loop hole with leasing or leasing to own a rig

While I can't possibly add anything more here, CHOMPI is dead on.
People like this are candy for the leasing companies and in 6months to a year, the driver will be forced out
and likely file bankruptcy. Asking for companies that do not require a downpayment is a big clue on
how much trouble you likely will get in here....

Know this...whatever/whenever your leasing...you do NOT OWN A THING!
I honestly don't know how guys can call themselves Owner/Operators when they lease.
Cause they don't own a dam thing....

 

Hmmm... imagine that!

 

The "Loop Hole" is what you put your head into when you sign a "Lease purchASS agreement."

 

Rednecktrucking, CALM DOWN and there is no need to cuss at people because they are stating the truth about things. You have to take to heart everything they are saying, because there are a lot of people that jump into the lease purchase deals. Some people fail, not because they don't know the industry but because of the other factors involved, and some make it to the end to pay off their truck. There is alot involved in becoming an owner operator or a lease purchase driver because they are two completely different classes. A O/O owns their truck (through a bank or outright) and they can take it to any company they want to, or they can get their own loads off the loadboard. A L/P has to stay with the company until the truck is paid for and the title is in hand.

The only loop whole that some companies give is a walk away lease, which means they keep all the money paid into escrows by you, the truck, and your pride for trying. The thing that I caution most to people is to do research about every company that offers lease purchase and that includes talking with drivers who work for the company. A recruiter will sale you on the world of dreams, but it will be a driver that will sale you on the truth about the company and their policies. I always tell people that if you have a truck payment of $600-800 dollars a week, $1400-1800 in fuel, .10 cpm for maintenance escrow, $100-250 a week for security deposit, 100-250 a week for plates,permits, and insurance, a deposit on qualcom or peoplenet of $18-50 a month, and $20 per month for a riders policy...that is 2400-2700 a week that has to be paid. Those type of numbers does not warrant for success especially if they are only getting .92-1.00 cpm and fuel surcharge. The numbers given doesn't include scales and tolls either. When looking at companies that offer L/P ask what the truck payments will be, what type of equipment they have, what the mileage range is, what do they pay their l/p drivers (cpm/% based), fuel surcharge rates, payroll requirements, deposits on escrows, how much is their plates, insurance, and permits, how much is their qualcom or peoplenet, do they offer a riders policy, do they file the IFTA taxes or do you, Do you file the over the road highway tax or do you? There are many more questions, but these are the major ones that you want to find out.

I am not downing you for your desire to get into this, but if you have less then a years experience then I really do suggest to drive for 1-2 years as a company driver, and really learn the transportation business. There are always unknown variables that happen in this industry, and it is knowledge and experience on how to handle the situations...and the experience as a company driver will give you a better advantage then fresh out into this industry with no knowledge.

 

I agree very much with mamamullins. There are folks who are successful at leasing, but by and large there are also a large number of folks who fail. Why? The odds are stacked against you in the first place. Getting that initial experience so you know how to run a load, packing away enough money to carry you through the difficult times, getting enough knowledge in terms of business, how a class 8 CMV works - all of this is what you need to even things out a bit in your favor.

 

That was so right on it needed to be repeated!

 

I'm not beatin on ya and I'm glad ya got the go get em atitude. BUT that and a good mecanical background will only HELP. It will not assure your sucssesful. there's nothing wrong with being a company driver, heck thats the best thing you can do ! Learn on someone else's truck and get PAID TOO! I've been my "own boss" before and DON'T want to try it in trucking. Be a company driver for awhile, save some money then make the decision.

 

Would you marry someone before you even know their name? That is pretty much what a lease purchase is. If things start going downhill you are locked into a financial nightmare.

You have a great attitude towards working hard. You need that for success. However, it does NOT guarantee success. A lease purchase, you will be under someone's thumb 24/7/365. They might start you out great, getting 3000 miles a week. What do you do when they hang you out to dry for a while, then when christmas or thanksgiving or your wife is giving birth, they give you that 3000 mile load? Do you take the load to keep your truck or do you take the time off and now can't make the payment? These are SOME of the games that they play and you need to be aware of them. Life is much easier when you just go to work and collect a cheque.

Run the numbers and figure out what you need, per mile, per day, per week, per month, per year, to make it work. You will find there are several ways to calculate your cost of operation. Do you know how much truck tolls are? How about MPG? Fuel card fees? Scale tickets? Fuel tax? I am not trying to come off as an a-hole here but you need to know your costs before you jump in.

 

There are a number of carriers that will lease you a truck with no money down and no credit check. You will essentially be a slave to the truck until the lease is completed. None will allow you to take the truck to another carrier. Some are a straight lease with no possibility of ownership at the end. There are those carriers who do offer a buyout at then end. It seems to me that if you are looking for a loophole to get out of a contract before even signing it, that you have no intention of completing the agreement. Even with impeccable credit and a few years experience, I don't know of any lender who will finance you a truck with no down payment. You will usually need from 10-30% down. In addition, you will need money to pay for your insurance, 2290 and fuel to get to wherever you may lease the truck. Most lenders will require from 1-3 years experience as a company driver plus the down payment before making a loan. You will also need decent credit.

There are really no shortcuts to true truck ownership. Very few lease operators complete their contracts. If you have read some of my other posts you may know that I saved my money and paid cash for my first truck and trailer. You don't need a new truck to make money in this business. While I don't mean to discourage you, many fail in this business. The two primary reasons are lack of experience and lack of money. If you don't have the discipline to save money for a good down payment and start up expenses, then you probably will have a difficult time to make a go of it as an owner operator.

If you expect to be successful in any business you need to do your homework. You need to learn about this business. The best way to learn is to work as a company driver for a couple of years. While you drive you can make a good living. You can save money out of every check and have enough in a couple of years to either pay cash for a good used truck or for a good down payment. Some carriers require a year or two experience before they will offer you a lease. The minimum amount of time that I know is 6 months. Personally, I don't think that it makes good sense for most drivers to buy a truck with only 6 months experience. In that short amount of time you are still learning how to drive the truck.

I know a couple of owner operators who came into this business with no experience and made a success out of their business. Both had deep pockets and good credit. Both nearly lost everything until they learned enough to start to make money. Both paid cash for their equipment and ran their own authority. There is nothing that is cheap in this business. You can still make a good living either as a company driver or an owner operator.

A few of us have owned trucks for many years. Some of us have been in business for several decades. You can choose to take our advice or not. If you really want to be a successful owner operator, then you may want to take a step back, read what has been posted and rethink how you want to accomplish your goal. Don't let your wants dictate what is a good business decision.