I'm considering buying my own truck and am wondering the advantages and disadvantages to leasing on with a company vs. getting your own authority. I've researched this a bit and have to say it seems like a lot less headache to lease on with a company. Am I missing something because I read and hear about others wanting and striving to get their own authority. Nothing wrong with that, but it just seems easier to lease on with a company. This is my impression and if anyone could give some insight on the pros and cons that would be great.

 

I meant lease vs. own authority, not o/o. I know I'll be an o/o whether leased or with own authority, but the own authority route seems really involved honestly. Thanks in advance for any info.

 

Leasing on is easier, but you pay for it by taking a % of the rate vs getting all of it. Let's say you get 70% and you gross 200k. You essentially paid the carrier 60k to do some of the paperwork, insurance, etc. for you.

You have to look at the total picture. You should make more on your own, but sometimes the carrier you lease onto has better rates then you might get.

 

In my opinion, for a fellow starting out, it may be easier to lease on to a company. They hopefully have guaranteed steady work. It may not be as much money as you hope but it depends on the company and your performance. The experience with all aspects of the business will give you invaluable insight for the future should you decide to get your own authority.
Be carefull of the contracts you sign, and make sure you have an option to release yourself without a penalty.
Having your own authority is easy and not alot of work. It requires more of an initial investment and more hustle on your own behalf to get your own work, obviously.
Having your own truck for me would be the only option, not leasing one from company you plan to lease onto.

You will be expected to work if leased on to someone. On your own you will need to motivate yourself.
Sometimes your own authority will motivate you to work non-stop and have it not feel like work because you are doing it for yourself. Leasing still feels like working for someone.

Hopes this helps your decision.

 

There are advantages and disadvantages to both. Leasing to a carrier is much simpler and less costly. You can lease to a carrier and be making money in a few days. It is usually a matter of having your truck inspected, taking a drug test and going to orientation. Orientation can take from 1-3 days with most carriers. Leasing on can be an advantage to someone starting out since your cash outlay is much smaller. Most carriers will finance your base plates and permits by taking a small amount of money out of your weekly settlements. Most also offer cash advances on loads. If your resources are limited then this is a consideration. Most carriers have either a dispatcher assigned to each owner operator or an agent based system where you can contact them for loads. Often they will be calling you to haul loads when they know you are in the area. Most carriers furnish trailers or will rent one to you if it is a flat or specialized trailer. Most will furnish vans at no cost to the owner operator. Many carriers offer cash discounts on fuel when you use their fuel card and national discounts on tires, parts and service. You may not be able to get these same discounts when you run your authority.

If you decide to run your own authority be prepared for it to takes several weeks to get your authority back once you have all paperwork filed. You will need to have liability and cargo insurance in place before authority will be granted. Authority costs $300 but your insurance will cost several thousand. Starting out your insurance is likely to cost somewhere between $6-10,000 or more per year. You will also need to pay for your own base plates and permits. Costs should run somewhere between $1,600-2,200, depending on where you live. It is difficult to run your authority without having your own trailer. It will also be your responsibility to obtain your own freight. You are totally on your own. You will need to be prepared to finance your business for at least 30-90 days unless you factor or use quick pay options offered by some brokers unless you have the resources to finance your business until receivables begin to come in. That will eat into your profits, but is an option. There are other expenses involved in running your own authority.

IFTA taxes must be filed quarterly. It is important to keep accurate records. When you lease to a carrier they will usually take care of this for you. Running your own authority requires that you do this yourself. The paperwork is where many get into trouble when they run their own authority. Some people don't like paperwork.

I know of several people who gave up running their own authority to lease to other carriers. They got tired of the paperwork and added responsibility. Others have gone on to various levels of success or failure running their authority.

It is easier for some to just lease to a carrier rather than run their own authority. It is a different mindset when you run your authority. You don't have a safety net when you run your authority. You are on your own. If you lease to a carrier they offer some more security than being totally on their own.

I think that leasing to another carrier is a good way to see if it is something that you may enjoy doing. It is a shorter step than being totally on your own. Not everyone is good at running a business. While you are technically in business for yourself when you lease to a carrier, it is different when you are responsible for everything yourself.

 

Thanks for the great replies and information. If I decide to buy my own truck, leasing would be the best route for me I feel. I'm not big on paperwork and after researching having your own authority I was amazed at the process and record keeping along with the inspections that are required. I would have to net considerably more per year to deal with all that is required having your own authority. That's just me and I know that about myself.

I'm curious how detailed and elaborate the company lease policies are. When you lease on with a company are you bound solely to them? I assume that would be in the contract, but probably not a big deal if they continually provide freight to haul.

It's been a little over a year since I've driven a truck. I drove OTR for about 6 mos. and a year and a half locally before that. I'm learning that to lease on with a company they require 1 yr. OTR. Landstar doesn't take local driving into consideration at all. I can understand that having done both. So I've got to go back and get a yr. under my belt before this is even a possiblility. That will give me time also to really decide if this is something I want to do. I just want to own my own truck someday.

 

I am from Canada and I am not sure about the US, but I have seen this overlooked before. If you are going to Lease a unit from a company, no matter how established, inquire if there is an underwriter. I ran with a chap one day through MT and he was leasing at an atrocious rate from a carrier that was on shaky ground and I pointed out that without an underwriter on that truck, it is still an asset of the company and not the leaser. If they file bankruptcy and you look outside your house to see the sheriff repossessing the unit, you are out big-time. This probably wouldn't happen with Schneider's, Swift, JB Hunt and any of the established big players with concerns of their rep, but smaller companies, as well as fly by night outfits, should be a concern

The other concern, and you will want to have your accountant check this out, but if you can get true financing (not a lease, or finance-lease - careful of the terminology used and have a lawyer check the contract before you sign anything) then you own the unit and are outright responsible for the loan. I have this arrangement in Canada and because I own the unit, I absorb depreciation and it eliminates my taxes to the tune of $1k a month or greater. If I was leased, I would have to pay at least $12k per annum.

If you are new I would say getting your own authority could easily overwhelm you and end in disaster. I began trucking in 2003 and may get my own authority in a couple years.

Good luck:clap:

 

What Bigmon said.
What sidman82 said. Nice bike!
What GMAN said. Good, helpful post, as always.
What Lockport said.
Good question. This ought to be a sticky.

Lockport -- The underwriter issue is true in the U.S. too. If a carrier goes belly up, guys who are leasing or lease-purchasing stand to lose "their" rig and all the dreams and money they've put into it. Thanks for bringing that up; it's an often overlooked part of lease agreements.

 

Most lease agreements are basically the same. Each carrier may put in their own verbiage, but the basics are still the same. The feds have certain requirements that must be included in any lease. Most carriers will not want you to haul your own loads unless they get their cut. If you want to find your own loads you might as well get your authority. You will not be able to book a load yourself without having motor carrier authority and insurance. Some carriers will allow you to find a load, but it must be booked through one of their agents or their dispatch office.

You might want to check with CRST and some of the larger carriers. Some will hire with at least 6 months otr experience. For others they may hire you and put you with a trainer for a few weeks or months and then give you a truck to drive. Once you get 1-2 years of current otr driving experience you should not have any difficulty finding a driving job or leasing on a truck providing you have a clean MVR and work history.

 

I have operated the same for over 11 years. leased o/o/. I call my dispatcher to see what he has. if I dont like it. I dont take it.my truck, my trailer. IA dont go where I dont want to go. they have all the contact's & I dont have the patience to do all the paperwork. they I get 80 % of the gross. fine with me. there are some co's that will not even bother with a 1 man operation. some want to move severl loads in a day's notice. I do know of 1 with his own authority. he does well. I dont want to be 500 miles from home & try to find a load back. I want to take a nap, eat, shower & tell my dispatcher to call me when he get's something.

I admire the work ethic of anyone trying to go out on his own. I have done well leased. having 6 kid's is why I like being leased. if I had my own authority, I would run a lot harder & make more money & be less picky on loads, but I dont want that kind of lifestyle. I have never been out more than 2 day's. & only run 8 states. that last year I have been in my home state & 1 other. with 1 or 2 loads going to oh.


my advice would be to lease on first. you have to learn fist what you want to haul & what requirements are needed. for example. some of the good loads I like are loaded on side kit only. if you want to haul to cetain area's or certain cargo, you have to know what is required. you can find out all kind's of info while being leased. best of luck.