Lease Purchase Programs Good or Bad and Why?

Upon reading this thread to this point, I can see why you asked me to jump in. I will play devil's advocate a little bit here, but I am going to approach a different angle than what you are discussing. I can't really provide real world numbers that would corrolate laterally with what most lease purchase plans would look like because, like Brickman, my operating costs are MUCH higher than what it would cost to run general freight simply due to the specialized nature of the work my company does.

Most startup companies in other sectors/industries do not even expect to be profitable for the first two years. Trucking is one of the few industries where a prospective new business owner can essentially turn a profit from day one. Most companies that owner/ops contract to will front the operating expenses and deduct these monies back out of the contractor's settlement(i.e. fuel,plates,permits,etc.). This greatly diminishes the amount of startup capital required of the new business owner(owner/op). The lease purchase essentially eliminates the startup funds needed for these aspiring businesspeople. That is where a lease purchase COULD serve a purpose. It plays on the emotions of someone with a dream.

While I agree that most lease purchase contracts are bad and that all lease purchases are weighted in the company's favor to one degree or another, there are some that CAN work. Would I ever suggest anyone get into a l/p if they had any other feasible option? Absolutely not, but if they have enough drive, desire, and work ethic and they can develop some good business skills and learn in a hurry how to operate atruck efficiently, it is possible to come out alive at the end. It is a HUGE sacrifice,but if they make it to the purchase part of the lease purchase, they will have hopefully rebuilt their credit, learned some things about business, and made some good contacts as to where to find work for their newly acquired truck. The problem is that most people don't realize how much of a sacrifice it is to make it to the end and most do not do the required research to find a MANAGEABLE lease purchase. If you don't have the drive required to heavily sacrifice in many areas(bennies,hometime,possibly income) then I would highly suggest they remain company drivers.

Once again, I agree that Lease Purchase is NOT the way to go, however, as Jllk said in a pm to me, this thread needed an opposing viewpoint.

 

I wouldn't do a fleece deal no matter what. My success or failure would depend too much on someone else--my outfit. If my company chooses to cut my miles later, I can't do anything. I'm stuck with that company and have to take it. If I own my own rig, I can dump my bad apple company and go lease somewhere else in a hurry if I so choose. Also, If I sign on the dotted fleece, my outfit can also force me to do things I may not want to do...like go to New York City five times in a row in January. If I'm a company driver or a true O/O, I can put my foot down and refuse to be a whipping boy and not be stuck doing that BS.

 

AfterShock is AfterShocked!!!!!

An EXCESS Mileage Fund?!!!!!!
That's a tad excessive, ain't it?

GooD GrieF!!!

OH!
But WaiT!
It ONLY applies to miles ABOVE 2,900 in a week.
So,......... if you have a better than 'average' week, they ding you for it?

If you run 2,500 miles each week for three weeks, and then get a whopping 3,601 mile week to end the month,
a Big truck leased driver gets docked before even gets a door?

Bend Over ---- here's YOUR sign.

 

Well I actually considered an Prime Lease at first (through their affiliate Wil-Trans) and thought it would be OK to get a decent start without using my own capital. Well since they sent me home 3 days after getting there for reasons not allowed to say to me (turns out that they sent me home because I had 2 herniated disks that where operated on via micro surgery and I was released to full duty no limitations by my doctor.... well anyway I am going at it on my own. I spent 125k on a very lightly used 05 Pete with 118k on the clock and an 06 Utility O/O rig with 5k on the clock. My monthly payments are 2600 so doing the math by 4.33 weeks in a month I have to pay 600 a week for the equipment and 200 a week for ins and tags. I have an new APU and rubber etc. If you don't have backing then I would only look at and use a lease for that reason as you can see with my numbers you can have recent good shape equipment and my mileage costs are very reasonable. If I run an avg of 1.6 a mile I need to run 200k team or 125k solo to meet my payments. If I avg 1.8 I can drop my team mileage back to 150k etc. I know freight is a bit shaky but these are avg numbers and definately doable. (This was also figured at 4.1 pergallon of fuel so that will have to adjust accordingly)

 

first off, if you want to own a truck, buy it outright, donot lease purchase. By the time you satisfy the terms of the lease, all you have done is pay the truck off for the company. By this time, the truck has so many miles on it you need another one.
Also, read the writing on the wall. At $4 plus a gallon for fuel, park that money pit and drive a company truck

 

I'm a Lease operator for ATS now. I go home every other Friday. I'm on target to net over $75,000 this year. Now I bust my ### for that. I don't due the truck stop thing, I take care of expenses and such.

If you are a newer driver who is thinking about O/O then a one year lease makes sense to learn that side of the business. Most are walk away so if you can't or don't want to make it you can go back to your company job.

I love it hear.

 

Do they have elogs over there at ATS??

 

If I may I would like to comment. I am in a Lease purchase program right now, granted I have only been doing sofor about 2 months. I won't mention the name because I don't know if that woud be considered advertising and I'm new to this forum... I've had a couple ups and downs already, but to sum it up, I started off with nothing, a wife and 4 kids at home, drowning in bills, almost everything was on shut off notice, and I was about to lose my house. Now, quicker than anywhere I have worked before in the trucking industry, my bills are ALL PAID OFF, my house is current, the truck account (which I started seperately from my wife and my accounts) is doing decent, enough to pay for a mid level breakdown at least, our seperate accounts are doing fine, and I've made a couple of major repairs already to the truck. I believe I'm doing well since I started in a whole to begin with.

This lease is a "walk a way" lease as you put it, so my wife and I decided what's the risk, we have nothing that can be taken from us anyways, let's go for broke. I am in the tanker business, and the loads pay very well, better than any flatbed freight or van freight I used to haul. I may not get the best fuel surcharge, I don't know, like I said I'm new to the O/O side of the business but I'm getting .51 cpm loaded or empty for every dispatched mile on top of the linehaul numbers they give me. I run by choice 2 weeks out and then come home for 4 to 5 days before heading out again because I love my family time. I average about 1700 a week after they deduct my fuel, advances, insurance, tags, etc., except on my 4 or 5 days off week, then I still can pull about 600 after everything. Again I'm new, but so far it's been the ability to disciplin the money is what's making it for me.

My wife and I said no matter what the truck makes, we need $800 to the house for us, $140 to me a week on the road, what ever is left goes to the truck account. We made a $3700 check 2 weeks ago and we still only took what we need. We have a tax girl that is setting us up on quarterly payments and I'm anal about truck maintenance, so I spend a lot of money on the truck. I'm not mechanical by any means, so if I can't have a friend help me fix something, I have to pay for it.

I did learn not to allow the company mechanics touch my truck very quickly, and my terminal manager means well but can't deliver all he promises, my dispatchers so far are great, they know when I'm on the road, I'm there to run, not sit in a truck stop, and they keep me moving pretty well.

I just don't think it's fair to say ALL lease purchase programs are bust, I think I'm lucky in the one I'm in now, just investigate thouroughly before stepping into one, and definately go for something u can walk away from without penalties, and if you do leave it or walk away from it, do it respectfully or you're just asking for someone to mess with you.