Jun 8, 2009

How To Avoid Losing Your Shirt With A Lease Purchase

In The Midst Of A Career Change?

It's orientation day one of your new trucking job. It took a while to get the CDL, and those backing exercises nearly killed you when you had to do them at the DMV, but that's all behind you now. You're a bona fide trucker....Or so you think.

When you closed the door you opened an entirely new one. The vast world of Over The Road truck driving. Congratulations. Now then, that's out of the way, let's talk about how it really happens. You sign on with a major carrier at first, because it's usually the easiest to get, or possibly you may have even gone through a carrier sponsored school.

After filling out enormous amounts of paperwork for two days, and wondering how your crippled hand will be able to float the gears from writing so much, You company throws a new bone in your lap. It's called a Lease, or Lease Purchase. A Trucking Lease or Trucking Lease Purchase is a double edged sword, in all respects. I'm gonna do my best to try to describe both sides of a Trucking Lease, one being the Trucking Lease Purchase, and the other being a Company Driver. I will also go into my personal opinion as a seasoned driver, and give you a few pointers.

All Trucking Lease Purchases aren't created equal. Some companies make it hard to be a company driver, because they prefer all drivers, inexperienced or experienced, to do a Trucking Lease Purchase with them. A certain "red reefer" company I've heard actually forces drivers to team drive unless they do a trucking lease.

First The Positives of doing a Trucking Lease Purchase:

The positives of doing a trucking lease are pretty simple really. The biggest, by far, being the potential to make more money. When you're a lease operator you make more per mile, usually in the area of ¢.75 - $1.00 per mile, and you have more freedom with the truck. When you do a lease, the truck isn't governed as low as a company truck, or is governed significantly higher than a company truck, which allows further potential to make money, Other obvious benefits include the ability to choose what make, model, and color you want, along with neat accessories, like putting a microwave, or a big inverter in it, that you can't in a company truck. Then there is the neat benefit of being able to purchase the truck, usually at a discounted rate when you complete your lease.

So, The Positives Are Shaping Out Like This
  • More Earning Potential
  • Faster Trucks
  • Choose Color
  • Choose Make
  • Choose Model
  • Ability to put appliances/inverter in truck
  • Option to Purchase and own the truck.
  • ...Chrome (I guess this would be after purchasing it)
  • Own Your Own Business

The Downsides to Leasing a truck:

There are heavy fees involved in doing a trucking lease purchase, such as:

  • Tax withholding @ 15%
  • Truck Payment Per WEEK (Usually in the Area of $300.00 -$800.00)
  • Collision/Comp. Insurance
  • Bobtail Insurance
  • Licenses
  • Permits
  • Fuel
  • Tolls
  • Taxes (Road, Use, Fuel)
  • Taxes (Personal @ 15%)
  • Maintenance/Maintenance Fund
  • QualComm
  • Trailer Rental

These are some of the fee's associated with a Trucking Lease Purchase, and many drivers doing a trucking lease purchase seem to find themselves receiving small/negative paychecks after all of the other associated fees are pulled out of driver settlements. Some of the other downfalls that are not commonly thought about is time off, not being paid for, and being an Owner/Operator doesn't always qualify for company benefits and never qualifies for paid vacation.

Part 2: Being A Company Driver