Thank you for all the responses. I must admit I am quite ignorant of the situation as I would never do anything like that. I'm surprised at some of the responses here; I would have thought these LP plans were cash cows for the companies. They have the drivers paying them to drive their truck. I was going to try and do it as a more equitable deal.

As for the comments that most of these people aren't good business minded people for if they were they would have money for a down payment etc. Well more and more I'm realizing that people in many fields are like that and might as well profit off of them. I actually just on a whim (and some investigation) just financed two car loans through a dealer. The interest rate on each loan was over 20%. (Of course there will be repos and down sides. They have GPS in the cars etc). But when I go to get a car, I walk in and sign the paper and have an interest rate around 1%. But the fact of the matter is people are going to spend more than they make, buy massive TV's and every other foolishness. (We have one small tv in the house and don't even have cable (we use Roku).

Anyway, I wasn't trying to take advantage of anyone, but we lose some good drivers as they want to "own" their own rig. I do like the idea of holding it out as an incentive to those that have been company drivers for a while. That seems like a good deal.

 

I want "IN" on this discussion. I'm impressed by what Merrick4 has to say. I've been following his "break out" for several years. He seems to be doing well.

I ALWAYS respect GMAN's words of wisdom (economically) and don't find them contrary to this discussion.

Solo, Chris, Mackman and Freebird... you guys are solid gold!

The others I didn't mention... well, you're in the "credits." lol.

I think there are GOOD drivers out there that would like to own their own truck... and their lives. But... don't have the financing for the truck. Let's say they are smart enough to have built up some kind of a "maintenance account" and 90 days of living expenses. Let's say they have a reasonable expectation that they will NOT be ripped off... and the truck they are driving will BE their "step off" to their future... and not jerked out from under them or presented with a bill for the PRICE of the ****ing truck!

I LIKE the idea of helping the LP operator choose the truck, plan his loads and budget, and share maintenance costs (until the lease is up.)

Question is: Do you want to make a few bucks off a truck, when the lease is over... and have massive turnover? Or... do you want to HELP drivers with ambition OWN their own truck and "continue" a lease relationship with you, where... YOU get the loads (and a profit,) and THEY get the career they wanted and are loyal to you for honestly "helping" them?

You want an LP operator to keep his truck clean? PROVE to him that it will be HIS in X amount of months...AND that you will continue to help him get loads that will make BOTH of you some money.

Don't hire "truckers" for these trucks. Put them in the ones you already have paid for! Look for the "ambitious" man... and make sure he's not delusional. THEN, start a relationship with him... and a truck... that will benefit both of you for longer than it really matters!

 

One of the first things someone asks when they apply for a driving job is do you have a LP? The next is how much advance per week and can i take the truck home? Then it's what kind of truck? The last is how much you pay. But you already know that.

Quite a few that have come to me after a LP also came with a Fed/State tax lien. And then they move on to another LP, takes untill the end of the year for the IRS to find them again.

If you factor in the failures you need to make 20-22% just on the vehicle cost. And then you have to control the maint/repairs. And that would require a maint account.

I LP'd some to drivers that had been with me for quite some time, they were very good as drivers but there was only one that i didn't have a problem with. The others were just day to day living. Had to finance them just for a couple of tires, much less repairs. And these were bumper to bumper warranty 3yr/450K.

 

Thanks for the kind words Golfhobo, but in a whole honesty, it's kinda ideal fantasy world you are describing. In reality, it's very simple;- Driving a truck and running the trucking business, is 2 completely different thing. You may not believe me, but most folks couldn't even count right. And the truth of the matter is (always was), that 9 out of 10 people, able to run it as it's suppose to be, i mean like a business, doesn't matter one truck , or 20, will be able to buy their own truck outright. I could give you quite a few examples and explanations, but that would be a lot of typing, which i'm not very good at. So just my word, based on my own experience and observation.

 

I looked at a lease purchase the other day. I was more interested in the cost that compensation, since I was not interested in leasing myself. One carrier that I looked at had a $900/week payment. They also required $0.07/mile for maintenance. I don't remember any other costs being listed. Paying $900/week is a $3,600/monthly payment. In addition, at $0.07/mile for maintenance and 10,000/month the cost would rise to $4,300/month, just for the truck. That does not include fuel and possibly other costs to run the truck. That is a huge amount of money to pay out each month.

I think most drivers prefer having a new truck. They don't consider the costs or whether they can actually afford the payments and accompanying costs of operating their business. Most would stand a much greater opportunity to be successful if they would lease a truck that is a few years old where payments would not be so high. Compensation is just not high enough to justify the cost of the lease.

Why would you want to establish a lease purchase program? Do you want to do a straight lease or lease purchase? Are you looking for another profit center or something to help driver to become owner operators? I am not sure that these programs are all that profitable for the carriers who do them. I think that ultimately there is a chance they could be profitable, but would think the profit potential would be more on the back end.

 

Company that I leased my truck through has learned over the years, if a new o/o had a payment much over $1500 a month starting out, they didn't succeed. As they got more experience, they let the payment go higher. Eventually to around $2300-2500. But a person would have been buying likely their third or fourth truck by then too.


This is a vehicle leasing company. They do absolutely nothing with hauling freight. I was pointed to these guys after trying to get financing from GE financial. They tend to work with guys starting out an local banks.


My golden rule; don't get the truck where you get the freight and don't get the freight where you get the truck.

 

When you lease a truck from the carrier, you are tied to that carrier until the truck is paid off or you leave. I have heard horror stories about some carriers not offering much freight to lease operators as they near completion of their leases. I don't know how prevalent that is today. I would say the leasing company is correct about the lease payments, mndriver. For the most part, those who participate in the lease programs are not cut out for ownership. They will do anything or sign anything for the potential of becoming an owner operator. They don't do the math to see whether the deal offered is financially viable. In fact, most would probably not be qualified to make that determination. Unless you have owned a truck or carefully tracked expenses while driving a truck for someone else, you would not know anything about what it costs to actually operate a truck. I don't understand why anyone would commit to something like a lease when you know little or nothing about the business and have no operating capital. I understand that life happens and that there are instances where people have fallen on hard times and are desperate to grab to any glimmer of hope where they can pull themselves out of their situation. Often, getting into a lease only complicates the situation.

I remember some years ago, when I was leased to CRST Malone, I looked at adding a truck through their lease purchase program. I decided to buy another truck through a local lender instead. But, I was pleased to see that their payments were about $250/week for a used truck. There was still the mandatory contribution to a maintenance account, but the lease did seem doable. The down side to their lease is that you could not select the truck you wanted. You signed the lease and they assigned you the truck they wanted you to take. I spoke with three lease operators who had mixed feelings about leasing from them. The trucks they leased were taken out of their van fleet. If one is to lease then it would make more sense to lease purchase a used truck that is affordable rather than a new truck starting out.

It should not be surprising that most who lease trucks fail. When you start a business with little or no capital and little or no experience, you are setting yourself up for failure. I believe Prime has their leases set up as a straight lease rather than a buy out at the end. A friend of mine leased a new truck from Gilner that he turned in after about 18 months.

Leasing a used truck can be a risk, but so can leasing a new truck.

 

Just like any tradesman you can be a great truck driver and a lousy businessman. One would be better off working for one of the GOOD companies and saving for a down payment. Does anyone here know of a person that went into one of those never never plans and ended up owning the truck? I have spoken to many LP truckers who make 40 cpm after expenses. Why bother?

 

I'd suggest investing in a business management program at least at a two year program. Even if you get a diploma without all the generals classes.