Want to avoid getting burned by a lease-purchase agreement?

As someone who got shafted by one of these Fleece/Purchase programs, I wish I had seen this article long before. I made the mistake of equating a carrier's public reputation with honesty and sound business practices. In the end, I had to drive the rig back to where I got it, on fumes, after just 9 weeks. The carrier has since sent me a bill for about $5,700, the balance owed after they re-leased the rig to someone else. This is after I paid through the nose to fix things that were supposed to have been fixed before I signed anything, spent 40% of my time sitting watching company drivers hauling all the freight, and pretty much ended up in bankruptcy.

If you want to start your own company, then that is the way to go. Buy the rig, get your own authority, and build your own customer base. From what I've learned since my negative experience, over 83% of "Lease Purchase" deals are scams, pure and simple. Every one of them claim they are there to help you succeed. The reality is, however, they are like any other business, out to make a profit by whatever means they can, including off of you.

 

I'm hoping you haven't signed yet.

I use to own my own video production business many years back, and by all accounts it was quite successful. I saved my money, borrowed only when needed (usually for new equipment needed for a new project), picked and chose both those that worked for me and those I would work for. I controlled how money was spent on what, where, and when. Much of the success was due to my work ethic, in which I worked nearly 20 hours a day almost every day during the first year, and then hired others to help take up some of the workload so I could enjoy the actual running of the business.

Being a lease-purchase operator is nothing like that. I use to compare it to being a company driver who pays all the bills, but that analogy doesn't do justice to just how uneven the business relationship is. A more accurate analogy would be the share-croppers of the late 19th and early 20th centuries.

You will be 100% tied to the carrier you lease on to. They will make your business decisions, all of them. Your job is to grow the crops they tell you (haul the loads they let you haul), where to buy the seed from (you fuel where they tell you, or else, because they get a kickback from it), and even tell you how to do all this (what routes to take). Oh, sure, you can make your own decisions, but then the price of doing business with them goes way up. Around tax time (read harvest time), you end up owing the carrier ("Massa"). When you want to see the books, they give you "statements" that even most accountants can't make heads or tails of.

If you're smart, you don't go this route to begin with. You do like any other type of business you would get into requires. You save your pennies, get the right equipment for what your business will be doing, get your own authority, and build your business from the ground up. If a customer decides to go elsewhere for their business, or you want to add customers, you can get all the business you can handle, and on your terms.

Just like you did as a General Contractor.

The articles coming out lately are correct, the majority of lease-purchase plans are legal ways to scam honest, hard working truckers for every penny the carrier can bleed out of them. We're talking 83% of them last I checked. They are designed to make sure you fail, pure and simple, some more quickly than others.

They will all tell you that they want you to succeed. But, does it really make business sense that a carrier really wants a potential competitor to succeed? They're not looking for a business partner, otherwise they'd offer you a chance to buy into the business. They are selling you their used equipment that they can't otherwise get rid of, and competing against you with their own drivers.

And, when you fail, they'll just put another "share-cropper" driver in your seat, and send you packing. If you're lucky, you'll come out of it breaking even. Most end up owing, and out of that most end up in Bankruptcy Court.

C'mon, you've run a business before, so you know already the right way to go about it. Don't believe the hype and false promises of "Massa" and become yet another "share-cropper" victim of this type of scam.

 

Where did you come up with this number?

 

Lease purchase=truck rental

Glorfied company driver.

Trucking co's have figured out how to get YOU the driver to PAY them to work for them instead of the other way around.

 

I don't get it. Why don't people do the math. I'm not a driver yet. I looked at a lease program from I think Swift. Doesnt matter bet there all the same. Anyway I could lease a used truck for X dollars a wk for x amount of time Did the math. The total was 3 k short of buying a newer truck and at the end of the lease period I still have a 50k ballon payment before the truck is mine!!!!! What????? That was a real eyeopener!!!

 

Not defending leases but I think you forget the small detail that is the interest rate when buying that truck.

 

you have a point. I just did a little netsurfin to see truck prices. Didn't look at interest rates although it did cross my mind. However I don't think the interest rate on the loan would amount to half again the price of the truck. But I could be wrong on that one. I'd still rather buy than lease. My big problem would be coming up with the down payment. The ONLY nice thing I see about leasing from the company. But not nice enough.

 

ooida has a great article on their website that gives you the questions you need to ask b4 sgning a lease purchase contract.. everyone considering should read it.. then just say no to lease purchase

 

I've been a company driver for a long time. I've heard too many horror stories about lease-purchases to ever get involved in one. I think my best bet is to save and buy a tractor outright to make any real money for retirement.

 

Folks I read posts on many forums and blogs where the topic, to lease or not lease, is discussed. Just like many of you, I too am infatuated with the thought of truck ownership. When I first decided to get into this life of trucking, it was my only thought. Also, I am in a pretty unique position in that I started in this business with a sizable nest egg that would allow me to pay cash for any new truck on the market; even a small fleet if I had found a way to make it work. I had money to invest from a previous business venture that ended in the past few years. Initial instincts would tell most to pay cash and avoid finance charges; financial advisers strongly advised me against that due to taxes, depreciation schedules, and other investment opportunities, etc.

After many disappointments when trying to secure freight contracts due to insurance and legal issues, in addition to advise from others, such as attorneys, I opted to drive for a common carrier to gain experience and to look at other forms of ownership. I invested the money I had; mainly due to IRS re-investment timelines and penalties.

I then applied to every company and was hired by Swift. I trained with an O/O leased on there; he is a 14 year veteran, a prior successful lease operator, and has now been an O/O leased on there for about 6 years; he is a successful truck driver. I learned a lot from working with him. After being there about 3 months I decided I would purchase a truck through Freightliner directly and have my holding company act as the bank and lease on to Swift. Prior to making a move I discussed at great length with Swift management; right up to the top. In the end they were open to the arrangement and I thought it would be a done deal. However,... insurance had their say. Swift's insurance company said "NO." Even with top management fighting for me it would not be accepted; "6 months OTR/Regional required or no deal."

I believed I could make it happen somewhere, so out I went looking. I talked to every carrier out there and the answer was "NO." HOWEVER, if I was willing to lease a truck through several of the companies they "could make it happen."

I had the companies each send the lease offers to my attorneys and my financial advisers; each of the people looking at these plans have worked with Shaffer, Schneider, and several others over the years setting up company structures, etc; these are people that understand trucking operations. In the end I was shown that "NONE OF THE LEASE DEALS WOULD WORK OUT IN MY FAVOR UNLESS THE LESSOR WOULD GUARANTEE 2800 MILES A WEEK FOR THE PERIOD OF THE LEASE." 2800 was the average break even point under most leases that were reviewed. We asked each of the companies if they would guarantee 2800 miles in 5 days for a solo driver; there were no takers.

I opted to NOT take on a company lease program as I have no desire to work 70 hours a week, carry all the risk, and make the same amount as I do as a company driver. If there is a worthwhile lease program for a SOLO driver, I have not seen it. For now, I drive to gain experience, someday I will be an O/O; when the deal is right.

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