Prime's lease deal. The math gets done.

I'm gonna be honest here. I looked at Prime about 8 years ago. I was just starting out as a over the road driver, but was around trucking since I was a gleam in my old mans eye. After a few discussions with the recruiters I had them send me some info. I sat down with it for a couple of days and at the young age of 22 was left scratching my head on how I was suppose to make money. Even my old man that had his own authority and a garbage company couldn't see the "profits".

I understand that some people fall on hard times and need help to get going again...hence all the lease options these carriers have. But, when you put all your eggs in one basket you are gonna end up on the short end of the stick. You buy your truck, insurance, plates, accounting services, and who knows what else from you carrier... YOU ARE UNDER THEIR COMPLETE CONTROL. The less you rely on your carrier the better you are. I could have my maintanence fund going here a Schneider, but I perfer to have it in my own savings account instead of their accounting. I have so much more to say, but will leave it at this...if they need to teach you how to read their settlements one of two things is going on 1. they are making it harder to read and trying to disgues things. and/or 2 you shouldn't be a l/o or o/o.

 

get some experience, and somebody might listen

 

If you would like to rent a truck and make a little money - try Prime. Ive met drivers who are happy with them. They are big (for lease) like Swift. Some are happy with them, and others cant handle the occupation. DRIVE SAFE

 

I'm not entirely convinced they can't handle the occupation. From what I'm seeing the cards are stacked against even the most basically competent businessman. Under these circumstances only the exceptional businessman can thrive, and that leaves little time to actually enjoy the work given all the necessary problem-solving.

I think a lot of reasonably good truckers will be put off by the wrong idea of what it's actually like to be an O/O if they believe that they actually are O/O's under this plan.

If you can make this work, think of how successful you could be with a good deal and good planning ahead of time.

Buy your own truck, get your house in order, then pick a contract such as this. Give yourself a chance.

 

If you cant handle a lease (driver) as a career, dont do it.!!! Remember, Prime has a walk away lease (if you cant handle it). Truckers have changed alot and its getting crazy, everyone wants 3000 + miles a week. If you cant survive the economy, look at Burger King! Good Luck and Drive Safe

 

So break down what it cost to buy a truck. Finance charges, ins, authority, permits... Some of your "hidden cost" with prime are your yearly permits broke up into 12 payments instead of 1 lump sum.

No question about it, this is NOT a lease purchase program, they don't want you to purchase the truck at the end, they want you to lease another 1.

 

Warranty should have nothing to do with it. The roof, and furnace of the building are fixed assets of the building, and as such, should be the responsibility of the owner. Just as major engine repairs, drivetrain repairs, etc, should be the responsibility of the owner.
I can see the lessee paying for daily and monthly expenses, like garbage, utilities, if they're not covered by the lease. In trucking, wear items, like tires, belts, oil changes, etc, should be covered by the person leasing the vehicle. But major repaire to a fixed asset, like the drivetrain, should be covered by the owner.

 

To clarify a couple of things here...

First on breakdowns, the drive train is covered under warranty from one end to the other. All costs covered by the lessor - Freightliner. They do look at individual cases to see if damage was caused by the lessee, but from what I've seen it's a fair process. If you own the truck, unless it's brand new, you foot the bill for all repairs, with no possibility of obtaining a loaner. The difference in costs between a loan payment and a lease payment can be viewed as insurance that you won't need to have say $30,000 in the bank to ensure that your truck can be maintained.

Second, the excess mileage charge "that you pay to haul their freight," doesn't work that way. Excess mileage kicks in when you run the vehicle over a certain level to cover additional wear and tear on the truck. It's just the same as leasing a car. It's set at a level that a solo lease operator will probably not pay into it often, while a team will.

Third, monthly statements: In any franchise business you get a monthly statement of accounts. People (and computers) make mistakes when compiling these statements, so if you run a Burger King franchise or a Prime truck "franchise" (aka lease) you have to be able to read, understand and check these statements monthly. If you can't manage to do this, you shouldn't be pretending that you can run your own business.

Fourth: I'm a company driver, and I use a CPA to do my taxes since I've been in trucking. It's that complicated. I pay the guy a weekly fee, and he deals. Personally, I figure I'm way ahead on this, but that's my personal decision.

Fifth: The wisdom of leasing vs owning. Again it's a personal business decision. Leasing capital equipment is a viable model used in many industries. When I was engineering, we quite often would lease very expensive test equipment rather than buy it due to the possibility that it wouldn't be needed for the long term, to replace it with newer models, etc. Granted, if you have enough money to make a decent down payment, your loan payments will be lower than a lease payment, but that can't be viewed as "profit." Either that goes into an emergency/vehicle replacement fund, or you're just kidding yourself about the viability of your business in the long term.

Sixth: Robert L. is quite up front with people on the ability to be successful with this business model. You can be a company driver with reduced risk, and the security of a paycheck - assuming the wheels are turning. Or, you can lease, assuming more risk, but also the potential of increased profit to yourself. RISK. That's what it's about in any business. You are risking your capital on the bet that you will succeed and be profitable. I know quite a few successful lease ops who are making more money than I am as a company driver. I know alot who aren't, and they are to a one, lousy businessmen/women. I also know owner ops who have leased out to Prime, and are making a lot of money as well... they all tend to have quite a bit of capital socked away to support their business. The lease allows you to get into the business of trucking as a relatively independent person without having a wad of cash available. It is quite possible to make 2 to 2.5 times what a company driver would.

Seventh: Independence... as a Prime lease op you can refuse any load, and determine how much you want to run, and when you take your time off. As a company type I have some of that, but not all. I can put a PTA out there to get some rest, but I can't take say January off because it's cold. I can't refuse a load - so there is more independence than what you get as a company driver.

Eighth: I see that word "profit" in this thread alot, and I'm pretty sure that most people don't understand the term. It's being used to describe the "bling in your pocket." That's not what it means. It's a term used to describe the net difference between operating costs and net revenue. If it's positive, then that quantity is described as "profit." If it's negative, then that quantity is described as "loss." The "bling in your pocket" is what you pay yourself, which is part of the operating costs of a business. If every cent of your "profit" goes into your pocket, your not running a business. For this to work, you have to pay yourself a salary - just like any other business.

Lease deals are just that... a deal to lease equipment that can then be used to make a profit. Whether that happens depends on how you run your business. There are pro's and con's, and a good deal of luck is involved. You can get leases at most of the larger carriers, Prime included. It's a viable business model for those who are savvy enough to run a business. Clearly, not all people are meant to run businesses.

 

I agree that not all people are able to run a business. From what I have seen with all lease purchase or lease to rent agreements you have the deck stacked against you at the start. When I look into a business oppurtunity I want the deck stacked in my favor.

As for the loaner truck part. I have my truck financing through PACCAR. They don't offer loaner trucks, but I plan ahead and have a account set up with Penske. I saw this as smart considering Penske is pretty much everywhere. So saying you can't get a loaner unless you lease the truck from a company isn't so true. A great business man plans for the worest possible outcome. Also having a nest egg in the bank is a standard if you want to own or lease a truck in my opinion. You may never need it, but it is there just in case. Also if you do the maintence on the truck you know what repairs are coming and can plan ahead. To many lease operator don't know how to do their own maintence. I have seen some Schneider l/o take the truck to a shop to replace wiper blades...you just got to say what the heck.

My opinion on point 5. I will never lease a truck froma carrier. It doesn't make sense to me when I run the numbers. My payments are a lot lower than any lease, and yes that is profit. If you properly care for the truck and use it wisely there is no reason it shouldn't last 10-15 years. My dad has trucks that are 12 years old that he bought new. They ran over the road for about 8 years and then got strecthed and installed garbage packers on them and they run everyday in worse conditions than over the road trucks. My Pete i bought new will last me for at least 10 years. I plan on rebuilding whatever needs it. In the long run leasing a truck in this business hurts you. You have no equity when the leaase is up and what do you do for the next truck if one isn't available.

On a side note. What if the person you are leasing the truck from doesn't pay the lessor. This is just and example and not a true senerio. What if (insert company name here) leased the trucks from Freightliner, then turns around and leases the truck to you. You pay your weekly payments to your carrier, but they don't pay Freightliner. What is gonna happen...Freightliner is gonna repo the truck sooner or later and you have no idea its coming till its to late. Basically you have nothing to show fot it. Do you have any legal recourse on the man that leased you the truck...very little. Its pretty much buyer beware. I have seen this senerio happen, just not with Robert L and Prime.