New To Trucking. What Is The Point Of Leasing From A Carrier? It's Not O/O And Seems To Be A Scam

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Diver Driver's Comment
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Trav H. I just want to say this that being a true independent contractor is a different animal than leasing a truck from a company in that you are responsible for everything versus the lease where the base plates, fuel taxes, tolls, pre pass, and hut may be paid by the company. Also in the event the truck being leased goes down with mechanical issues the owner may be allowed a rental in order to keep making revenue. There are companies with a bad lease program that can take advantage of drivers but there are some companies out there have a good leas program in place and offer support to their owners.

Just my .02. If you're gonna lease, that's one thing. But for the love of God, stay away from Lease Purchase plans !! The fact that they are "walk away" plans may sound great, but remember, that walk away option extends to the company as well. It's possible for the company to take the truck back, and you're screwed.

Old School's Comment
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Heath, welcome to our forum!

This has always been a controversial subject in here. We've had quite a few unintended "dust-ups" over whether there is a monetary benefit to leasing or owning the truck. Sometimes we just prefer not discussing it because people so quickly take offense by our positions on it.

You made this seemingly innocuous statement...

There are companies with a bad lease program that can take advantage of drivers but there are some companies out there have a good leas program in place and offer support to their owners.

It implies that the driver somehow needs to have the discernment to differentiate between the "good" lease programs and the "bad" ones. I work for Knight Transportation, and have reviewed their lease program. As a long time business owner I can tell it's a "good" one as far as lease programs go. They have fairly persistently approached me assuring me that my track record indicates I could be making a lot more money as a lease operator.

Thirty years in business has taught me many hard learned lessons. One of which is that it takes a miracle to significantly beat the mean averages in any business. Company drivers earn whatever they get, and their pay is based on those same mean averages that affect the whole industry. The only thing affecting a driver's pay that changes when he decides to lease is that he is now receiving a percentage of the revenues he produces. Formerly the company received those revenues and paid the bill's that were connected with producing those revenues.

Once a driver enters a lease program he still has that "big booger" of mean averages to deal with. It never occurred to him as something to deal with as a company driver. Here's where we usually get crosswise with folks on understanding this whole issue. It's real easy to equate those larger paychecks with making a lot more money when we first jump into this. But reality has a way of showing up when we are least expecting it.

Averages sometimes take a little time to settle in on us. We may run an exceptional year or two while incredibly beating the averages, followed by a year or two of ending up getting well acquainted with Mr. Murphy. Averages are like a brick wall in business. It is extremely difficult to move them in a positive direction. I have two friends who are considered extremely productive Top Tier drivers in the dedicated fleet I drive in. They both fell for the leasing hype, and we've been comparing notes for well over a year now. Guess who is coming out on top?

It's hard for new lease drivers and new owner operators to understand that revenues do not equal net pay, and that is a distinction that has to be made. We've had plenty of people jump in here claiming to be making two or three hundred thousand dollars a year as a driver. We always feel compelled to point out the fallacy of such claims. No one has been able to prove such claims to us. Of course we would all be on that bandwagon if it were true.

People really want to believe if they own or lease the truck they'd be making a killing. It's a concept we struggle with regularly as mentors to new drivers, and I guess it's one of those things that we will always be dealing with.

Our position is this: The financial rewards are simply not significant enough to take on the associated risks of owning or leasing a truck. Anytime you are working with averages, both the rewards and the risks must be calculated properly. Whether you're a company driver or owner operator you still face the same odds and mean averages of the industry. The advantage of the company driver is that he eliminates the problems associated with the inherent risks, which are monumental.

There is a lot of misunderstanding around this subject. Even the original poster on this thread makes this observation...

Seems like company driver or O/O are both vastly better options.

He's convinced leasing is bad, but owning would be better. I think it's a false conclusion. It's still got all the same issues, only in a slightly more attractive package. I know people are going to continue to disagree with us on this subject, but as mentors to new drivers we feel compelled to keep them on the right track for at least a few years until they can establish their careers on a good foundation. After that they can go out and find out for themselves that we were right all along. smile.gif

Owner Operator:

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

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OWI:

Operating While Intoxicated

Heath L.'s Comment
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Old school I guess we can agree to disagree over the issue. With that being said, I agree that drivers need to get at least a years experience before really deciding on a lifestyle change. And in some cases it will definitely take longer than that.

Brett Aquila's Comment
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Old school I guess we can agree to disagree over the issue.

Well we'd love nothing more than to see someone prove us wrong. We'd love to learn about a way to own or lease a truck and make way, way more money than a company driver. Show us a nice six figure number around $150,000 or so on the line that says "Net income after all deductions" on that Federal return and we'll be big believers.

Of course we've been telling people that for over 10 years here on this website and I was asking people for that the previous 15 years as a driver but I've never one time had anyone demonstrate that it's anything more than big talk. Never once. We've hurt a lot of feelings and made a lot of people mad by calling them out on it, but we've never been proven wrong.

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