Celadon Lease Purchase

[Malaki86]

I know that I'm going to get blasted for this, but I wanted to throw it out anyway:

The last time I was in the Indy terminal, I went in and talked to the guy that runs the l/p deal just to get some info (and to waste time). I've talked to 10-15 guys at Celadon who are currently doing the l/p and all seem to be doing well. Anyway, here's the breakdown for it:

Income:

$0.90 per mile, plus FSC for all dispatched miles. The FSC when I talked to him was $0.265 per mile.
$36.00 per hour Detention pay (After 4hrs, paid in 15 min increments, max $250/day)
$150 for loads delivering or originating in the NYC/Long Island area
Tolls paid east of Ohio

Expenses:

$375 per week truck payment (average 3-3.5 years, depending on the truck)
$0.10 per mile Tractor maintenance
$65.38 per week Physical damage insurance ($3400/year)
$8.75 per week Bobtail insurance ($35/year)
$41.54 per week Occ Accident Insurance ($2160/year)
$14.00 per week Qualcomm (Free install/removal)
$17.00 per week CBSI Tax Service
$28.00 per week Base Plates (1st year only)
$150.00 per week security deposit (1st 10 weeks only)
$50.00 per week for the 2290 (1st 11 weeks per year)

$0.04 per gallon fuel discount at Pilot/Flying J (paid at the end of each month)
I know there's a discount for tires purchased at any Wingfoot dealer.

At the end of the lease, the truck buyout is $5,000, which can be made as weekly payments of $200 until fulfilled (or lump sum payment). The l/p deal requires $0 down and is guaranteed to be approved.

As for what I would be responsible for, maintenance-wise, on the truck is only the windshield and tires. Anything else with the truck is covered 100% by the maintenance fee. Of course, any work done to the truck would have to be done at one of their shops, or at a shop approved by them.

Having driven there now for a little over 6 months, I know that with the trucks they have, the lanes they frequent and the type of freight, getting 7.0-7.5mpg is a definite possibility. I currently get 7.2mpg in the Prostar I'm in and I don't even try. I've done a spreadsheet comparing my current pay (before taxes) with what the same miles would get me as a l/p operator. The first 11 weeks I would see an average of a $50/week drop in pay, because of the 2290 & the security deposit. After that, I would go to almost identical pay. The following year (after the base plates), I would be averaging about $100 more per week.

I still have a couple questions for him, such as per-stop pay, if there's any refund on the maintenance fee if, by chance, the truck doesn't need any major work during the l/p period and if there's a refund of the security deposit.

Ok - enough from me - bash away. I'm really starting to lean towards this simply because I'm tired of being a company driver. 10 years in the business is plenty of time for me to know that I either need to take the next step or simply get away from it completely.

[Mackman]

Mal. Do you have any type of cash you can put down on a new truck?? I mean i got a 75,000 truck with 8,000 down. Payment is 1480/month for 5 years. But i have a+++ credit.

[Steel Horse Cowboy]

Sounds better than some other LP deals out there. Here's my questions i would ask:

Maintence is covered 100% by maint fund, but what if the repair is OVER the amount you have in your maint fund???

Can they cancel your LP at anytime? Thus leaving you high-n-dry like some have had done at Prime.....

The payments would avg to be about $1650 a month (some months have 4 weeks, some 5) this is for a NEW truck correct, not a used Celedon truck. If it is for a USED Celedon truck then in NO WAY is this a good deal. You'd be better off going to your bank and getting a loan for a $25,000 truck and going from their. You will save thousands upon thousands of dollars. And if your credit is not good enought to get a loan, then stick with being a company driver till you can get it better.

[Mackman]

I'm really starting to lean towards this simply because I'm tired of being a company driver. .

You are still in a way going to be a company driver. Since you dont own the truck its not like you can take it and lease it on with someone esle if you wanted too.

[solo379]

I would be averaging about $100 more per week.

$100! Wow! And if your truck in a shop for a week, or you get sick, or family matter.... all the deductions are still there? What about benefits, or you don't have any? I also believe you've said that tires is your responsibility? I wouldn't even bother to comment on that crap, but you seems to be a nice guy, and been here for a long time. Get real!

[Steel Horse Cowboy]

The first 11 weeks I would see an average of a $50/week drop in pay, because of the 2290 & the security deposit. After that, I would go to almost identical pay. The following year (after the base plates), I would be averaging about $100 more per week.

WOW, I didn't even see this......... it is a NO BRAINER Mal, DONT DO IT !!!!!!

You would have to be a fool to even contemplate this. There is absolutely no benifit here.

You sound like most guys I know, they are tired of being a company driver, but in the end, it all boiled down to them being tired of driving a goverened truck. I know it sounds basic and dumb, but that was the just of it. If your unhappy being a company guy, why not try a different company, maybe a smaller outfit with nicer trucks and not speed limited...... just a thought. But if you go LP with all the research you have done, then you sir need to go flip burgers LOL

[GMAN]

One thing that you didn't mention in your post was how many miles, on average, you should be running. Another is the cost of fuel in your calculations. If you have been driving a truck for 10 years you should have had an opportunity to put some money back. You should at least have enough for a good down payment on a truck. If you have not been able to save money during that time, then that should be an indicator that perhaps this is not the way you need to be going. In your post you mentioned that you would be making less starting out with a l/p than you would as a company driver. If I could not make more with a l/p than as a company driver then I would not make the jump. Of course, I would not do a lease purchase anyway, but to get involved in one where I would be making less makes no sense. Another factor you should keep in mind is that there will ALWAYS be costs that are over looked when it comes to running a truck. You seem to have already made up your mind, but if it were me, I would either buy a truck outright or stay a company driver.

[Malaki86]

It's not the speed the truck goes. Hell, I've been in a goverened truck for 9 1/2 years of my 10 years driving. The place with the 'wide open' trucks was a disaster and I only stayed there long enough to get my time in to go somewhere else. The last smaller outfit I drove for (about 50 company trucks) was a craphole. I made piss poor money, drove a 2002 Freightliner pushing a million miles. I left because they wouldn't do repairs on the trucks, even after getting an inspection with about 7 or 8 violations. The only reason I stayed there for 3.5 years was because I was home 95% of the time on the weekends (if getting home late friday/early saturday and leaving at noon on sunday counts as the weekend off). They also had no clue what the term "hours of service" meant.

It's also not where I run or the freight I haul. I've worked for companies that weren't forced dispatch. But, because I hate to sit, I don't turn down loads - period. Dumb? Maybe. But it keeps the miles adding up.

What I'm getting tired of is all of the rules put on the drivers now. Not the "run legal, log 100% what you do, etc". It's more of the: don't idle your truck, even if it is 100 degrees and you're sitting in Laredo for 2 days. Don't idle when it gets 20 degrees out either - you have a bunk heater (ya, that's fine as long as the batteries are decent). Don't put an inverter in your truck even though having the ability to have a microwave in here would save me a fortune in food every week. I think what finally got to me was when I was in the shop the last time. My truck turned itself down in speed from 65 to 62 early this summer (within a few weeks of getting this truck) from having to run the truck to stay cool so I could sleep. Well, it's been over 2 months now since I've idled my truck for more than a couple hours total in a weeks time. I had the shop check to see if there was something wrong. Well, turns out that the idle time is cumulative for the total hours of the truck since the day Celadon received it. The truck is at 46% idle time overall (it's a 2009 with 225k miles). The time has to be below 40%. What happens is that they don't reset the idle times when a new driver gets in a truck. So, basically, I won't see a speed increase period. Again - it's not the actual truck speed that gets to me - it's the being punished for needing to, Heaven forbid, be able to not die of heat stroke.

No, the trucks aren't new that they're leasing. I 'think' they're 2008's and newer. A guy was signing his l/p when I was in there. He was getting an '08 Volvo 780. For maintenance, everything is covered (besides tires & windshield - period). If it breaks on the truck, they fix it and, no, no more money is owed, no matter what the cost.

[Mackman]

tires alone for 100 more a week in pay ain't worth it. I just spent 1,400 bucks on 4 new drives about 3 weeks ago. So that mean 14 weeks of no extra pay over a company driver. Steer tires are 500+ 2 of them thats another 10 weeks with out the so called 100 a week.

It doesn't add up. i would walk away from this deal.

Have you ever went to a mack or peterbilt or any type of truck dealer and sat down with a salesman. They do all that they can to get you in a truck of your OWN. My salesman at mack was a big help.

[GMAN]

If you have decent credit and some money saved it would make much more sense to buy a truck rather than get involved in one of these lease deals. If you want to lease a truck there are leasing companies that specialize in leasing trucks to new owner operators. Most want at least the first months payment. Some require first and last or perhaps as much as 3 payments down. The advantage in doing a deal with a regular leasing company is that your payments are likely to be less and you can take the truck anywhere you want.

If it is the idle time and speed that is of concern then there are other carriers that you may want to contact. Like Mackman suggested, you may want to sit down with a dealer and see if you can work something out to buy a truck. I would expect them to require a down payment of from 10-20% down. But, you never know. It is best to keep your options open.

[Steel Horse Cowboy]

First off, miles dont equal $$$$ as an O/O, accessorials and such make you more, plus percentage pay is usually MUCh better than mileage pay.

For example, I have always made more more money running short loads than long haul. I can do 2 250mile runs at $500 a shot a day, so thats $1,000 in my pocket eachday compared to a 2500 mile run at .90 a mile......

I honestly think you should look into working for a different company. You may be settled in, and know yours runs and lanes, but you seem to be unhappy there. Or just hang it up and go do something else all together....

[solo379]

First off, miles dont equal $$$$

Well, it is in a way....But it's $$$$ out of your packet.

[GMAN]

First off, miles dont equal $$$$ as an O/O, accessorials and such make you more, plus percentage pay is usually MUCh better than mileage pay.

In his situation miles do equal $$$$ since he will be running for mileage pay. As you mentioned, he could make more on percentage than mileage, especially at $0.90/mile. I don't remember any carriers who do lease purchase that offer percentage.

[Malaki86]

I've never had any luck whatsoever running % with companies. That's as a company driver pulling dry van. I won't touch a reefer (screw the grocery warehouses and unloading their freight) and I can't do flatbed because of my back. Nothing is decided yet, nor will it be within the next 6-9 months. I still have a couple of bills I want to eliminate before I take something like this on.

The main thing that worries me about outright buying a truck (or leasing one from an independent lease agent) would be having something major go wrong before I have a chance to save up any money. I'd hate the thought of putting a turbo on a truck after only a month or two. That alone would be enough to sink me.

[GMAN]

I've never had any luck whatsoever running % with companies. That's as a company driver pulling dry van. I won't touch a reefer (screw the grocery warehouses and unloading their freight) and I can't do flatbed because of my back. Nothing is decided yet, nor will it be within the next 6-9 months. I still have a couple of bills I want to eliminate before I take something like this on.

I am glad to see that you plan on losing some debt before doing anything.

The main thing that worries me about outright buying a truck (or leasing one from an independent lease agent) would be having something major go wrong before I have a chance to save up any money. I'd hate the thought of putting a turbo on a truck after only a month or two. That alone would be enough to sink me.

This is a good reason to wait until you have some money put together in case something does go wrong with your truck. There are so many people who jump into getting a truck without any resources. It is a formula for failure. If you check out a truck before buying there is a good chance that it will do a good job for you, but anything can happen, even with a new truck. If replacing a turbo would sink you then perhaps you should wait until you can afford to replace it. Repairs are expensive. Unless you have the money or credit to make those repairs, you are out of business. I have seen this happen so many times over the years. A driver gets into a lease or is able to buy a truck without any money or credit and has a major expense. He doesn't have the money to get his truck repaired so he loses his truck and most everything else he owns. I have had to replace a turbo the last 2 or 3 years. The turbo alone cost over $1,500. With labor and parts I wound up with about $2,700 in the repair. If the engine is not a CAT the cost is less, but it is still an expensive repair. Last year I had to replace a transmission. The tow bill was $954. That is not something that is usually covered in any warranty. The truck was down for about a week waiting on parts. By the time the dust settled I had spent a little over $8,100 with the tow, motel and expenses. About 3 years ago I replaced the front power divider in one truck. Parts alone ran almost $1,000. I have since replaced the other rear. My truck was in Nevada with the rear end and I also had to replace a damaged oil pan. Total cost of the repair was about $2,700. In addition to the repairs you could have to pay for a motel, food, etc., which is not going to be included in ANY warranty. What I am trying to get you to see is that it is not cheap to operate a truck. I am not trying to discourage you from buying a truck, but you should be prepared for unexpected breakdowns or expenses. They WILL happen. If you have money saved then you can weather these expenses. If you start out on a shoestring you may do all right as long as everything goes well. The problem is that things don't always go as planned.

[Mackman]

If you start out on a shoestring you may do all right as long as everything goes well. The problem is that things don't always go as planned.

I started on a shoestring. After i got the truck no lie i had 1100 in the bank lol. Was it a smart move?? Hell NO. But it all worked out. If need be i had a credit card with a 17k limit. So if **** hit the fan i had it covered. Now i got alittle over 12,000 in the trucks bank account and i add to it every week. It keeps growing. Knock on wood nothing has yet to happen to the mack.

[Steel Horse Cowboy]

In his situation miles do equal $$$$ since he will be running for mileage pay. As you mentioned, he could make more on percentage than mileage, especially at $0.90/mile. I don't remember any carriers who do lease purchase that offer percentage.

That is what I was saying GMAN, I honestly do not understand how a guy can survive on .90cpm You know as well as I do seeing we have ran our own auth. that damn well Celadon is getting at least $1.50 for those loads if not more.

Only place I know of that does a lease with % is Schneider, but it's not a LP program, you have to buy the truck thru their finance company. But they give you % and also a load board to select from. My best friend runs on this, they call it their "Choice Program" and he is doing VERY VERY well.

Now to the fact that it is a USED 2-3yr old truck, with say 300K miles on it, and you will have to pay $1,600 month for 3 more years? That is just plain ridiculous. That truck will have been paid for 4 times over by then!!!
Not to mention that Celadon has these trucks for sale in the truckpaper for $30,000 outright

[GMAN]

If someone is running under a carrier's authority and helping them find loads, taking care of the IFTA, etc., they do deserve to make a profit. However, I would question how much profit would be considered fair in a situation such as this where Celedon is only paying $0.90/mile. A friend of mine pulls vans and he is getting a lot of loads around $2/mile and that is with one truck and getting his loads from brokers. He has been doing very well on his own. Some of these carriers are getting that much and more on at least some of their loads. As long as they can get drivers to work for $0.90/mile there is no reason to pay more. Most percentage carriers will pay owner operators about 65% with power only and about 75% if they have their own trailer. That doesn't necessarily include the fsc. I have another friend who pulls a flat and is leased to another carrier. He is averaging $1.47 for ALL miles and is doing a lot of deadheading. He hauls a lot of loads that pay him $2/mile with the fsc and after the carrier gets their cut. I know others who are leased to the same carrier who have not done quite as well. When someone works for percentage there is always a good opportunity to find decent paying loads.

If Celedon is selling those trucks for $30,000 then he could probably find one with a payment of about $500-600/month. That is much less than leasing it from Celedon. I believe someone else mentioned Schneider and them paying percentage. I thought that they discontinued that program. In any case, he could get a much lower payment if he bought the truck from an outside source, or at least found his own financing.

[Malaki86]

I was looking at trucks from Arrow Trucking. They have 2007 Volvo 780's autoshift in the low to mid 30's. Yes, I'd much rather buy, if/when I decide to do it.

[RostyC]

Mal, you're smart to wait. That deal is something I would run from. Save some money, buy you're own truck and either lease on with a good company or get your own authority. It's worth the wait to have your OWN truck, then you can make all decisions about your business. Be prepared though, owning a truck can be just as rewarding as it is stressful.