Reasons To Avoid Leases & Lease-Purchase Programs

In today's trucking environment, many companies will try to cut costs by pushing their drivers into doing a "Lease-Purchase" or a "lease" on a truck.
Why do companies do it? Because it's a way for them to get out of paying benefits for drivers and shoulder them with most (if not all) truck operating costs .

As an "INDEPENDENT CONTRACTOR" with the company, you may have some freedoms that you didn't have as a company driver, but you do not recieve Medical/Dental Insurance, 401K, Workmen's Comp Insurance, or any of the benefits that company drivers get.

Also, as an Independent Contractor, you're responsible for paying your own taxes to the I.R.S.

The company will try impressing drivers by throwing some rather huge, 6-figure numbers at you when asking them about earning potential on a lease-purchase program, but remember, that's the GROSS amount paid to the truck before anything is taken out (fuel, road use taxes, truck lease payments, Truck Collision Inurance, etc, not to mention maintenance expenses if the company maintains the truck, or when you have to pay for the maintenance expenses yourelf). They will try to make it appear as though you're making more money, but when you figure out how much it would cost to pay for your own medical insurance and make truck payments as well as cover your living expenses during some of your time off (instead of paid vacations), you will often find out that you're making less money.

One general rule of thumb: NEVER lease or buy a truck from the same people who are giving you freight to haul. They will have even MORE control over your finances than they would if you were a company driver- all while not having to pay any benefits.

If you have aspirations to be an Owner-Operator and are willing to take on the responsibilities, you WILL be much better off buying a truck on your own.

If you want to do a lease or lease-purchase with the excuses of "I wanna drive a pretty & faster truck", "I wanna go where I choose to go!", or "I wanna take as much time off as I want", then you're wanting to do it for the WRONG REASONS. Fuel is expensive enough for the major fleets and that's part of why their trucks are governed to run between 60- 65 MPH. Driving faster than that in situations where you're responsible for fuel expenses will eat away at what little real profit margin that might exist at all, not to mention that when you take time off with a truck that you're making payments on, you are still responsible for making those payments even when there's no money coming in. Besides, with what little freight is out there right now you need to do whatever you can to stay busy instead of being selective, which can cost you a lot of money in unproductive downtime over the course of a year while 'waiting for the good loads' that are often evasive.

Don't fall for any of those "No Money Down And No Credit Check" deals- If your credit rating is lousy due to financial mismanagement on a personal level then it's likely that you will not be able to make it as a self-employed businessperson either. That may sound harsh but it's the reality.

 

Long and short of it..... anytime anyone tells you "We want to help You make more money" put one hand over your wallet, one over your butt and RUN as fast as you can in the opposite direction.

 

Lease purchase is quite simple, everyone and everything gets paid, EXCEPT the Lessee (Driver).

 

Many people I have spoken to, told me they would rather lease a truck and be on their own rather than to work for a company. If you have bad credit you can alwasy just do a 60 month loan with no money down. Lease purhcase is becoming a thing of the past anyways. Banks are realizing its easier to let the truck go than to take it back after a lease. There are new programs out there for folks looking to get into their own truck.

 

Lease purchase is for those who enjoy the carny games on the midway at any two-bit county fair.

 

They may say that when they first lease a truck but wait until they get farther along and see how they feel- especially if they leased it from the company that gives them the loads to haul.

Maybe so but the payment amounts and interest rates are likely to be rediculously high. Those kind of loans are similar to what happens when someone gets an appliance from one of those 'Rent-To-Own' places- they end up paying several times what the item is worth before the loan is paid off.

When we consider that bad credit is normally the result of personal finance irresponsibility, if someone won't manage their own money well enough to begin with they will not make it as an independent businessman.

Those 'programs' are mostly a rip-off. It's too bad that too many don't think about getting a lawyer to look over the contract with them beforehand so they would obtain an understanding of the reality of what they're getting into before it's too late.

It makes more sense to obtain a truck of 'your own' the old-fashioned way: Either pay for it in CASH or get financing with a good interest rate if your credit will allow you to do that. Leasing or Lease-Purchase Programs are definitely NOT the way to go, regardless of what the trucking company recruiters and those with little financial common sense will try to tell you.

 

The best way to describe a fleece purchase program is this: All you are IS a company driver with no benifits that is paying the operating cost of the truck! It's been beaten to death throughout The Truckers Report, you pay the fuel, insurance, truck costs and I mean ALL OF THEM, and go WHERE they tell you to go! You do NOT get to go where you want, take time off when you want, have the truck go as fast as you want! Now you you see where leasing a truck is not the smartest thing to do. Just figure a pay of say $.35 per mile x todays average of 2300 miles against the same miles at the piddling rate of $.89-98 CMP and a ripoff FSC of what a whole $.20+ CPM (wait till I finish ROFLMFAO) Now figure out who will bring home more money at the end of the week IF THEY GET PAID! It's NOT the L/P thats for sure! I'll scan my last pay stub before I had to get off the road due to medical problems just to prove that I did better than any L/P driver! It'll be in my profile in a couple of days.
I also don't have a worn out POS Freightliner either! Thats about the most popular truck on that L/P scam! I still wouldn't do it if they put a Pete or KW on a fleece! But a FL? Part of being a business person is making a wise decision on equipment you buy that will actually have a resale value when it's time to retire it! A POS Columbia, Century or this new junker has NO resale or trade in value! Don't believe me take that rolling junkyard of yours to a dealer and say the words trade in and look at the eyes as they say "sucker just walked in" Don't think that those truck mags are showing the trade in prices! LOL
Go company if at all possible,as these companies that are turning into lease companies are nothing but snake oil salesmen! I don't care if they go to church every week they are ripping you off by letting you pay everything for him as he's still making MORE money off you and that truck than he did when he ran a "company" driver company! I lost all the respect of my boss when he went to all LP. He was a great man until he bought back part of the company that broke off many years ago and kep some of the idiots that couldn't even run an O/O company! They conned him into th LP program got rid of the people who put that company back on its feet back in the late 90's and up till these fools came back to the roost and fired or actually gave us company drivers the option of leasing and most of us had to tell them we aren't that stupid and had to find another place to call home! Oh well when all of these wanna be L/P drivers figure out the scam and word actually filters down to the rest of the world the L/P programs just might come to an end when these scam artists go broke! Lets just hope anyway!

 

Unfortunately, for every experienced driver who ditches any idea of doing a lease or lease-purchase there's at least 5 newbies with closed minds whose theory-only-based thinking that are ready to take their place and fall for those scam programs. Just go take a look at an Orientation Room at Prime, C.R. England, Trans Am, or any of those outfits who has gone that route on any given week and you will see what I'm talking about.

With the economy being so bad, people will fall for a lot of scams out of desperation. When the recruiter tells them about 'the lucrative 6-figure income' they will earn doing a truck lease they envision being able to live in a nice home in a high-end neighborhood with two brand new cars in the garage while puttting their kids through college and taking exotic vacations every year when NOTHING could be further from the truth.

 

its too bad its a scam because it could be a really great thing. They could pay the LP drivers a good rate and give them a good deal on a truck. But they dont. None of them do.

I laugh at people on this forum who have been ripped off more than once on the same scam. And you know who im talking about.

 

The first thing you want to do is make sure the company you sign with actually owns the vehicle and has the title. If not, it's because they are not expecting you to finish your payments and it's a good bet they won't give you enough to do it.
I don't know about now days but that was going on back in the 90's. I haven't looked at one of those since then.