Leasing For Dummies
 

Can someone please explain to me, like they are explaining to a 5 year old (because I have absolutely no experience or knowledge in the trucking biz) how leasing works exactly?

Like, do I own the truck, or do they own the truck? Do I own the trailer, or do they own the trailer? Am I paying them, or are they paying me?

Thanks!
Jen

If you are asking about leasing a truck from a carrier to whom you will be contracted, then they own the truck as well as the trailer you will pull. You will be called a lease operator rather than an owner operator. Most people who do these programs lose their shirts. The leases are much too high for the rates that they are asked to haul. Some of these carriers charge as much as $800/week and you don't own the truck. Rates are usually low and paid by the mile. Some only pay as little as $0.90/mile plus fsc (fuel surcharge). Fuel alone will cost you about $0.50-0.60/mile. Just taking out the fuel costs doesn't leave much for you to pay for your lease and have enough to live on.

If you are talking about buying a truck and then leasing it to a carrier, then you will own the truck. There are leasing companies who lease trucks to owner operators with a buyout at the end of the lease. Some leases are just another way of purchasing a truck. When you buy a truck and finance it through a regular lender you can often buy a truck with a monthly payment at or less than what a carrier lease will cost weekly.

When you lease a truck from a carrier you will usually not be able to take the truck to another carrier. If you have your own financing you can leave at any time.

Running a truck is not cheap. Unless you have money put aside for emergencies I would advise against doing either program. Most people fail due to lack of capitalization. When something happens to the truck they don't have the resources to get their truck repaired.

When you own a truck and lease it to a carrier you will usually not own the trailer, especially if you pull a van. When you pull a flat bed most carriers require you to have your own trailer. Some will lease or rent you a trailer, but they will expect you to have a trailer whether it comes from them or you get your own. Many of the van carriers do a lot of drop and hook, but some do allow owner operators to have their own trailers and will pay more to use your trailer.

Here Ill make it even simpler. NEVER, NEVER, NEVER lease, or buy a truck through the carrier you work for PERIOD! It is a no win situation, 99% of the time. If you truly lease a truck through like Pacar, your credit better be pretty high, but it is the ideal way to go as almost everything you do to the truck is a tax write off. Heres the way an old man explained it to me. He said you can either pay old old iron ( a used truck) or you can sign a lease on a new truck for the term of the lease and turn it in on another new one. Makes sence. If your credit is good a lease through a bank or other credit lending company is the way to go, but again leasing anything through the company you work for is a rip off.

ok I got it. thanks for the answers! that really helped me to understand :)

Here is even a more simple explanation...... If you lease a truck, you have a 99% chance of never making any money and never owning it in the long run. DONT DO IT!!!!

ok ,guys i m new to this site and have been driving for somebody else for about 5 years,at this point i want to do this for myself and have my own rig ,and i almost got involved in the lease /buy program with a major carrier,but what they told me did n t sound to good to me ,after reading your comments i just set my mind up WONT DO IT

If you want to own your own truck, then save about $25,000 and BUY IT OUTRIGHT. Heck, if you can go 1 year w/o any major repairs and save your money, you could a darn near new truck the following year. truckpayments seem to be everyones downfall now-a-days. And at $2300 a month, I don't blame them. Just fyi, no payment means usually $1,000 a month you don't have to cover.

i d love to find a good company to drive for ,but dont have any idea of which company will be best,any suggestion?

MY payment is only 1400 and i think thats high!!! 2300 is crazy.

What type of freight are you wanting to pull and where do you want to run?