Lease/purchase....How do they do it?

My accountant I have it was OOIDA that referred me to him. Truck drivers is most of his business.

 

I was, my trucking MC is 46xxxx. I 'give' away 27% to LS but don't pay Liability or cargo. I primarily haul contract freight, which means I'm getting 73% of what the shipper pays plus 100% of fuel surcharge, or 100% of what the agent backs out of the spot bid rate for fuel. I run for much better rates than when I had three trucks and an O/O under my authority. The guys that run for brokers under their own authority are simply deluding themselves that they are getting '100%'. The guys that are leased to someone that takes a cut out of THAT are just plain crazy.
My compliance issues besides logs, and getting an inspection every 4 months are ZERO. No Ifta, IRP, KYU, NYHUT, AR tax, KS tax, NJ tax, on and on. No drug testing consortium, etc. I could go on all day.

That being said, if the company I hauled for out of FL hadn't sold out and I lost the deal at $2+ coming out, I'd probably still be on my own. If you don't have direct customers, its not worth being on your own, IMO. LS is a vacation for those that ran their own authority. Oh yeah, the best part is, not calling 30 brokers to find out their load pays 1.25 a mile and have them get offended when you don't take it.

 

Too true.
There are Big truck truckin' companies that promote their lease program as a way to "Be your own boss", when in reality you're not. The company controls just about everything including setting the governed speed to about the same as company Big trucks, which obviously limits potential productivity as well. Put more bluntly, a leased truck and the "boss" who leases it, are both castrated.

Read 'em and weep.
Not very encouraging stats, yet there's a line of wannaBee "bosses" at the revolving doors, chomping at the bit to sign the dotted line in spite of the odds.
When they go belly-up, they're often in debt so deep it'll take years to recover.

Meanwhile, the company feels no pain, as they've taken their cut right off the top. The company always gets paid, --- not so for the "boss", who learns the hard way what it's like to receive a negative paycheck. Break the lease early and pay a penalty. Meanwhile, the company re-leases the turned in trucks to another stary-eyed wannaBee "boss". And the beat goes on.

B I N G O !!!
When a recruiter who could sell porn to a nun describes a lease-purchase(?) it sounds fantastic. And it is, --- for the company.

It's referred to as a "lease purchase", which, technically, it is, but there's a catch. If a "boss" successfully completes a 3-year lease thinkin' that the Big truck they've been leasing is now theirs, they're in for a rude awakening. What it costs a "boss" to lease a Big truck from some of the companies that offer such options, is more than the sticker price at a dealership for the same truck. To add insult to injury, when/if the lease is up, the "boss" is required to turn the truck in, --- and walk away with nothing. The "boss" may have an opportunity to purchase the truck though, possibly for a reasonable price, which is how they get away with calling it a "Lease/PURCHASE". The truck does not automatically become the property of the "boss" at the end of a lease period. Those who decide to purchase the truck, are often financed by the same company that leased the truck to them, --- and the leasing company is likely connected with the Big truck truckin' company.

OH!
By the way, --- y'all know how when a car or light truck is leased the contract allows only so many miles during the lease period, and any amount of miles driven over that limit is charged back to the lessee on a per mile basis? Well, ....... are y'all aware that the same holds true when leasing a Big truck, too?
It's twue!
It's twue!
So, keep those wheels a-turnin' driver.
Drive now, --- Pay later.
Nobody ever said bein' your own "boss" comes cheap.

READ EVERY WORD ON EVERY PAGE OF A CONTRACT BEFORE DECIDING TO SIGN ON THE DOTTED LINE.

And, if a company has a policy of never allowing a contract to leave the company's office, don't just walk away,
RUN away!
(Yes, there IS, at least, one Big truck truckin' company with that policy. And, yes, there are those who sign anyway.)

Excellent post, excellent insights and excellent advice US MARINE. :smt045
Mega ThanX.

 

Ok. I see your point there. It's kind of trade off. It was same thing with us. Out of 9 years, 8 was in dedicated account, from which 6 as a company team. But then one day in early 2010, there was a pay cut from 48cpm to 39 cpm and no stops. They offered as brand new Cascadia, 1 year walk away lease, and that way we were able not to take that pay cut.

Anyways, my point was, if we could make it at 84cpm, guys can make it at 98cpm. Not great, but it would be far cry from breaking it even.

 

Set up your veteran business and if possible do a HUBZONE if your area will allow it. Become a vehicle for the set aside work that the majors want. You know what I'm talking about.... Sign a teaming agreement, let them foot your bills for start-up and collect the checks. Push the paper instead of the hammer...

 

I must be crazy then. I'm pulling in money over the past 5 weeks running "cheap - load board - dry van freight" that will put most indepedent flatbed owners on here to shame and been sitting at the house a lot here lately too. Where I'm leased there's value in the cut that comes off the top. I'll make that back in other ways, from the direct I'm soliciting, don't even have to haul any of that and will get a cut off the top of every load that ships. As far as getting 73% of what the shipper pays, how can you be so sure of that? Not that it really matters you're obviously getting what turns a profit and keeps you happy.

 

How can I be sure? I get the freightbill on every load that has the bill to party. Pretty simple. Bill has some direct freight, right? So obviously, I wasn't talking about you. The guys that run for carriers that have no direct freight are obviously getting hammered twice. However, when you run LS or any other broker freight, you are getting it too. Hopefully, there is enough direct to make up for that and more. I think I've run maybe one brokered load this year, 90% has been one agent, same customer.

 

Some brokers have decent rates and others have cheap freight. The same can be said of most carriers. Most carriers broker at least some of their freight. Some can do as well or better leasing to a carrier than they could do on their own. There are others who manage to do better running their own authority. I have a good friend who did a little over $200,000 last year to the truck and he is leased to a carrier. He is on schedule to do a little better this year unless the economy takes a dump again.

You need to find what works best in your situation. Running your authority requires much more involvement in your success. There is no backup. You are the backup. Leasing to a carrier offers more support and it can help to have a major company in your corner. They do all the paperwork and most offer some fuel discounts, which can also help with your overhead. Some also offer labor and tire discounts that many independents cannot get.

I don't believe that I would be getting the rates that I do if I leased to another carrier. I need the flexibility that running my own authority offers. If I did lease to another carrier it would be one that pays percentage and has decent rates.

 

Looks like I have some research to do on this....