To lease or buy? That is the question.......

DSK333 · Mar 26, 2018

SteveScott said: ↑

And it amazes me how many people get into trucking with ZERO business experience and think they can pull it off. That's the primary reason that over 80% of new O/O's fail in the first year. They greatly underestimate the costs involved, they don't put enough (or any) money aside for breakdowns, taxes, or any one of a hundred things, but feel like they have plenty of cash to go out and buy a new toy like a ski boat or motorcycle.

As I stated in the very first sentence of my original post, I'm getting my own authority and not leasing on with anybody. A big part of running any successful business regardless of size is being able to budget and approximate costs before making capital expenditures. Asking advice from people who have done it is part of that process, which is why I'm here.
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I agree but when you get into it more in depth from an Owner Operator perspective you'll really see what I mean.

SteveScott · Mar 26, 2018

driverdriver said: ↑

The payment won't necessarily be less matter of fact probably higher.
Do the math on the quote you received.
2k plus .08
Just on 10000 miles a month that's an additional 200 a week. So now your at 2800 a month.
Many drivers with a good down on a straight purchase are in the neighborhood of 1400 a month.
But again a lease will allow you to get out easily if things go south or you discover its not for you to run your own.
Granted if don't complete your lease there's most certainly going to be a monetary penalty.
Another hopeful is your freight will pay well enough that you won't have to put 10k miles a month on the truck. Lol
And if you do you'll have the $$ to handle that . lol.
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I thought about that, but looking at the big picture I can at least deduct 100% of the lease payments as opposed to depreciating the truck over 5 years and only being able to deduct the interest on the loan. I know it's a trade off, but if I can work free maintenance and full service in the lease deal it sounds too good to pass up, even with the additional for mileage. I won't be venturing more than 1,000 miles from my home each week, so the most I should have is 2,000 a week.

johnnyman1099 · Apr 4, 2018

I have been an owner operator for over 10 years and have gone through many used trucks. From observing many local trucking companies in the Charlotte, NC area and working for them, i realize that leasing is the way to go for me. I am not a mechanic nor do I want to be one. Trucks depreciate too much in 5 years. $2000/month plus the small per mile rates that includes full service is a low rate compared to Penske's rate.

Now, full service can be tricky depending on what it includes. My previous employer were paying more than $3,000 a month of their lease, but it includes all roadside, tires, any mechanical issues and if the truck is down for more than a day, they get a free rental truck. This full service means full service.

I have mostly cash my previous older trucks and the maintenance and down time cost more than $3000 a month on a yearly average. Most guys does not factor in downtime.

VagaWheel · Apr 24, 2018

Hi SteveScott,
Could you please dive an update of your story, how did it go?
Have you finally leased? What about Insurance, what have you found for your new company?

I am asking it, because I am also thinking about starting my own trucking company

SteveScott · Apr 24, 2018

VagaWheel said: ↑

Hi SteveScott,
Could you please dive an update of your story, how did it go?
Have you finally leased? What about Insurance, what have you found for your new company?

I am asking it, because I am also thinking about starting my own trucking company
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I had a family emergency that killed 3 weeks for me, so I'm just now getting back on track. I'm still setting up the corporation and then getting my DOT and MC numbers. Once that is done I'll move into getting the equipment leased and insurance. Will post updates as they happen.

darknessesedge · Apr 25, 2018

SteveScott said: ↑

I've been a company driver for the last 3 years and want to try my hand at being an O/O with my own authority. I started driving late in life (age 55) and owned a successful business for 30 years that wasn't related to trucking. So I have a business background and I'm not worried about having a good grasp on running the business and budgeting. Doing my research, the biggest hurdles I see are starting a new business from scratch and the costs involved. I have a sizable amount of cash available for this new venture, but since I'll be creating a new business entity, I won't have any business credit history, and I know that regardless if I buy or lease, the cost will be astronomical for a truck and especially for insurance. Look I get it. Most new trucking companies fail in the first couple years and they have to charge enough to cover the high probability of a loss. So minimizing my monthly costs will be a priority if this is going to work which of course is true for any business.

From what I gather about leasing, most terms run 3-5 years. I stopped by a Kenworth dealer a couple days ago and they ball parked a lease rate for 3 years with full service at $2,000 a month plus .08 cents per mile on a used truck from their rental fleet with 200k or fewer miles on it. Seemed kind of steep for a well used truck until I thought about what a new truck would cost even after a large down payment and financed for 5 years. The advantage I saw for leasing is that I have a low down, service is taken care of by the leasing company as are repairs. If I buy a new truck, I have much higher payments or cash out of pocket, I'm responsible for all service, and repairs are all on me after the warranty expires. Then I'm left with a truck after 5 years that probably isn't worth as much as my down payment as opposed to just turning in the leased truck and getting a new one with another small down payment.

So are the any small O/O's that have done it both ways with any advice? I really like trucking and hope to do it until I finally decide to retire. But working for a carrier for slave wages is a joke, and they treat you as sub-human. I would much rather be in control and find my own loads.

Appreciate any suggestions.
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buy a cheaper used truck and run it...fix it,,..until you can afford better

VagaWheel · Apr 25, 2018

Steve, thank you!
Looking forward for your updates.
Your story and her progress is encouraging me, because I am also about your age and kind of in the same situation.

By the way, are you filing for DOT, MC, IRP, IFTA etc by yourself or using some company to fill it for you?

SteveScott · Apr 25, 2018

I'm planning on doing it myself. Will let you know if I run into any problems.

Buckeye 60 · May 11, 2018

lease or buy ..... different strokes for different folks either works .... it's a lot better when the thing gets paid for lol .... just waiting for it to blow up .... nothing like the feeling when you get that first title in your name. ... the way the new tax laws are buying is a little better for taxes

SteveScott · May 11, 2018

As long as I'm making enough to comfortably cover the payments, I'd rather have the title in the banks name and a warranty to cover repairs. I'm no mechanic. I've owned a lot of new cars in my life, and it seems like every one that I've wound up keeping beyond the warranty craps out right after the warranty ends.

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