Lease Agreement

So I've been trucking for a few years as a company driver now, and I want to get into my own truck and become O/O. I am thinking about leasing a truck from a dealer, anyone knows how that works? Anyone got a sample lease agreement for me to have a look?

Allysa,

I cannot help much with your question, but I do have a question for you.

First, thank goodness you've earned your stripes and have a few years under your belt before taking this leap!

My question is this: Why? What, in your assessment would be different, beside the obvious? The reason I'm asking is, I wonder if it's a matter of having more freedom in/with your truck, as opposed to having to follow company rules in terms of what you can have in your tractor and how things are governed? I'm curious because I intend to consider something similar, but certainly not until I company drive for several years first.

Is it a pride thing for you? Is it an entrepreneurial spirit? A combination? What's your motivation for considering a lease?

I would let Brett answer this and i do think he has some blogs about it as well

We really don't specialize in the leasing aspect. We are committed to helping folks get their career started off right. We aren't committed to helping folks get into financial ruin (which is what your plan sounds like and what leasing is all about).

I would however suggest you check out the OOIDA website.

Each dealer is going to be different, loan mountain is not the exact same lease as a paccar lease. You will be able to deduct your payment from your taxes, not so with a purchase payment you will only be able to deduct depreciation for 3 years on a tractor and four years on a trailer. your accountant should tell you which is best for you. any lease agreement should be available to you as soon as the finance company knows who you are. fill out a credit app and ask for a copy of the lease agreement to show a lawyer or accountant. remember some carriers will not lease you on unless your name is on the title, make sure who ever you get lease financing from is on your carriers approved list.

Allysa,

I cannot help much with your question, but I do have a question for you.

First, thank goodness you've earned your stripes and have a few years under your belt before taking this leap!

My question is this: Why? What, in your assessment would be different, beside the obvious? The reason I'm asking is, I wonder if it's a matter of having more freedom in/with your truck, as opposed to having to follow company rules in terms of what you can have in your tractor and how things are governed? I'm curious because I intend to consider something similar, but certainly not until I company drive for several years first.

Is it a pride thing for you? Is it an entrepreneurial spirit? A combination? What's your motivation for considering a lease?

Hi Joe,

I've been told by too many people that O/O is a bad idea...that it's not going to work out unless you are really into trucking. But to answer your question, I think to me it is a matter of freedom, and it just feels good to be working for myself. Maybe im too naive, I don't know.

Each dealer is going to be different, loan mountain is not the exact same lease as a paccar lease. You will be able to deduct your payment from your taxes, not so with a purchase payment you will only be able to deduct depreciation for 3 years on a tractor and four years on a trailer. your accountant should tell you which is best for you. any lease agreement should be available to you as soon as the finance company knows who you are. fill out a credit app and ask for a copy of the lease agreement to show a lawyer or accountant. remember some carriers will not lease you on unless your name is on the title, make sure who ever you get lease financing from is on your carriers approved list.

About the credit app, I don't have very good credit and I am kinda concerned if they would charge me a higher rate for that...

And I wonder if it makes sense to go with a full service lease?

Herein lies the difference between the sentiment of "having more freedom" - or actually less - as an O/O or Lease-Op.

As a company driver - want to take a few days off? Cool - the truck is costing the COMPANY $$ when it's not moving. When you OWN IT - it's still costing $$ every day (truck payment, insurance, etc.) and if it's not ROLLING - it's not making $$ to offset your costs (and perhaps put some $$ in your pocket).

Leasing from a DEALER (versus a company) gives you the flexibility to take your truck and "lease on" to any company that takes O/O's. Which is GOOD - but there's a lot more paperwork and regulatory details when you do it this was (as opposed to a "sign & drive" lease you would do with a trucking company.

The BIGGEST PROBLEM with leasing - is that it is HIGHLY UNLIKELY that you will ever OWN THE TRUCK OUTRIGHT. Most truckers that lease - never put away enough $$ to "buy out" the truck at the end of the lease period - OR - if the truck is old enough that the buy-out is affordable, it's usually older and has enough mileage on it, that you're looking at some major expenses in order to keep it on the road (in-frame-rebuilds, transmissions & differentials, etc.). "Ordinary Maintenance" is expensive enough on these units. Breakdowns take you off the road, expenses can run in the $1,000's for major repairs. Ever price a transmission for one of these trucks - including labor? Ever wonder how long it takes to rebuild one in a shop - while you're paying for a motel room and losing miles?

For the most part - people that lease - especially those NEW to the industry, rarely complete a long-term leasing arrangement. If you hand the truck back on a "company lease", there are usually no repercussions (no risk lease). If you default on a "regular lease" (from a dealer, etc.) you could be "on the hook" for the balance of the "term of the lease", plus other penalties. On a CAR - not really a big deal. On a $140K (+/-) truck - bankruptcy to get out from under the debt.

Which brings us to - do lease-ops really make that much more than company drivers - in order to justify the expense and exposure? Most people will tell you NO. Which is not to say it NEVER HAPPENS - just that it seems to be the exception, rather than the rule.

Most people here will try to discourage someone from leasing or owning. Personally - I think a person should look at all the angles - so they're making an INFORMED DECISION, and not just leaping into the "allure" of owning your on truck & being your own boss.

I almost did a "fully capitalized" buy-in a couple of years ago (that it - I had $150K cash available to get started with NO DEBT SERVICE) and I still opted not to do it. In hindsight - I'm kind of regretting it - because I've sat 3 more years in my computer business, hating life - but it wasn't the right thing to do at the time.

Rick