Being a truck driver and working for a good company is the first step to a successful career, but what if you want more. Thousands of drivers want to experience more and they do this through being in business for themselves. However, in some cases being an owner-operator may be more difficult for some drivers.
Because some drivers lack the financial stability, many trucking companies have put together lease purchases, lease options, and drive-to-own opportunities. This gives drivers the opportunity to pursue their dreams through more traditional financing sources. But the question is raised, does leasing a truck from a carrier make financial sense for the driver or should you avoid them all together?
Unfortunately there isn’t one simple answer; it all depends on individual circumstances. When looking at your options, consider the following information to decide what is right for you.
Leasing a truck makes sense to the carrier, especially for drivers who don’t have good credit or don’t have a down payment and other start-up costs.
Carriers market their lease opportunities to drivers heavily as a short-term path to truck ownership. While the terms vary from carrier to carrier, carriers claim that leases benefit drivers in a variety of ways. This includes:
- Low deposits
- No long-term commitment
- Low down payments
- Relaxed credit standards
- Lease completion incentives
This allows lease operators to experience the perks of ownership while limiting their financial risk. Carriers look at leases ass being “walk away” leases, meaning that if it doesn’t work out, drivers can walk away from their leases.
Driver Advocacy Group Perspective
Driver advocacy groups don’t entirely trust carrier-sponsored semi-truck lease opportunities. They’ve even gone so far as to successfully file class action lawsuits on behalf of drivers who fall prey to unfair or illegal carrier leasing practices. The Owner-Operator Independent Drivers Association (OOIDA) has successfully won large settlements for drivers in high profile cases against such carriers as C.R. England Inc, Landstar, and Arctic Express Inc.
Some of the issues the driver advocacy group raised have been violations of federal truth in leasing laws, the failure of carriers to return escrowed funds at the end of the lease or when it’s terminated, illegal or improper deductions, and in some cases, fraud.
For many drivers, leasing a truck has been a financial disaster. What was supposed to be a positive career move has turned into low miles, unauthorized deductions at the hands of carriers, and confusing lease contracts written to heavily benefit carriers.
Many drivers have been taken advantage of be these deals and have been left holding the financial blog, owing their carriers more at the end of the week than they have managed to earn by driving.
The lease contracts developed by carriers make it almost impossible to earn a living due to:
- Inflated fees for insurance
- Large payments
- Over charge of fuel taxes
- Carrier mandated repairs at company-owned repair facilities
- Large deposits, escrow, and repair accounts
Some drivers state that their carriers don’t clearly explain what terms drivers can access tire and repair money. Because it’s so vague, some carriers make it impossible to access those funds by setting a very high minimum spending limit before funds can be tapped.
While this may look bad to those considering a leasing program, some drivers do actually make money. Since there is no national database available with statistics showing how successful or unsuccessful drivers can be with commercial leasing, drivers are left to form their own conclusion. One of the best ways to decide is by asking fellow truck drivers and research the company’s leasing program.
When everything comes together, leasing a truck can be an intimidating financial endeavor. However, some drivers have the determination to survive in the transportation industry. Going into a truck lease agreement with your eyes peeled and every detail of the lease covered will help you strive in the trucking business and owner-operator world.