Lease Purchase? Ask yourself one question....

But,

they'll put my name on the door !!!!!

Where do I sign.....

 

I am by no mean promoting a lease purchase. Lease purchases allow the companies to show a better ratio of profit to liabilities. This in turn allows them more capital reserves. If ABC Trucking Company purchases 100 trucks then they have 100 depreciating Liabilities. They don't become assets until they are paid off or the value is greater than the liability. Now if ABC Trucking Company decides to lease off their fleet then the fleet now becomes an asset. (Or any part of the fleet they lease out.) The trucks are no longer shown on their books as a liability. So if ABC Trucking Company needs some additional capital investment then their numbers are going to look real good to banks or investors. Unfortunately this is where you have to be careful. Is ABC trying to keep their capital reserves high or is ABC trying to get rid of their junk and show a profit. Is being in business for yourself worth the effort or not. If a deal looks right you could be an Owner/ Operator at the term of your lease.
I will throw this in based on my research of different companies who are looking for O/O's. There are people / companies out there who are real good at moving freight. But they are not real good at being fleet owners. They rely 100% on O/O's moving their freight. Some of these companies offer the same benefits as the larger fleet owners do. They just make no pretense about being a fleet company. Look on Craigslist under transport. Not all O/O's are attached to large companies pulling their strings.

 

While what you say is true about assets on the books, it is only part of the story. The other part is the increased profit they show. You also seem to confuse fleece/purchase with owner/operator. While it may be possible to make it work the deck is stacked against you even if you are an owner/operator who brings your own truck to the lease.

The rates they pay today are the rates I ran for in the late eighties and the FSC just corrects for the fuel difference. The problem is I can't buy equipment for what I did 24 years ago! The company is taking as much as 0.60 CPM for around 0.13 CPM in items furnished. There is where they make the real money.

With a true cost of operation around 1.57 CPM, how will you make it on a lease that pays 1.40 CPM with the FSC?

 

No, What I am saying if you have a good lease purchase, then at the end of your lease and buyout you are an O/O. Then there are opportunities depending on where you are.

 

Name some of those GOOD opportunities........

 

I've heard of two or three that actually have a one dollar buyout. Are you aware that the completion rate expressed as a percentage for fleece/purchases is barely double digits at some places and less at most? Are you aware that companies make more reselling your truck than they do transfering ownership to you?

 

That's good enough for me.
I'm in.

do you think instead of "Leased to" I can get "Enslaved to"?

 

Completion rate can't be solely looked at in the view that the company is setting you up poorly, even though they are mostly. You could give two guys the same exact miles and pay and one could make it and one couldn't just based on their ability to manage money and an operation.

I'm not advocating leases in the least bit or trying to defend the companies that offer the leases. They are a bad deal mostly. I would never do one. Just making the point that completion rate can't be solely blamed on the company. Many O/O's don't make it either on their own and fail to complete the financing plan they got on their own.

 

Why would trucking have a higher percentage of successful new businesses than any other industry? Most of the lease/purchase programs are a ripoff, but there are a few good ones. The biggest reason most people fail in a lease purchase is that they aren't prepared to start a new business. They think they have become a company driver who makes more money and gets to turn down loads. The same problem happens when you finance a truck or lease from a third party. The truck is the last thing that should be on your to do list in becoming an owner operator. I realize that sounds backwards, but if all your ducks aren't in a row to start a business the cost of the truck will throw you into bankruptcy. Just like those who complain that they can't afford their truck and now they are loosing their house as well. If the only way you can become an o/o is to risk you home to get the money, you are not ready to start a trucking company.