Leasing Just For The Pay Bump.

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Rigs's Comment
member avatar

So I’ve read through the forums and I realize that the general consensus is lease to purchase programs on the whole or a scam. But what are you guys think about a driver he’s currently making 1200 a week but the release program would be making $2000-$5000 a week after the truck payment. If I pay off the truck in the end that’s a bonus but just getting the extra pay Bob doing the same Miles seems worth it in my mind just wanted to get your guys thoughts on this if I’m missing something let me know but in my mind an extra thousand dollars a week to go towards saving for my own truck paid cash seems worth paying their truck payment.

Old School's Comment
member avatar

Vince, it's important you know the difference in "pay" and "revenue." Once you lease a truck you're in a business of your own. You are no longer an "employee." Your check is no longer your "paycheck." There's no way you should consider it a "bump in your pay." It's clearly not. Otherwise if you were worth that much to the company they would be paying you that much now.

Your check will be your revenues that you've produced. Those revenues will be reduced by your expenses. You didn't mention them because you actually don't know what they are yet. Trust me they're going to exceed your most liberal estimates. Trucking companies lease trucks as a great way for them to control, or fix their costs (expenses). That means they make more money off the trucks they lease out.

Now, if you think they can pay you an extra couple thousand dollars each week and still make more money off of your efforts, then jump right in there. Just so you know, national averages indicate trucking companies are making profits in the 3 - 5% range. There's no way you can make that math work in your favor.

I'm just trying to be real with you. I understand the temptation, but it's not going to give you more income. You'll see bigger checks, but the money isn't really yours. That's the reality of running a business. I know it well. I did it all my life. I would deposit tens of thousands of dollars each week. None of it did I ever consider as my pay - it wasn't.

HOS:

Hours Of Service

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

Vince, it's important you know the difference in "pay" and "revenue." Once you lease a truck you're in a business of your own. You are no longer an "employee." Your check is no longer your "paycheck." There's no way you should consider it a "bump in your pay." It's clearly not. Otherwise if you were worth that much to the company they would be paying you that much now.

Your check will be your revenues that you've produced. Those revenues will be reduced by your expenses. You didn't mention them because you actually don't know what they are yet. Trust me they're going to exceed your most liberal estimates. Trucking companies lease trucks as a great way for them to control, or fix their costs (expenses). That means they make more money off the trucks they lease out.

Now, if you think they can pay you an extra couple thousand dollars each week and still make more money off of your efforts, then jump right in there. Just so you know, national averages indicate trucking companies are making profits in the 3 - 5% range. There's no way you can make that math work in your favor.

I'm just trying to be real with you. I understand the temptation, but it's not going to give you more income. You'll see bigger checks, but the money isn't really yours. That's the reality of running a business. I know it well. I did it all my life. I would deposit tens of thousands of dollars each week. None of it did I ever consider as my pay - it wasn't.

Alittle back story, right now I’m running 1099 as a company driver for “20%” of the load. So I understand revenue in the sense that I keep track of my “profits” f and pay expenses right now but im reimbursed so I won’t be able to write them off. Basically right now I’ve been running as if I’m a lease operator but I’m getting no deductions and only 20% of WHAT THEY TELL ME THE LOAD IS. When I was hired I was told there would be transparency and I would see rate cons from the broker. I’ve yet to see one. I run 600+ miles a day and it’s important for me that I see I’m actually getting paid what I’m supposed to be paid. I’ve run the rates by owner operator friends, friends who broker freight and I’ve looked at the national averages for my lanes; they’re all low. When I asked my company to show me some proof that the 20 they have been paying me adds up, I was given the run around and told that nobody ask to see what the Rae contracts say and it would be too difficult to show a driver like me rate contracts. Basically I was told that I would have to just trust what I was told. I save. I have a phone bill and buy groceries, everything else I’m putting away to buy my own truck. Even if after my expenses and the truck note is paid if I only make a $1000 a week as a lease operator, that’s almost all savings if it’s a walk away program on a warranty truck. And as a lease I would see what the load pays.

Basically what I saying is, isn’t it better to make a truck payment and a little cash, instead of just making the cash and owing taxes with no deductions on that cash?

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

Rigs's Comment
member avatar

Also old school, they are putting me on flatbed. End game for me is running my own flat/step. So getting that training under my belt is appealing. The company I’m with right now is pushing me to run on Personal conveyance and the other day asked me to drive a trailer missing all but one lug nut to get repaired 50 miles away to avoid the cost of having someone come out and get the truck legal to drive. The biggest thing for me in these early years of having my CDL is keeping people and myself safe and keeping my CDL clean. That’s not a priority for these foreign guys. Getting my flatbed feet under me with a company that has the power to do things right sounds good. It’s a walk away lease. Let the house win while I save to make my own casino.

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.
Chief Brody's Comment
member avatar

Rigs simplifies his question.

Basically what I saying is, isn’t it better to make a truck payment and a little cash, instead of just making the cash and owing taxes with no deductions on that cash?

You're question is akin to asking " if a frog had wings would he bump his ass when he hops?"

The answer to both questions is " sure." That is if your question assumes the " little cash" is non- taxed.

But that is not necessary the case. As Old School points out trucking like any business profit is revenue minus costs and expenses. You say you understand this but your question says otherwise. No experienced businessman would ask if tax-free money is better then taxable money.

OWI:

Operating While Intoxicated

Sid V.'s Comment
member avatar

Rigs,

The terms 1099 and company driver shouldn't even be in the same sentence. You're either one or the other.

Why not go to a reputable company like tmc to train for flatbed if that's what you want to do while saving up for your own equipment.

If you're making payments on the truck you should be making somewhere around 80% of the load. I've never heard anyone making 20%, cause that would be like $1000 net before fuel and expenses.

EPU:

Electric Auxiliary Power Units

Electric APUs have started gaining acceptance. These electric APUs use battery packs instead of the diesel engine on traditional APUs as a source of power. The APU's battery pack is charged when the truck is in motion. When the truck is idle, the stored energy in the battery pack is then used to power an air conditioner, heater, and other devices

Old School's Comment
member avatar

Vince, I can tell you've put a lot of thought into this. I understand your frustration with the way your current employer is handling your pay. It's one of the main reasons I discouraged drivers from working as a 1099 contractor and getting paid a percentage of the load. You hit the nail on the head when you said you were getting paid...

20% of WHAT THEY TELL ME THE LOAD IS.

I get it. I honestly do.

It sounds like you are fairly frustrated with this company. Is this going to be the company that you will be leasing from? I ask because it sounds like you already don't really trust them. That sounds like some bad medicine to me.

Here's the deal Vince. I have never seen a truck lease that I thought was worth messing with. I have strictly kept myself operating as a company driver. People have a hard time believing me, but I make considerably more money than my friends who lease from the same company employing me. I was a business man all my life. When I finally closed my business and decided to drive a truck in my later years I wanted to do it as an O/O. After spending a lot of time studying the numbers I never could bring myself to "pull the trigger." I could never make it come out on paper where I was doing better than I could as a competent efficient company driver.

I just can't encourage you toward a lease. I can't even encourage you to be an Owner/Operator. I'm not convinced it's a better way to go. You say you've got O/O's who are helping you with answers to your questions. I've talked to a lot of O/O's over the years. Whenever I can get one of them to be honest with me, I find the income their accountant comes up with at the end of the year is less than a really good company driver receives. They love to talk about their revenues, which sounds good to the uninitiated, but i know that revenues don't mean a thing. In business, what you keep is what's meaningful. Their accountants show them what their income is for income tax purposes, but that same number is their real income. It's silly for them to go on thinking their revenues are their income after their accountant has told them what their true income is. It's worse than silly, it's delusional.

I'm proud of you for jumping in here and asking questions. You already knew we would advise against it. That tells me you have some doubts or some questions raging in your mind. I hope you will take into consideration the things we teach. I'll just put it straight to you. I have personally discovered that being really good at this job is how you make good money at it. I have worked for the large carriers. The very ones that you will hear most O/O's bad mouthing. I have made some very good money. I've never been a trainer or a lease operator. My company has these recruiters call me at times to try and sell me on the idea of being a trainer. They try to tempt me by telling me their highest paid trainer is making 90,000 dollars. They don't believe me when I say I would have to take a pay cut if that's the case. I've had a few of them contact my driver manager just to confirm it.

The way I teach truckers to increase their income is to learn to be more productive. I have a friend who wants to make a thousand dollars a week. He's satisfied with that. I think he's crazy. I remember when I was making a thousand bucks a week. I thought it was nice, but I could see all kinds of money I was leaving on the table. I'm just programmed that way. I want to be the best I can be at anything I'm pursuing. I'd say find yourself a company that won't push you to do things illegal or unethical. Do everything you can to improve your own levels of productivity. Trust me you can always do a better job at this. I have a thousand tools in my tool box that I have developed over the years. I make sure that I am making things happen out here in my favor. Once a trucking company finds a driver that can handle the challenges out here and still be safe and productive they will get behind him with all the miles and freight they can give him.

My suggestion would be work on trying to figure out a way that you can be more productive. That's where the big money in trucking is.

Driver Manager:

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.
PackRat's Comment
member avatar

I can't wait to dig into this one tomorrow.

Too tired tonight.

Rick S.'s Comment
member avatar

Leasing a truck - is like BUYING A JOB.

And a lot depends on what you THINK the benefit is going to be. Are you thinking you'll end up OWNING THE TRUCK - and then you can take your ball and go play elsewhere? Like every lease (cars/etc.) there's still a BUYOUT at the end.

Then there's the tax DISADVANTAGES. And if you are working for a company using their equipment, and are a 1099 employee - you are BEING MISCLASSIFIED (and in some states, this is even ILLEGAL).

We have a couple of folks here that have leased (and one or two that even completed a lease and turned the truck in - choosing NOT to buy it outright). We even have one or two that OWN their truck and are "leased onto" a company. Maybe they'll chime in and discuss rates versus overhead.

But the company that leases you the truck - is like the mafia in Goodfellas. Broken down for a week - F YOU GIVE ME MY MONEY. Need a week of for personal reasons - F YOU GIVE ME MY MONEY. Get stuck in a blizzard for 4 days - F YOU GIVE ME MY MONEY. Hit a piece of metal on the road and need to replace two drives ($5-700), and don't have enough in your maintenance escrow account - F YOU GIVE ME MY MONEY.

Again - if you are doing this to OWN A TRUCK (which we also pretty much don't recommend, especially for a beginner)? Get a couple of years under your belt - save for a DP, and there are LEASING COMPANIES that are not associated with a CARRIER - so you can lease/purchase and go WHEREVER YOU WANT (company-wise) with your truck.

The CPM I'm seeing for lease/OO is somewhere around $1.25-$1.45. Guys I know that own, won't even start the truck for that rate. That's what the S Florida to "get back north into the lanes rate" (gas money gigs) looks like.

Now - I haven't looked at the load boards in awhile, so I'm not current on what rates/lanes are looking like recently.

But LEASING from a company, takes all the responsibility AWAY FROM THE COMPANY, and puts it ON YOU. And for a NET/NET in your bank account - only MARGINALLY MORE (assuming no breakdowns and you stay out 48 weeks a year) than just HOPPING IN SOMEONE ELSES TRUCK AND DRIVING.

And as a NEWBIE (even with prior experience running a business) - it's NOT THE KIND OF ADDITIONAL STRESS to take on, their early in a career where you are still learning the ropes.

And you are right to be leery of a company that tells you to run Line 5, or drive equipment that might put you OOS if you get stopped, ESPECIALLY if they are paying you 1099.

RUN FOREST - RUUUUUUUUUUUNNNNNNN...

Some people just get an idea stuck in their head - and have to find out the hard way. The best we can do, is give advice based on our own experiences in the industry, an (for some of us) as prior/current business owners.

Add to that - in the political environment at the moment - NOW IS NOT THE TIME TO GET INTO LEASE/OWN A TRUCK. Pete Buttigieg as Secretary of Transportation? GOOD LUCK WITH THAT. Although not as "incestuous" as Cocaine Mitch McConnell's wife (Elaine Chao) as SecT - I'm pretty sure the industry is NOT going to see improvements that will BENEFIT TRUCK OWNERS.

A decision like this (lease/own) means you have to look at THE BIG PICTURE - not just what's outside the windshield in front of you.

GET ON WITH A REAL COMPANY - RESIST LEASING FOR AWHILE until you learn the ropes, and see which way the "political winds" will affect the industry.

But like I said - some people just get an idea stuck in their heads (I happen to be one of them), and you have to look at this from ALL THE ANGLES before jumping in. DON'T LET YOUR NEXT EMPLOYER SUCK YOU INTO LEASING (and many PUSH IT HARD - again - the COMPANY BENEFITS WAY MORE THAN THE DRIVER DOES).

Best of luck to you - keep us posted. I have YET TO HEAR of someone that jumped into leasing (especially this early in the game) that came back and told us HOW GREAT IT WAS.

Rick

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Stevo Reno's Comment
member avatar

I think of it like this.... Which ever company is leasing as well as company drivers. They would be more apt to give most of the best loads to company drivers.

Since company drivers are paid by the mile hence the company gets more of the load value $$

Than a lease driver? They may figure to give juicy 1st loads then taper off. Not like they care how long you hold the lease. They will find another newbie to lease that same truck to. I may be wrong but my trainer was lease and was times we sat more than we ran..... And his DM didnt really give 2 hoots. Few months later he walked away due to a fued over who was paying for a repair on his older truck (650k on it).....So he quit after company tried to blame him at fault.....His story

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.
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