lease vs. buying outright... what does it cost??

Well said. Drivers want to play pretend owner operator and dont even have a clue what they are getting into when they sign up for a fleece purchase.

 

and you just bring us here thread 7 years old

 

Well I think this thread is still very relevant. Many carriers are tweaking their LP/rental schemes and are getting more creative due to the law suits.

I cant tell a grown person what to do. I only can tell the hard core truth and make proven suggestions.

One of the main issues is that drivers mentally masterbate about being an owner operator (especially an LP driver) and fantasize of the road to riches. They create fantasy math and plans and get to the point where they think they are highly skilled and shrewd and know how to run a business. Now comes the LP carrier who cements and reinforces these fantasies.

#1 Educate yourself how to run a business. This is to include how to be fiscally responsible. Many online resources out there.

#2 Straighten out your own finances and Credit. Even if it means working as a company driver for a few years. It will pay off. Get your debt lower. You will be happy you did.

I went through a divorce that totally nuked my credit back to the stone age. No bankruptcy....but my credit was in ruins. My credit looked like the Death Star exploding lol. After about 4 years of determined work I got my credit back to 780 And payed off, got rid of, or got down my debts to a responsible level so it reflects great on my credit.

#3 If leasing or entering any contract with a carrier. Get a copy of the contract before you do anything and have it reviewed by a trucking specialist or OOIDA. This does not mean take it to your buddy who has been driving for 25 years. Take it to a professional who specializes in trucking contracts or OOIDA. If the carrier refuses to allow you to see the contract. Walk away. Do not listen to lunch counter truck stop lawyers. For that matter don't listen to forum keyboard cowboys either. Take the contract to a professional! Many carriers worth their salt will send you a copy of the contract. They will even e-mail them to you. You want to see this contract before making any agreement to contract to them. Also...carefully have the "contract termination conditions" looked over also. How you leave is just as important!!!!!

#4 Do not buy into lunch counter/truckstop advice. You might pick up some nuggets of intel to follow up on. But don't take it at face value. There are many drivers that are "recruiting ninjas" out there and are just after a quick referral bonus.

#5 While trucking forums are a source of good information...they are also routinely used by trucking company recruiters posing as drivers. Do your homework. Online forums are fertile ground for recruiters.

#6 Always have an exit strategy just in case. This is a must!! The company you finally went to work for or lease to might have met all the bench marks you were looking for when you hired on.....only to find out that things were not as they were represented by the carrier. This is also why you need to do step #3. Now its time to leave or quit. How you leave can be just as important in the contract. DOes the carrier have any recourse on you? Will they keep your money? Can they sue you? Will they put derogatory info on your credit? etc etc In fact I can personally guarantee its buried somewhere in the contract. (contract termination). You investigated how to work for the carrier....knowing what will happen when you leave is also just as important. Many carriers have legions of lawyers that do nothing but sue and bring civil action and collections against drivers. And guess what this is also another revenue stream for the carriers. All the legal, punitive fees, interest etc etc go in the pockets of the carrier. Yup.....if you leave contrary to the contract the carrier still will get in your pocket.

Understand that this is not a troll or a flame on carriers or LP. What I stated is the hard core truth that is very beneficial to drivers....and their well being. It it taking your time to to the hard work and the intelligent work before climbing in bed with any carrier....LP or not.

 

I have never leased a truck from a carrier. When I looked at the numbers I don't see how you can make much with them. There are a lot of costs associated with a lease purchase from a carrier. OOIDA has a spreadsheet you could use for either buying or leasing. It is usually much less costly to buy rather than leasing from a carrier. I would expect to pay at least 30% more for the lease. Buying will usually require you to put around 20% down on the truck. If you have strong credit and a few years experience, you might get the down payment to around 10%. There are equipment leasing companies around. The down payment varies from only the 1st month to 1st and last to about 10%. At the end of the lease you own the truck when you make the last payment. Some have a balloon payment. A lease can be deducted on your taxes at 100% of the payment. Buying requires you to depreciate the equipment over several years. At one time you could either depreciate it over several years or do it the first year. You can buy a truck for much less that leasing from a carrier. It is possible to find a good used truck for less than $20,000. Even if you financed your purchase, payments would be less than one weeks payment on a carrier lease. I have said this a number of times, but a truck is merely a tool we used to make a living, just like a mechanic has tools. One thing to keep in mind is that lease payments continue whether the truck is moving or not. They also continue when you do a purchase, but the payments are normally monthly and much lower than a lease payment. When you lease, you could have weeks where you are in the hole or only have a very small settlement from the carrier.

 

Dont forget one important aspect of carrier LP. You have absolutely no rights regarding the truck. Why....because the truck is not yours. Actually you are an employee. The avalanche of lawsuits has already begun. You do not control any assets nor do you direct the business. The carrier does. You may think you do.....but you dont. This is what the court uses as the test to consider if you are an employee or not. Its a scheme plain and simple. Its right up there with pay day loans.

Finance a truck and have the title (with or without a lien holder) you have full rights to the truck to lease and do what you please.

The problem is to many drivers get "shiny truck syndrome" and get baited into an LP with out a clue what the heck is really going on. The LP contracts are all different. This is why you need to seriously consider what I posted above. G/man has some pretty basic points and it is clear that he knows what he is talking about because he probably has ran his own trucking business. He uses some business lingo....but do drivers really know what it is? This it is why it is important to understand how to run a business and learn some of the ins and out of finances.

Speaking of finances......before you even consider getting into a trucking business.....make sure your own finances are in order first.

 

I suppose another way an individual (lessee) could come out ahead is this...

Get into a short term lease (12 months?)...test the waters (WHILE ENSURING ITS A TRUE WALKAWAY LEASE)

While you are wading in the proverbial waters...use that time to establish business credit (remember that EIN that you got, to set up that lease agreement?)

Use the available credit building tools i.e. fuel card that gets paid in full, business credit card that will be current etc

At the end of the "lease", you can then exercise the "walkaway" option - if you want - , or if the lease has a good residual (advantage to lessee a.k.a driver) then get a business loan and do a buy out.

Question is: Will the lessee survive the first year endevour, while at the mercy of the carrier's captive program to feed him/her loads to make timely payments and be in good standing?

 

Wanna build business credit? Make sure your own credit is in order first.

Learn the ins and outs of running a business.

Get lease and have it reviewed by a professional.

Dont get souped up by carrier promises. Use your head. Make business decisions.

DONT FALL VICTIM TO SHINY TRUCK SYNDROME!!

 

You could pay cash for a decent used truck for what you will pay a carrier for a lease for a year. You will spend upwards of $900/week for most leased by the time you figure all the extra costs, such as insurance, mandatory maintenance contributions, etc., If you purchase a truck through conventional financing your payments and other expenses should be less than half of that amount. Plus you will actually own the truck when you make the last payment. A fuel card will not help to establish business credit unless you can get an open account with one of the major card companies, such as comdata. Most require payments to be automatically deducted from your bank account or for you to prepay for your fuel. Business credit is not always reported to the credit agencies unless you default. Also, most lenders want to see at least 2 to 3 years of financials on your business in order to establish business credit. Lenders will also usually require the owner to co sign for any credit and possibly put up personal assets as collateral. Another thing to consider is that many lenders don't make loans for class 8 equipment. I have had banks to make an exception due to how long I have been in business and my relationship with the lenders. I don't want to be totally negative here. There are options for those wanting to become an owner operator, other than a lease from a carrier. Unfortunately, many are not willing to do the basics in order to achieve their goals. Lenders like to see someone with experience and good credit. It is very difficult to get your first truck financed without good credit and a couple of years experience in the seat unless you have a good relationship with a lender. If you are disciplined enough, you could stay a company driver and commit to saving money from each paycheck. You could save enough in a couple of years to pay cash for a good used truck. It is important to have money saved before buying a truck. Even if you do decide to lease a truck from a carrier, it will be in your best interest to have money saved for emergencies. I am a firm believer in making a commitment and then working to achieve your goals. If you really want to be an owner operator then save your money and either pay cash or at least save enough to make a good down payment and have funds left over to see you through a major breakdown. It isn't easy to be successful in this business. But, you can still make an above average income and build a successful business if you are willing to make the hard choices in the beginning.

 

AMEN!

 

In order to make the hard choices....they have to have a foundation/education to do so. This is why I am so vested in drivers educating themselves by utilizing many resources out there.

Dont take stock in lunch counter/truckstop BS. Dont listen to recruiting hungry drivers and recruiters. Dont listen to fleece purchase fan bois who wave a selected settlement sheet in your face trying to convince you its all teddy bear picnic lunches and lollipop dreams. Nor does this mean listening to Kevin Rutherford on Sirrus XM radio for a month. You have to do some work to learn. To many drivers just mentally masterbate about owning a truck and driving their way to riches. These are the drivers that get caught up in "shiny truck syndrome."

What G/man said is correct. But in order to fully digest and fully understand what he (G/Man) is saying take the time to learn how to run a business, how finances work, operational costs, lending vs leasing (truck or trailer), costs....I can go on and on. Learn about credit. Fix your won credit if need be. Its easy to do without paying someone to do it. It takes WORK!!!! ...............and more work.