Lease purchase or O/O

Here's a recent thread on the subject:
Advice on Purchasing a truck or not.

 

These videos show the current reality of the Trucking industry. Apply some common semse understanding when watching them









There are plenty more videos showing the current reality of Trucking and being an Owner Operator in these times. Unless you have a large reserve of money $100k plus it's a HUGE risk. And even then that $100k is nothing is things go south in your 1st 6 months once problem amalgamate.

 

Getting started in bad times can be a good thing. Money is hard to come by, so you tend to be more careful with your expenditures.
In great times, people tend to be careless with their money as they figure they can always make a bunch more next month. Until next month collapses.
An equipment lease ( from a finance company) is just another form of financing comparable to a loan, with just different capital investment amounts either at the beginning, the end, or both. There’s nothing inherently wrong with either option.

A lease purchase from a trucking company is a miserable can of worms to be avoided completely. You never get your “financing” from the same or related company that dispatches your loads. There’s too many games they can play to make sure that you never complete the deal. We called them never-never plans.

 

One more video from Houston, TX showing in a interview of what some current Owner Operators are going through.

 

stay driving for at least 3 more years.

While it seems to be a good move to make the big bucks, the problem is we have too many owners out there who are depressing the rates, we need to see a real hard freeze to kill off these marginal players and get the rates to rise, at least 20% of the owners need to go.

 

All above comments/responses are great -- but I would also add -- you are simply too new to the business to be an owner, yet.

Learn to be a great driver first (2 years, approx)...figure out which type(s) of freight you prefer -- THEN later when market conditions come back to something close to sane levels, consider having your own gig.

-- L

 

So I've been looking into this since getting laid off last October. In terms of going true owner/op, unless you have about $30k in the bank forget about it. First you need a truck. You are looking at a used truck with 350k to 500k miles on it and $15k down. Maybe $10k down if you have good credit. Possibly zero money down if you are a proven company looking for a truck. Based on your post, you can join me in the not proven company category. I'd also like to point out we haven't even discussed buying a trailer yet, getting numbers (authority), and finding customers to pull freight for. And then once you do all of that, you are saddled with absolutely ####ty freight rates for 90 to 180 days. Why? Because #### you and entrepreneur dreams that's why. The real reason is you don't have any history as a company running your own numbers, so the higher paying freight won't book with you.

You mentioned lease purchase. In 2024 there are two types of truck leases based on my research. The first one, and most common is a carrier lease program. Think your Swifts, Primes, and USXpress (which I guess is just Swift again). These are usually "zero money down, no credit check" with the caveat being you only get to pull freight for the carrier giving you the opportunity to lease a truck. Nearly all of these programs are rpm (rate per mile) + FSC (fuel surcharge). There are lot of these that exist depending on where you live. Some of the lesser known names are Wilson, RE Garrison, National Carriers, Riverside, MNM Transport, Decker, Hirshbach and countless 1099 Chicago companies. I wish JCT didn't get bought out. On the "zero down" model you could at least go home without feeling the heat because the truck payment was a variable on the miles you ran.

So we've covered true owner/op (buying a truck with cash or a loan) and carrier lease purchase program (zero cash down, no credit check, drive for the carrier).

The second lease option is basically leasing equipment. In some cases you could consider it a lease purchase, but not usually. Companies that exist in this realm are SFI, Lone Mountain, OTR Leasing, LRM Leasing, TEL and BillyBobs [insert your state/city here] Trucks. The truck payment is going to be expensive, similar to carrier Leases, the kicker is you can take your truck and go to another carrier. There may be some qualifiers to do so though.

For example. I've been talking to SFI to lease a truck to run for Parkway Transport here in South TX. Parkway Transport is owned by HEB which is the big dog in our area when it comes to Grocery stores (I've read even Walmart is struggling to remain open here and they are the last competitor for HEB). For me to lease from SFI it would cost me $7500 up front for a truck and drive for Parkway. If I go to JB Hunt it'd be $3k. If I go drive for Schneider it'd be $2k down with a $6k signing bonus. We didn't get very far into the conversation when I asked what the down payment would be if I got my own numbers. It's a lot. Comically so.

Lone Mountain wants a heavy down payment, but will generally let you run where you want to run. Unless you want to try and strike out on your own with your own authority. They will ask for more. Typical down payment with them on a used truck is $6k and they will expect a sizeable amount of funds left in your account for maintenance. Mileage on their trucks (if you can secure one) will be anywhere between 300k and 500k. Their payment structure is more in line with getting a loan on a used truck with similar mileage from a dealership if you have reasonable credit (not bad, but not great).

I'm not going to tell you what to do, but I would hope you go with a true equipment lease over a carrier dedicated one. Or buy a truck from a dealer if you have the means. I've been looking at this #### for over six months, so know the market is in a down cycle right now, across the board unless you run specialized freight (yes I'm counting flatbed in that). If you truly wanna jump in right now, based on everything I've found, get your costs as low as possible. I'd also like to point out we haven't even discussed insurance costs or the truck breaking down yet...

As an aside, I have a newfound respect for those out here running their own junk. It definitely ain't as easy as buying some used truck and showing up at a warehouse ready to ship some freight. And if you are out here doing it and supporting a family back home? Respect for real. It's tough right now and while I'm not living it, I see the numbers and I'm often left wondering how y'all make it work.

unloader

 

Good rule for buying any vehicle is put down at least 1/3 of the total cost, or else you will be 'upside-down' (meaning that you owe more than the truck is worth..) for most of the loan period. Truck gets wrecked, you are still paying payments on a 'dead horse'.

Also, on a 'lease-to-own' contract, you own NOTHING until the last payment is made.