Is leasing a waste of money?

Any LP is a joke! This is nothing but a modern version of share cropping for drivers. I would rather pour jet fuel on my head....light it on fire...then beat it out with a 10 pound sledge hammer than do a "fleece purchase."

The issue is drivers get all giddy like a teenager when you wave a shiny truck in front of them in one hand....and LP documents in the other. The devil is in the details! First and fore most you have absolutely NO RIGHTS TO THE TRUCK WHAT SO EVER! NONE! ZERO! ZILCH! NADA! Do you know why? Because the truck is not yours! You dont even have a title with them listed as a lien holder! Scribbling on a company document does not give you any rights to the truck. You are paying for all the maintenance on a truck for them!

The way they push lease purchases on drivers is the envy of every TV infomercial. Speaking of that many lease purchase driven company's literally have the sales pitch down to a science to try an convince you that you own your own trucking company. I literally have to keep myself from vomiting in my own mouth when I see this happen to a driver.

Lets take an objective view of the behind the scenes manipulation of how they convince the drivers to actually fall for this scam. Let me set the scene for you first. Ever been to a carnival that has all those cool fairway games you can play to win a big stuffed animal? You will most likely see someone win and walk off with a hulking teddy bear. This person is a Schill that was supposed to win so others will see him. Usually the schill is a deliberate plant or chosen at random to win. In any event all the other people see the win and scamper up to the carnival game to try their luck convinced they could do it too....but fail. As do all the others fail. But from time to time there will be a few winners to give the others hope of success. Get the point. Fleece purchases are no different and employ they same strategy. Just like a progressive jack pot at a casino. Many will play....few will win. This "dangling" the bait at the end of a hook is the hallmark of the fleece purchase.

Wow Moglar you are a troll and have no idea what you are talking about. Well I do. I live in Missouri and have long known friends that are involved in an upper management level with the nuts and bolts of fleece purchases. I will leave it at that without divulging the carrier.

One of the main tactics is to give the LP driver the illusion that he/she is in charge. This is not the case. "But I can pick my own loads like a real owner operator." Yes and No. You only see what they want you to pull. Many other trucks in the area see the same loads. It will get covered whether you pull it or not. In other words.....loads you see are actually chosen/selected for you to see by someone else. You dont see them all. The loads are cherry picked. The schills will unknowingly see the pick of the litter giving them the illusion that they are doing such a wonderful job and making decisions.

What I am trying to say is you have NO control. Its designed to make you think you actually run something....but you dont. How do we keep this fleece monster fed? Out of a certain number or drivers only "x" amount will get the trucks. The drivers that get the trucks can go out and tell others how great and wonderful fleece purchase is and how hard they worked. The company will get on their soap boxes and herald the success of the new truck owner and even put his face on trucking magazines and advertisements showing how delighted the driver is. I am not going to go into a whole diatribe on how much money the carriers make off the fleece purchases.....I will tell you its HUGE! That will require a much longer post to show the math behind the fleece and the services etc etc. Its a mountain of money.

I am just sorry I didnt invent the fleece purchase myself....I would of been sitting on Fiji by now enjoying umbrella drinks while raking in the cash.

There is no short cut to success or running a business. As Kevin Rutherford would say "you must be willing to do the hard work."

Take care.

 

Man, you really don't like LP programs, do you?

Once again, as a previous poster alluded to, there is some mixing of apples and oranges here.

Not ALL leases are bad...

Some companies lease their trucks with no intention of ever owning them. Some of these leases include a full maintenance program which includes covering the truck from top to bottom during the term of the lease, running anywhere from .07 to .12 a mile extra.

The guy I used to work for had around 75 of these trucks in his fleet. He knew what his costs were going to be during the life of the lease. He liked it that way. If a truck required extended repair, the leasing company provided a loaner truck in the interim.

Some of these trucks were sub-leased to drivers who wanted to run in a pseudo-independent fashion. I was one of them. I knew exactly what I was getting into when I signed the sub-lease agreement.

Although there was an opportunity to pay off the predetermined balloon payment at the end of the lease, I never intended to do so.

I also knew that I was not free to take the truck anywhere I wanted to so long as the truck was in the company name. I was obligated to haul his freight (receiving 90% of gross) in his trailer, under his authority. I also knew that the lease was a true walk away lease.

Which I ultimately did...

Let me assure you, under that agreement, I earned significantly more money than I did as a company driver with any company (including his) I've ever driven for. I knew his system, the lanes he serviced and the rates he received.

For me, the lease program was a way for me to get my feet wet after 5 years as a company driver and to gauge whether or not I really wanted to become an owner operator. Which is exactly what I did.

Last January I got my own authority, purchased my own truck & trailer and launched out on my own. The best decision I could of ever made. And I owe some of that to my opportunity to get my feet wet in a LP with a company owner (not perfect) who had in place a LP option for guys like me who wanted to give it a try.

 

@Scooter Jones ...what you've said is exactly what I'm looking for.

Pm me with more details if you don't mind. Thanks.

The confusion and lack of distinction between lease types makes most people do a wide paint brush re: leasing. Sadly, most will be quick to condemn, than take time to understand.

 

There's a reason WHY there is so much angst against lease op programs. What I described is something that most have never been exposed to.

Too be honest, that opportunity is few and far between. In addition, most persons who get involved in a lease op program just don't have the business acumen to do so in the first place and really shouldn't do it anyways. Even if they have the means to qualify for their own truck, trailer and authority.

 

There is a difference between a lease and a lease to own program. A lease is where those with a dream of getting rich so to speak sign for a truck, not understanding that they are just renting the truck. Atleast Celadon tells you in advance that all your doing is renting a truck for the right to run like a O/O. They call it the rent to run program.

To me and to many business people I have discussed this with, including my attorney mother in law and CPA father in law, Lease to Own is the way to go. It has obvious advantages however the one big disadvantage is that if you decide to walk away, you've left money, sometime significant monies on the table, so it could be an expensive exit strategy.

Being a new driver or semi new to this industry, means that your going to work for low cents per mile rates and cheap paychecks. For some, the difference in pay is worth the risk of leasing. If your going to lease, your making the decision to go into business and how well you run your business, is the difference between success and failure.

 

This is true JJ. The other major fact you left out is that the vast majority people that get baited into these fleece purchases have absolutely NO idea how to run a real business PERIOD. Even if you asked them to sit down and put it on paper in a financially cogent fashion to outline a real business plan....they could not do it. Why? Because they have NO idea what they are doing. These drivers think running a business is plug and play. That is the #1 problem. Drivers think that playing pretend owner operator makes them a business owner that's on their way to riches. Really LOL!

put this into perspective.....if the same driver be given a truck and trailer, his own authority and a decent maintenance account.....could he run the business without going bankrupt. The answer is NO NO and a solid NO! The only exception is if the person knows how to run a business...specifically a trucking business.

You identified he #1 issue in your post. Its called "running a business."

Running a business and understanding operating costs, regulations, accounting and all the other responsibilities that go along with running the operation. The biggest decision to cause people to get caught up in fleece purchases is emotion. They get excited and have not a clue that they are getting into.

Many of these drivers don't want to do the hard work. Many drivers think that scribbling on a lease purchase agreement makes them a business lol.

PS. Many of these companies now call it "Rent" instead of "Lease" because there have been so many lawsuits regarding "contractors" or "employees." Not to mention a whole other host of legal and tax issues plaguing this "sharecropping" style of trucking. I dont want to start a food fight over this issue...I think we are on the same page.

 

Except that I think JJ is confused, and therefore wrong.

He says "Lease to Own is the way to go", by which I believe he is referencing a carrier's lease-purchase program. If so, it is a decidedly bad idea. Why? Because the carrier has complete control and the driver is simply shouldering most of the risk while having little control and especially no control of the asset (truck). As you put it... sharecropping.

Leasing is simply a form of financing an asset that employs a strategy whereby the lessee only pays for the period of time they use the asset. It also allows the lessee to minimize their capital cost (money up front--unlike a typical purchase) and allows the lessee to carry the financing as an expense, rather than a liability as would be the case with a loan to purchase. Yes, many leases can culminate in the outright ownership of the asset, but that is not the normal course. A lease is neither good, nor bad, but the use of it may be so depending on the circumstances. Just like a purchase may be better or worse, depending on circumstances; likewise renting.

 

Well said not4hire. This goes to the core of my argument. In addition many drivers don't know the first thing about running a business...specifically a trucking business. Scribbling on an LP agreement does not automatically endow the driver with business skills or knowledge lol.

Besides not having any rights to the truck...the driver does not have ANY control of the freight. The freight is cherry picked (and so are the rates for certain drivers) and distributed accordingly. The LP driver will indicate that they can "choose" their own freight. The fact is the freight was already chosen for them and displayed accordingly. The company will only allow the driver to see what they want them to see. The illusion of control lol.

I am specifically focused on the carrier sponsored LP. I am not talking about going to a Kenworth/Peterbilt dealer and doing a TRAC lease or other programs. (yes you get the title).

I have actually sat in a few carriers sales pitch (for fun) to see first hand how they bait the drivers into an LP. I actually did this with 3 major carriers I would love to get it on hidden video at some point and post it on the internet. It reminds me of the infomercials you see on late night TV. Its a real sales pitch lol. (and professionally done I might add). At the end of the presentation I asked if I could have a copy of the LP agreement (to take with me) so I can review it closer. And to have a transportation/trucking lawyer look at it because I did not understand some of the legal jargon in the contract. They told me "no" and I could just read it here. LOL!! Basically the carrier didn't want me to see how I was going to be scammed/taken advantage of.

If you cant even take the LP Contract with you to have it looked at first (by a real professional)......walk away and dont look back

 

MOGLAR; Giving us the gospel. Thanks man, i really appreciate your post.

Here's what i got outta it; "the freight is cherry picked!" (that means, favorites are being played, and most of the good runs are going to company drivers).
----AM I RIGHT?

Man, it seems like you gotta do a lot of hustling to make it in this biz. Not as easy as they put it.

Carrier sponsored LP. Gotcha. BUT STILL purchasing from Dealer, is still gonna require contacts, shipper relationships, etc.

What a "CRIME" to sucker these poor drivers into signing their life's away on the dotted line. Hopefully some big law firm will SUE the Crap out of them for cherry picking freight.

Carrier sponsored LP= Predators...!

 

Don't waste ur time. Get yourself good credit and get ur own truck