Lease Purchase

Topic 20821 | Page 2

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Old School's Comment
member avatar

Wow! I'm pretty sure I spotted a definitively negative response from one person in here who is currently leasing a truck. Hopefully that knowledge adds some weight to your decision making process.

As a long time business owner who had a small fleet of big rigs, I never advise anyone to lease a truck. I myself am a company driver who could lease or purchase my own truck, yet I recognize the economic advantages of being a good solid company driver.

If your rational argument for leasing a truck includes the prospect of making more money than a good solid company driver, then it's rationality is completely compromised. I will allow that it may be possible to make a very small margin more than a company driver, like maybe 3%, but it is highly unlikely. One of our lease operators in here recently admitted that less than 10% of the lease operators at his company even survived at all - they were very quickly out of business. If you like those odds, I don't know what to say.

This is one ruthless business. One of the best ways to learn that lesson is to get yourself into a truck lease. All of a sudden you are a business owner who is in charge of nothing. Someone else sales your product, controls your freight, determines who your customers are, and even decides what rates you are going to have to work for. If you don't like it and start resisting, guess who gets to exercise their control over every detail that can make or break you? It's never a good idea in my estimation.

Dm:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Brett Aquila's Comment
member avatar
Amidst all the hate, I'm going to say that Schneider has a successful lease program

Hate? Is that the way you perceive it? Because I perceive it as knowledge that comes from extensive business experience. Wisdom, to be concise. But I realize there are a lot of people who feel they're being attacked or consider it hateful when someone disagrees with them.

And what does that even mean that Schneider has a "successful lease program?" Successful for whom? Who really gets ahead with these lease programs, the companies offering them or the drivers making the payments?

Anyhow, let me throw my hat in the ring and agree that you should avoid leasing a truck altogether. That has always been my stance on the issue and unless there is some fundamental change to the way business is done in the trucking industry that stance will remain.

G-Town's Comment
member avatar

Unolychaos (UHC) wrote this reply to the Leasing debate

Amidst all the hate, I'm going to say that Schneider has a successful lease program. You work off of a load board pull Schneider loads that their agents book. In a nutshell, you dispatch yourself, pay for all overheads yourself, minus anything company equipment related.

Aim for a MINIMUM of $500/day in revenue to be able to cover any expenses including fuel and truck payments, set aside money for taxes, 20-30%, pay yourself only what you need, set rest aside for your business.

As Brett stated, and I agree "what hate"? I read well thought-out, sincere, truthful replies from Old School, Robert (Dragon), etc. Far more in-depth than what you wrote above. There was no hate, no guessing. Passion and conviction for what they believe in? Yes. None of us wants a member of this forum to enter into an agreement like Leasing a truck without first doing everything in our collective power to open their eyes wide to the facts and the pitfalls.

To say Schneider has a successful Leasing program, is based on what? I am sure it's successful, highly profitable for them, otherwise they would not be in the business. They are transferring fuel cost, maintenance cost, downtime cost, equipment cost (lease payments), liability and risk to the driver, in exchange for a nominal increase in compensation. The profit starts with the initial price mark-up of the truck, and only continues from that point forward. Their cost per mile decreases substantially. Etc... Indeed, Schneider Leasing is highly successful, but are the driver's successful? You don't really know. In defense of Schneider, at least they require one year of experience before allowing a driver to lease. That places them ethically above many of the other players in this game.

Leasing MUST be a business decision, because it is a BUSINESS. Period. If you have no clue how to run a business in a highly competitive market, RUN. How many times has that been said? It's not BS. The carriers are very smart, they effectively "play" on the emotional aspect of the opportunity and basically sidestep the importance of the entire business model. No different than the tactics of a car salesman. "Would you like it in red?" It's an emotional buy, no different with this. The only question that matters in making a final decision on leasing; is the increased risk and stress worth the actual and perceived rewards? I use the word perceived as a qualifier because what is considered a valuable reward today, might not be 6 months from now. Is the price of leasing worth the perceived reward of additional freedom, control, and that shiny new truck? For me,...the answer will always be NO.

UHC, considering the amount of time you have been a member, I am surprised at your reply. It lacks depth...and understanding. Have you read Brett and Old School's blog pieces on Leasing? If you (or anyone else) have the slightest, passive interest in leasing at your one year point with Schneider (or other employer), I urge you to invest time in building a war chest of factual knowledge on the subject long before entering into an agreement with them.

OWI:

Operating While Intoxicated

Old School's Comment
member avatar

Unholy already declared to us in another thread that he didn't really care what our thoughts were on leasing. After his one year anniversary he's already determined that he is diving into the lease waters. He's certain that he saw dollar signs down in those depths.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
millionmiler24's Comment
member avatar

Unolychaos (UHC) wrote this reply to the Leasing debate

double-quotes-start.png

Amidst all the hate, I'm going to say that Schneider has a successful lease program. You work off of a load board pull Schneider loads that their agents book. In a nutshell, you dispatch yourself, pay for all overheads yourself, minus anything company equipment related.

Aim for a MINIMUM of $500/day in revenue to be able to cover any expenses including fuel and truck payments, set aside money for taxes, 20-30%, pay yourself only what you need, set rest aside for your business.

double-quotes-end.png

As Brett stated, and I agree "what hate"? I read well thought-out, sincere, truthful replies from Old School, Robert (Dragon), etc. Far more in-depth than what you wrote above. There was no hate, no guessing. Passion and conviction for what they believe in? Yes. None of us wants a member of this forum to enter into an agreement like Leasing a truck without first doing everything in our collective power to open their eyes wide to the facts and the pitfalls.

To say Schneider has a successful Leasing program, is based on what? I am sure it's successful, highly profitable for them, otherwise they would not be in the business. They are transferring fuel cost, maintenance cost, downtime cost, equipment cost (lease payments), liability and risk to the driver, in exchange for a nominal increase in compensation. The profit starts with the initial price mark-up of the truck, and only continues from that point forward. Their cost per mile decreases substantially. Etc... Indeed, Schneider Leasing is highly successful, but are the driver's successful? You don't really know. In defense of Schneider, at least they require one year of experience before allowing a driver to lease. That places them ethically above many of the other players in this game.

Leasing MUST be a business decision, because it is a BUSINESS. Period. If you have no clue how to run a business in a highly competitive market, RUN. How many times has that been said? It's not BS. The carriers are very smart, they effectively "play" on the emotional aspect of the opportunity and basically sidestep the importance of the entire business model. No different than the tactics of a car salesman. "Would you like it in red?" It's an emotional buy, no different with this. The only question that matters in making a final decision on leasing; is the increased risk and stress worth the actual and perceived rewards? I use the word perceived as a qualifier because what is considered a valuable reward today, might not be 6 months from now. Is the price of leasing worth the perceived reward of additional freedom, control, and that shiny new truck? For me,...the answer will always be NO.

UHC, considering the amount of time you have been a member, I am surprised at your reply. It lacks depth...and understanding. Have you read Brett and Old School's blog pieces on Leasing? If you (or anyone else) have the slightest, passive interest in leasing at your one year point with Schneider (or other employer), I urge you to invest time in building a war chest of factual knowledge on the subject long before entering into an agreement with them.

When it comes to leasin a truck, I think companies should make you have 10 years MINIMUM of OTR experience and 1 MILLION+ safe miles and be in the top 10% of your company overall before even allowing it. In that timeframe and with that level of experience, you hopefully should have learned enough to know the business inside and out. That way you could MAYBE (and this is a BIG maybe) be successful at it.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

OWI:

Operating While Intoxicated

Brett Aquila's Comment
member avatar
When it comes to leasin a truck, I think companies should make you have 10 years MINIMUM of OTR experience and 1 MILLION+ safe miles and be in the top 10% of your company overall before even allowing it. In that timeframe and with that level of experience, you hopefully should have learned enough to know the business inside and out. That way you could MAYBE (and this is a BIG maybe) be successful at it.

Being great at doing your job is only a small fraction of what it takes to run a successful business in that industry. Even if you're going to be the one doing the actual work producing the product or service, you're still going to need a huge variety of other things managed. Depending on the nature of the business that could include marketing, bookkeeping, human resources, sales, distribution, inventory, and more.

With trucking you wouldn't have to handle a large variety of tasks if you're a solo lease driver or owner operator who is leased on with a company. But you also have almost no opportunity to distinguish yourself from your competitors, which is critical for turning reasonable profits in any industry.

Being great at your job is definitely not an indicator of how successful you will be running a business unfortunately.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

OWI:

Operating While Intoxicated

Old School's Comment
member avatar
Being great at your job is definitely not an indicator of how successful you will be running a business unfortunately.

That is so true, and something that few people understand. I've known a good many people who were extremely skilled at their profession who failed miserably when they tried to go into business for themselves doing the very thing they were so good at. I also know a very successful man in the Pizza business who couldn't bake a decent Pizza pie if he had to. He's a cut throat competitor and understands marketing very well, but his employees wouldn't dare let him in the kitchen - his cooking skills are non existent.

Chris L.'s Comment
member avatar

I think running a couple years as an company driver has many benefits. I can't comment on leasing but I've been an Owner Operator now for 6 months and so far happy with my decision.

I plan on talking about my numbers after my taxes are done for this year. My experience this far has been good. I've paid off all credit card debt and have a healthy cash emergency fund. I also pay quarterly estimates and fund a retirement account.

I'm still very new to being an Owner Operator and will see what happens as time goes on. So far I enjoy it.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

Old School's Comment
member avatar

Chris, if you have an accountant (CPA) helping you with your taxes I'd be interested in know what they come up with as your actual income for your tax filing. If you're doing it yourself I'm probably not gonna be real confident in them.

You are still in the honeymoon phase of entrepreneurship, and I realize you are aware of that. I'd be way more interested in knowing how you're doing after five or six years. Everytime I tried to put together a realistically succesful business plan for being an owner/operator, it all fell apart around that time frame when I purposely tried to set it up so that I was making more money than I am as a company driver.

The biggest problem that faces owner/operators is that they end up using monies for their personal income that should be allocated for that ever demanding need for the next asset needed to help them produce revenues. This is an asset based business, and without being able to always refresh those much needed assets on an as needed basis this business falls flat on it's face.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OWI:

Operating While Intoxicated

Chris L.'s Comment
member avatar

I plan on having a professional do my taxes. Someone I've used in the past. I've done my taxes myself as a company driver but will go back to using a professional this year. I'll be happy to share those numbers good or bad when I have them.

I was a box truck owner operator for 9 years before getting my CDL. I got burned out on the all day city driving in a day cab. I left that job for the open road type of driving which I still enjoy today.

There's a lot more expense and regulations to driving Class A over box trucks so I know it's not the same but I'm willing to take the risk to find out on my own.

Only time will tell if I made the right decision.

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

Day Cab:

A tractor which does not have a sleeper berth attached to it. Normally used for local routes where drivers go home every night.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
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