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

I know a guy who has about 70-100 trucks in his fleet . He used
To have drivers , now he has “o/o” ..... I wonder WHY ???? Do you guys think that this guy changed his way of doing business because he thinks is good for the “o/o” ???

 

It’s the business model. Limits liability and the big maintenance variable. Easier to predict costs and manage cash flow without the inconsistencies of breakdowns. With the right freight and system in place it is profitable for both.

 

When he had drivers was profitable for him, now that he uses “O/O “ it is MORE profitable for him.

 

Maybe I should put some light into the topic as a former dispatcher and a person that's been managing such model. Such "time to lease offers" are 99% of the time times to be a driver and not O/O. Mostly this happens when when the market is down, freight is cheap and the trucks in the company have weekly/monthly payments. What they do when you agree to lease is transferring the expenses on you like tolls, fuel, truck payment, dispatch, registration, maintenance etc. Many people and by many people I mean 95% of the people can't make simple calculations and that is okay because most drivers have never owned a truck before and are not familiar with the expenses and costs. At the end of the week you end up with 5K but after expenses your salary/profits is $700-800 a week, in other words better be a driver. On the other hand the company is making it's small profits from dispatch fee. Of course all the expenses vary and that's why you should read the contract but in general the model is the same. They mostly profit from dispatch fee, mileage cut, rate con cut etc. depending on the company. Many times companies are okay to be on the 0 profit so they can have a good control of the taxes at the end of the year. So much more to be said, just wanted to keep it short.

 

I don't think all lease purchases gigs are bad, just most of them. These companies take these new guys or guys who don't know anything about running a business and dangle some shiny new truck in front of them and they sign up in mass.

If you want to be successful you need to be in a position to control your own destiny. You're stupid and setting yourself up for failure if you're a L/P O/O and you're relying on someone else for a miles/loads. I'm not going to let a dispatcher, a broker or anyone else decide how much money/miles I make, especially when they have no skin in the game.

At the end of the day it's a numbers game...so know the #### numbers. Control your cost, sign a lease with fixed maintenance cost, (a full maintenance lease if you can) so you know what it's going to cost you when you brake down, need new tires, blow an engine etc. I'm not talking about these 26cpm funds either. What happens when the repair is more than what's in the fund? Exactly!! Figure out all your expenses for a month, fuel, insurance, fixed costs, salary, truck payment, insurance, etc. Now figure out how many days a month you want to work. Divide the expenses by the number of days. That's how much you need to make each day to stay in the green. Now, figure out how to make the most amount of money, in the shortest amount of miles. Sometime 2 or 3 shorts loads in a day, pay more than one long run over a few days.

Anyway, not all leases are bad, you just got to go in smart and prepared. Before you sign on that line, you should already have your #### together. You need to know how to run your business, know how, when and where freight moves, and what you're gonna do with things go wrong. Too many of these guys just wing it and go out there with nothing more than a wing and prayer.

 

Topic is about trucking companies offering lease not leasing companies offering lease like Penske and Ryder. You can't be in control of your loads and mileage unless you run under your own MC/DOT and you do it all yourself. Take my advice and never lease a truck from a trucking company.

 

Actually you can. Infact, Schneider folks do it all day long.

 

Absolutely wrong, we are talking about 2 different things sir. Have a good one.

 

Ha ha yeah ok. I didn't realize I was dealing with a know it all.

 

I disagree with you . I think you lay down a good argument , but your closing argument should be ALL LEASES ARE BAD.! For some people are ok , but that doesn’t mean that any lease is good .
Some people who don’t have a good credit , some people who don’t have a clue .... they may think is ok until they figured it out or their credit get fixed , then they will stay away from crap like that and you know that .
So when you say “ go in prepared and smart “ do you think you are going to convinced a prepared and smart guy to go and lease ??? Seriously???