Good lease purchase?

You need money to make money. If you dont have the capital, save up and then start! Never start any sort of business w/o any capital. What ever the price of a truck- have atleast another 7k in reserve before you hit the road.

 

JCT seems to have more positive feedback than the others. Decker out of Ft Dodge IA and Hill Bros also have good reports but you have to be a company driver for a few months to qualify. See the thread by JR OTR for info on Hill Bros.

 

Pawn everything you own to get some capitol and go buy a truck. Good Luck.

 

And when you have your first break down you will need to pawn the truck to pay for the repairs.

 

I guess my sarcasm didn't come through?

 

It's truely amazing how many people have no clue on how to run a business. If you don't have enough cash to buy a truck and at least $10,000 in the bank...DON"T EVEN CONSIDER BEING A O/O! Like others have said "lease purchase is just a glorified company driver." It may seem like you have more power and say, but thats all B.S.

Heck last November I had to have my engine inframed due to bad workmanship a few months before. Between fronting the repair bill, rental truck, insurance (for the rental), a hotel room for a few days, and a tow bill I spent roughly $25,000 in 30 days. I've been a o/o for 9 years and had a decent size amount of cash saved, but this ordeal put me on my knees and drained my reserve account. What would you do in this situation if you don't have the cash? More than likely you will do what many guys do and try to borrow money from the company you're leased to. Bad idea, since now they have you trapped even more. Basically if you don't have cash...don't try to be a o/o or a l/o.

 

While your statement is true 90% of the time, there are a few good programs out there for L/O that will make you more money than a company driver. But even then you do need a good business head to make them work.

 

Ok, first you have to understand between the two different programs.

The first is a lease that is never designed to allow you to own the truck. I have never seen or heard of one of these programs that at the end of the lease you could not walk away and buy the same truck off a lot for much less than they have agreed to sell it to you for. They are designed to keep you leasing from them and driving a new truck.

The second is a purchase program. You are going to be driving a used truck that they finance for you at a high rate. The price they finance is likely 20-30% above market value. And they will spin some type of program that you will own the truck in 24-36 months. Now you are looking at 7-10 year old truck with high miles that you own.

So you have to have saved $10-20K while driving that truck so that you can afford to operate it. At the end of the day you have to have capital to be in this business. What many fail to understand is buying the truck is the easy part. Running the business is the hard part.

My first revenue mile was Dec. 12th. As of last weekend, not counting the cost of the truck and trailer, I have used $15k in capital and have about $12k in invoices outstanding.

I am not going to be the person to say that LP's are all bad. In the right situation you can make better money than the company driver. But you will also have to work harder than the company driver.

I have talked to several people that have taken the completion bonus along with money saved while driving, used part of the money as a down on a cheap truck and leased on to a company that will pay for plates. They still have money in savings for repairs so that they do not have to go into the hole with the company and they are able to make a step-up in earnings to get to the next level.

 

I'm not trying to start a Pi##ing contest, but if you know the trucking business then you also know that only a very very small percentage are successful in the lease purchase arena. This fact has been proven time and time again. If your dad has any experiences in his 35 years he will tell you the same thing. Pretty much all the lease programs are setup them same...expensive payments for a used truck or a under-speced fleet ride. Then the company sets your available freight level and you are under their thumb until the lease is completed or you walk away. To me this isn't a smart business plan. I'm not trying to be negative, I'm just looking at it as a true business man. This type of business plan is like playing blackjack where the dealer removes the aces (the odds are way in the dealers favor and they will clean your pockets out).

If you still want to be a o/o then I see two viable options:
1. Stay a comapny driver until you have the cash to back you up in a purchase and operating expenses.
or
2. Go see about leasing a truck from Penske or Ryder for a year. The payments are gonna be as high as a lease purchase (from a trucking company) and the truck will more than likely be a fleet ride, but the trucking company won't have a major advantage. If the freight levels fall out you can just take the truck to another company and start making money.

I wish you the best, but I don't see a happy ending if you keep heading down the lease purchase road. Just look at the rates the companies advertise and the fuel surcharge may look decent. But when you get a look at the deductions and the overly complicated settlements the truth is hidden...you will slowly be losing your butt and not realize it till its to late.