Posted: 6 years, 10 months ago
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Owner Operator vs Lease Operator question
I am starting CDL school Monday, so I admit I don't have a lot of knowledge of the industry.
My question is in regards to a post on another forum (I'm leaving out the company details because they're not really relevant to my question). I was a business major in college and have always had an entrepreneurial mindset/spirit.
One thing that appeals to me is the ability that I can become an owner operator and have my own small business.
So, here's what I read in the forum:
The truck costs about $1000/week including the lease, and all other expenses, Fuel will cost around $.35 to $.55 per mile at $2.50 per gallon (4.5 to 7 mpg). At 2400 miles per week, the lease costs $.42 per mile, fuel costs ($2.50 pergallon at 5.5 mpg) about $.46 per mile. Add these up and you get $.88 per mile as costs. The fuel surcharge that you will be paid at $2.50 per gallon is $.25 per mile. You are paid $.84 per mile as a lease driver. You can do the math, but at 2400 miles you will make $.21 per mile. The starting company driver will be paid $.32 per mile.
Now to my question:
Do companies allow owner operators to purchase their own truck outright, or financed through a loan instead of a lease? If you have a monthly payment of $1000 instead of weekly, that equates to a little less than $.10 per mile as opposed to $.42 per mile. That's an additional $.32 per mile toward your EBITDA.
I read so many people doing these lease options, and either I do not understand the industry well enough, or they do not understand business well enough. Some of them it's VERY clear they don't understand business well enough.
The reason for my question is because my plan (as it stands now with my very limited knowledge of the industry) is to find a carrier to sign on with as a company driver. I want to stay with a carrier for 5 years while straightening up my credit and becoming debt free, and also because with most companies, I'll be 100% vested in the 401k and I will be able to roll the company match contributions over to a ROTH IRA. In this time frame, I should be able to save up ~ $100k of which I would use $75k as a down payment on a truck and the rest as business startup capital and working capital. I'm anticipating making $35-40k my first year and $40-45k the other 4 years. If I end up making more, great that just improves my position when venturing out into the realm of owner operator.
I'm going in with very low expectations, because at this moment in time, I have very low needs.
Posted: 6 years, 10 months ago
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Owner Operator vs Lease Operator question
Thanks for the info and input, Rainy. I guess I didn't do a good enough job making it clear the numbers were not mine, and they were from another forum I read.
What I was trying to ask was if an owner operator can just buy a truck outright instead of leasing a truck. My plan is to remain a company driver for at least 5 years. I admit I don't know much about the industry, so I don't know if the numbers I quoted were accurate or way off.