Lease or not to lease that is the question

I will sum up all of the answers that come after me by saying that if you ask that qurstion on this forum, the basic answer is that you have to be an idiot to lease a truck from a company.

My answer is do your research elsewhere and really ask yourself what you want out of a company.

 

Letsbounce, you've been driving 11 years? Over the road? Only reason I ask this is because usually once you have been out there for about a year or have some experience in the trucking world you know for certain that leasing is not a good option. Leasing is for the new guys who have no clue about the industry or how it works.

Give yourself a little more time.... Once you have some experience you will be able to crunch the numbers and then you will know for sure that there is almost no profit margin in leasing. The profit goes to the mega-carrier and that is why they are doing it! If there were money to be made off of owning or leasing that truck the mega-carrier would not give you that option. They would keep this money making secret to themselves! Instead they are moving their freight for next to nothing! Not only are they paying a so called owner operator next to nothing, probably like $.85 a mile, they are also making money off of him by charging him to lease the truck and in that including all kinds of bogus charges and fees!

Why would you lease a truck from these mega-carriers at $1000 a week making $.85 a mile when you could save your money buy your own truck maybe for $500 - $600 a month and be making anywhere from $1.85 - $3.50 per mile?!

The reason you see most new drivers or inexperienced drivers suckered into leasing is because of "Bass Syndrome". Its called "Bass Syndrome" because like the bass fish it will bite at anything that is bright and shiny no matter what the consequences. Drivers getting suckered into this leasing have "Bass Syndrome". They want a nice new, bright and shiny truck no matter what the consequences! It usually results in their career ending just like the fishes life.

So they entice you with a brand new shiny truck and guess what? You don't even have to put down any money up front! Wow! What a great deal! Almost as if they are just giving you a truck. How could you lose out on this deal, right!? After the quick session of signing for that new truck, any and all money that the new driver has in his bank account goes toward lights and chrome for their new shiny truck! (Sorry had to throw that in there! Sad but true.)

To make a long story short after about three months the company will no longer lend you any more money because you are maxed out in being upside down with what you owe them and now you have no money to even operate the truck. You aren't allowed to go back to being a company driver so you are forced to quit. The company then tarnishes your DAC with "Truck abandonment" because you were under contract so now you will pay hell trying to get hired on with the seediest of companies and besides that great news the mega-carrier you leased from that just tarnished your DAC will send you a bill for the remainder of what you owe them which almost never is under the amount of $10,000!

Letsbounce, don't do it! Save your money and do it the correct way. You will thank me later on down the road.

Right now take the time to crunch the numbers. Get out all your old pay stubs and you can also do this with your future pay stubs. Calculate everything as if you were an owner op and see how you did or how you will do. Figure about $1000 a week for the truck lease payment and the insurance, permits etc... This doesn't include fuel though so you will have to do that separately. Also there are a lot of other little things that payment doesn't include such as scales, tolls, food, health insurance etc... You will have to figure in all that to get an accurate figure. Most mega-carriers are going to pay you between $.80 - $.85 a mile if you are leasing. You can pretty much count on about 1600 - 1800 miles a week is where you break even. Also don't forget that whenever you took home time for the week and didn't get a paycheck as a lease driver you still have to pay them that $1000 for the week. So technically you will be $1000 in the hole for that week. This is usually where the snowball starts for most guys.

Anyway, I'll leave you with that to calculate... I think you will be amazed at how little you will actually make, if any, once you have this all calculated out.

 

Normally, I would agree with honeybadger, but there is one company I will recommend and that is Greatwide. They recently merged with Cardinal Logistics. I have several friends, maybe 20 or so, that went with Greatwide and became 0/0 through their program. Majority have been very successful. Most have since paid off their trucks and remained with Greatwide and some even trading in their truck for a newer one. A few paid off their trucks, got their own authority, and left Greatwide.

 

My personal OPINION is, anything that "Locks" you in to a specific company is not a good idea. IE;;; company Cdl school, company lease, or any type of situation that you can't easily get out of.

You never know. God forbid, let's say there's a tragedy at home or with yourself and you can't drive for a couple months. How do you make your payments?


Lets say you love the company your driving for this year. But next year they get bought out or change management. And now your "less than thrilled", shall we say, about driving for them. Now what do you do? Your lease is with them!

The Attraction, more than likely, is the "no money down", scam; uh, I mean, "benefit" of the situation. Just remember this FACT. "No money down" = FULL price for the thing your buying + Interest!!!

Most people don't want to hear this, but, if having your own rig is what you want to do. If this is where your headed. Wait and save up a down payment. 10% minimum!!! Go to YOUR bank, credit union, whatever lending institution you have a good reputation with and fund through them. In the end, you'll be MUCH better off. And if you DO have a situation that prevent's you from working, your probably more likely to get leniency from your OWN lender than someone who knows they've got you by the "short hairs".

This is just MY opinion. It may take a little longer, and you may have to straighten your credit out first. But me personally, I'm against anything that locks you in to a company where THEY hold ALL the cards.

You have to do what is best for you in your own mind. Good luck in whatever you decide!

 

What do you gain by leasing? You get no employee benefits and are responsible for all the truck expenses. You make the same or less as a company driver.

 

even becoming an O/O with your own truck is not good of a deal now.

if you pay the proper amount into the escrow accounts(maint,ect) and factor in fuel,ins,ect. you'll come out making about the same as a company driver makes with all the headaches of breakdowns and repairs left up to you.

used to be the profit margin of an o/o was great enough to make it worth it, not now.

I'll get blasted for that I'm sure.lol

yes,there are those making it, BUT not all.

and ,yes,you can leave with your truck any time you want.

well, so can I. with my yrs out here I can come and go anywhere and find a job.

no tickets or chargeable accidents

 

"What do you gain by leasing? You get no employee benefits and are responsible for all the truck expenses. You make the same or less as a company driver."


That's just it... the company is the one gaining from you leasing and that is why they push it so hard down the newbies throats!

Another thing is that they will make it sound as if you are an owner operator and you can do as you please but once you sign on that dotted line those freedoms seem to be very limited. Try refusing a load and see what happens. Not that you should anyway but as a true owner operator you have the freedom to choose where and what you want to haul and for what price. Try that at one of these mega-carriers!

Then there is also the issue with home time. Many newbies don't think of the fact of you have still pay for that truck when you go home. Take 3-4 days off and then you still have to make that $1000 payment a week and it could really kill you! Usually after the first trip or two home is when the debt starts to snowball for the driver.

When its all said and done and you can longer financially survive as a leasee the gracious mega-carrier will not let you return as a company driver! So now you have a ton of debt and no employment. On top of that, like I stated before they tarnish the hell out of your DAC with truck abandonment and money owed to the company so to make it near impossible to get hired on with any other carrier!

Want to be a owner operator? Drive as a company driver until you can save up enough money to do so. During this time get all your ducks in a row and learn everything you can about being a successful owner operator. Its not just owning a truck and holding a steering wheel! Its owning a business! If you are not an entrepreneur in the first place then you may want to reconsider. Owning your own business takes a unique individual. It takes a real go-getter and hustler! You must really love your work to own your own biz because it really encompasses your life.

During the time you are driving company keep track of everything you do. Run as if you were already an owner operator and see how you do. Also take this time to really refine your driving. An owner operator drives totally different from a company driver. Keep in mind that fuel is coming out of your pocket! So is money for brakes, transmissions, tires, maintenance etc.. you really need to drive that truck differently to cut down on your operating costs. With that being said, you also want to have a good back ground in mechanics. You're not going to be able to afford to pay someone every time you need your oil changed or tires inflated. The more you can do on your own the more money you are going to keep in your pocket.

Check out the OOIDA website (not to take away from this site but they too have some really good info on owner operator) there is a lot of good info and links to being an owner operator on that website. Buy yourself some business books on CD. This is a great opportunity to learn while you drive! Find yourself a niche! You don't have to haul the same freight your mega-carrier is currently hauling. You maybe able to find just a few certain customers in which you can deal with on a one on one basis. For example.... a friend of mine hauls hay from Canada to Florida for a local feed store and that's all he does. He has a contract with the feed store owner and he does pretty well.

Sorry for the long post gang but that's my two cents, or one cent! I'm sure I have a lot more cents to give, however you won't want to read it all!

 

Very usefull information.

 

Well Put Chompi !!!

It IS a business ! Thats what most new to business people don't get. You see what you 'think" is the "golden goose", but you have NO IDEA what it takes to feed him.

And it's NOT just the company, It's political also. I'm AMAZED at people who say "it doesn't matter", but yet 6 months later, they're the ones screaming the loudest !

It DOES matter ! Walmart has ZERO effect on my life, and alot of people get their panties in a wad over them. Or Exxon, Apple, Target, Etc; But Senator "Foghorn Leghorn" can change my life with the stroke of a pen !!! Why don't MORE people get that FACT???

Again, Good post Chompi !!!