LEASE OWNER OPERATOR PLANS –
10 REASONS TO RUN THE OTHER WAY!
Click Play button for Audio Transpipt of page.
WHAT IS A TRUCKING LEASE OPERATOR?
A trucking lease operator is really a company driver with all of the expenses of an owner operator. They pay all related costs for the leased truck, including payments, fuel, repairs, maintenance, fuel tax etc. Normally, the trucking company holds the title for the truck. The driver leases the truck directly from the carrier.
There is often no down payment, or a minimal amount of money required to get on board with one of these lease programs. Pretty attractive, isn’t it?
HOW THE TRUCK DRIVER SHORTAGE AFFECTS
THE LEASE OPERATOR PROGRAMS
I’m of the belief that in the midst of the current ‘trucker shortage’, more and more trucking companies are using these powerful finance plans to attract drivers to their company.
If the carrier can’t attract drivers to drive company trucks, or if there isn’t a company truck available to a driver, companies will offer these ‘instant ownership plans’ to the potential driver.
The carrier then has the driver on board with a heavy commitment to make payments on the leased truck, as well as all truck related expenses.
Because the lease operator agreement will be written in the trucking company’s favor, the new lease owner operator will be obligated to stay with the company, as the company owns the truck.
And why be ‘just’ a company driver, when you could be an instant truck owner at a carrier AND be an owner operator?
Many drivers who dive into these programs are attracted to leasing a truck because of the appeal of instant truck ownership. Getting into truck ownership with a minimal amount of money required as a down payment is pretty attractive.
So the trucking companies are capitalizing on the driver shortage by promoting and actively using these programs, as a recruiting tool.
PAID CDL TRAINING SCHOOLS TARGET NEW
TRUCK DRIVERS FOR LEASE OPERATOR PROGRAMS
This practice is becoming more widespread in company sponsored CDL training programs too. When the trainee has completed their training, carriers are marketing these programs to brand new truck drivers.This can be a recipe for financial ruin for a new driver. New drivers have plenty to think about, know little about the trucking business and have enough on their plate, without concerning themselves with the business of owning and running their own truck. I know of a few 20+ year experienced truck drivers who have been through a few lease to own plans and managed to make it work. But I would not recommend these plans for new drivers.
WHAT WE’VE LEARNED ABOUT LEASE OPERATOR PROGRAMS
Although we’ve never personally been through one of these programs, we can offer some honest warnings and tips for protecting yourself. However, we have surveyed over 500 truck drivers who have participated in a lease operator program with a trucking company. From our survey, we will offer some tips and advice to truck drivers from the valuable information we have learned from the survey.
1. CANNOT CHANGE CARRIERS
The driver must remain with the carrier they are leasing the truck from. Freight shortage? Too bad. You’re stuck.
2. COMPANY HAS CONTROL
The company has control over the truck, the number of miles and how much and when the expenses are paid on the truck. The company then deducts all expenses from the driver’s settlement. If the freight movement for the company is slow and there aren’t enough miles to be had, the operator won’t earn enough to meet his financial obligations.
It’s not uncommon for the operator to actually owe the company $$ at month’s end, if the expenses are high and the miles just weren’t there. Sometimes the company creates a maintenance account, funded by the lease operator, which the company also controls.
3. LEASED TRUCK CAN BE A JUNKER
The new operator can be stuck with a truck that is a piece of junk, which leads to high repair bills.
4. COULD BE LOSS OF EMPLOYEE STATUS
If a driver moves from being a company driver and therefore a company employee, this could mean loss of health benefits when their status changes.
5. MANY DON’T UNDERSTAND WHAT THEY ARE SIGNING
Those who sign a lease purchase program agreement with a trucking company, often don’t fully understand the obligations of the agreement. The carrier provides the agreement, so the lease is setup so the trucking company cannot lose a thing.
6. LACK OF BUSINESS SENSE
Many drivers who enter into these plans don’t have any business sense, which can often bring about financial ruin to the operator. Just because someone is qualified and good at driving a truck, doesn’t necessarily mean they would have the skills necessary to operate a single truck business.
7. YOU MAY NEVER OWN THE TRUCK
Because the company owns the truck and the operator pays all truck expenses as well as relies on the company to earn sufficient money to meet his obligations, the odds can be high that he may never own the truck. Too many factors are out of control of the operator.
8. HEFTY BUYOUT AT END OF CONTRACT
At the end of any lease, there is normally a payout where the lessee can buy out or officially own the said vehicle. This can range anywhere from $1 buyout up to $20,000+ buyout cost. If the payments on the truck are low, there’s a good possibility the buyout at the end of the lease, could be big. Be sure to check this out in the lease contract before signing.
9. SUCCESS DEPENDS HEAVILY ON THE TRUCKING COMPANY
Much of the success of these plans depends on the trucking company. If the carrier’s freight lanes slow down, they will definitely filter the freight they do have to their own company trucks before the leased trucks.
Some carriers are more honest than others. A dishonest carrier could easily cheat an operator on their pay, by altering the documents that loads pay or not giving verification of the true value of a load. This is a common scenario with many leasing carriers.
10. LEASE OPERATORS SEEN IN TRUCK STOPS WITH LITTLE TO NO MONEY
We have seen and interacted with drivers upon several occasions, as have many other drivers we have spoken to, seeing lease operators at truck stops asking to borrow money from other drivers (as well as borrow money from us) for food. We have been approached on several occasions for money by these operators asking for $10-$20 for food.
Every time we’ve been asked for money, it was a l. operator, not an owner operator or a company driver. A lease operator.
Each of the stories these lease operators presented were all very similar. Their most recent paycheck was under $100 or more commonly, they owed the trucking company money on the pay settlement.
What if I Have an Accident
Expenses on the road, and Who Covers Them
A Few Tips For Owner Operators