back for an emergency or major repair. In fact, it would be better to invest at least part of that money so that it could grow. If you have $45,000 your best bet would be to find a truck and pay cash. I would try to find a truck for around $20,000 but no more than $30,000. Even if you paid $30,000 cash you would have $15,000 left for a major repair. The most expensive repair would be an engine. A rebuild should run between $10-18,000.

I would suggest putting as much back as quickly as possible as a cushion. Most will not do that. They will spend most of what they make on toys. When you have little or no debt you can get along much better when the economy goes south. It would be great to have a nice shiny new truck. But, most have bugs in them which need to be fixed. That costs time and money since you will not be working when the truck is in the shop. You will make more money with a good used truck than a new one. A new truck will likely have a monthly payment in excess of $2,000. It will not make you any more money than a good used truck with a $500/month payment. But, you can put the extra $1,500 in the bank to earn interest or invest it. In fact, you could even buy yourself a new toy and pay cash for that amount of money.