Ready, Set,,,,Here I go.....

You can always pay extra every month and knock the percentage way down too.

 

This just makes -me- mad, and I'm not the one doing it! You're covering all the carrier expenses, so it's not like you're getting any value out of this deal other than compliance, invoicing, and maybe a little float on the money. Without LS, that cost to the carrier would be some number around 5%. Most carriers that do that sort of deal offer a 88-90% settlement on gross revenue. With LS, the fleet owner will do practically nothing to earn that percent of the percent. To be fair, I did not see IRP listed, but that's probably being paid by you too, given the rest. All he'll really be doing is, well... not much more than taking a chunk out of the middle.

I hear what you're saying about a dream truck, but at some point even you need to question that plan. You are clearly getting too emotionally invested in this deal you have. Not being critical of you. Just pointing out what maybe you're not seeing and the rest of us are. Put your business man hat on for a minute and look at this in terms of value, not in terms of how long you've paid into it so far.

That's almost $3,800 a month for chrissakes. I can't even imagine doing that (or even offering it as a carrier) in the first place, but here you are. Did you get a buyout quote? If so, what was it? The first thing is going to be whether that is a fair price for that equipment, as if you were on the sales lot kicking the tires. Or else no finance company will buy it and make you a deal.

For comparison, here is a counter point. I know it is not your choice of equipment. 2-1/2 years ago, I bought a $45k truck from Arrow Truck sales. Not the cheapest possible option. I was ready to step up to a better truck with an eye towards reduced repairs/maintenance costs. With the junk I traded in, I financed roughly $37k for 3.5 yrs. The payment is $1,300 per month. Broken down to a weekly amount that's $300.

The point of this is not to make you feel bad for the situation you're in. I am trying to show you there are better options than maybe hanging on to this one, no matter how deep you feel you are into it. Honestly, the only way I see this working is if the owner gives you substantial credit for payments to date, and the buyout quote reflects that. If not, I really think you need to stop the bleeding and walk away.

 

Well you're in a bad l/p deal with all the facts on the table. Heck, you were in a bad deal before the LS talk. You haven't saved any money. If there is no balloon payment, you owe roughly $70,000 on the equipment. You have been happy so far with the deal so why upset now. Why haven't you saved any money? Is this equipment financed with other equipment on the same note? If so, there is a good chance the bank won't separate the equipment and let you buy it. How likely is this guy's chances to be in business in 18 months? You really need to evaluate the situation From a non emotional viewpoint. BTW, Landstar is 65% for truck, 8% for platform trailer making it 73%.

 

I stepped away to deal with my dog, and thought about this some more. I think another piece of this is some weak logic in justifying the equipment payments. I think our initial (wishful thinking) method tendency is casting that note payment against expected revenue. That is, constructing an "average" business case, without seriously taking into account really hard times. As-in really thinking about where that payment is going to come from when things aren't so average? How many payments can we float with zero revenue? Think about that a minute. It's not just vacation time. It could be an extended breakdown. Or illness/injury that shuts you down for a few weeks.

I'm dealing with that right now. We've been running at about 50% capacity or less for the whole summer. Rates have sunk and freight is lean. Instead of chasing break-even freight, I've chosen to spend a lot more time at home and deal with some low priority maintenance. It's just now starting to sting a little. Had my equipment costs been 2 or 3 times what they are, I could not have done this.

In any event, I've done that kind of math before. Truck can do $5,000 a week revenue so $1,000 a week cost should be easy-peasy. Well, it's not. It looks good on paper, but sucks in practice. There's always extenuating circumstances to make that math go badly. Anything from a slow week to a break down. And the opposite case, a blockbuster week, almost never happens.

Another way I look at this is: opportunity cost. In other words, what could I use that $1,000 a month for if I wasn't spending it on this new truck?

- 500 gallons of fuel
- A set of new steer tires. or two premium drive tires
- Two axle brake job
- 3 regular PM services
- Take $250 more per week as income
- Use that money to fund a trailer payment

The interesting thing about those options are, you don't necessarily NEED all those things every month or at the same time, but you COULD if you had that extra $1,000. If you don't spend it all on something else, it carries over as profit and stacks up. Surprisingly fast, I might add. Truth is, I'd REALLY like to have a nicer truck. However, I have been unable to make the financial case to green light such a deal.

I have seriously considered newer equipment. To the point that I paid for a $1,100 rental for a one week trial. The deal breaker was value. What was the value I was expecting to gain by paying over 2X what I am now? Again, not your dream truck (glider). However, it was a 2015 T-680 with about 10k miles on it. My son had it out for a week. I drove it twice, once bobtail when I picked it up, then loaded to 80k gross, completing a run I made earlier, the day I turned it in. To be fair, it -was- a nice ride. Just not $1,000/mo nicer than what I already drive. There would be an improvement in fuel economy that would cover some of the additional cost, so there was that. Truth be told, that would probably be enough to cover the bump in my physical damage insurance, going from a $45k value to $150k. Of course that would diminish with depreciation, within the restrictions of my finance agreement. It would actually chase down the principal balance, not the actual value.

Then, I thought ahead. We run around 80-100k miles a year. Something like that would be financed out to 6 or 7 yrs to make the payment work. So after 7 years of that, I would end up with a $40k used truck with 600-700k miles on it. Albeit, a "paid for" one. But truly not really "ahead" of the case with older equipment after all that money.

The nail that closed the coffin on that deal came a week after I turned it in. Wouldn't apply to you necessarily, since you are in a glider. Still a little relevant, as it relates to wear and tear. My oldest truck went down with a major engine problem. I called my rental guy. The new truck I had before was already back out, so I got one a little less than new. A 2012 T-700. It made a 750 mile journey and had to be towed and replaced with a Ryder substitute, a 2011 Cascadia. Emission control failure-o-rama. Long story short, I drove 3,000 miles in two different, nearly new trucks with continuous check engine/derate issues and one tow. I'm sitting here thinking that's gonna be me in three years with that $2,000/mo T-680. Um.. no thanks.

I guess my point here is: now that you've had a taste of this maybe it's time to evaluate that cost in a different light. Maybe make some hard decisions based on your now first hand experience. You seem to have the work ethic thing nailed down solid, so I really chuckle when you say you want to just quit trucking altogether. I think if you open your eyes to some alternatives, you can make something work, even better than this deal did in good times.

 

How many miles are on the truck, and is it a condo or midroof?

 

Wish you well SD .......

but you may want to check out other possibilities ....sni choice maybe.

There's no way you can give 18% to the owner.... And pay all those costs.

P.S. @Oscar the KW it's a midroof