Lease purchase driver

[Joseph floyd]

Wow.....lol, I appreciate all the help drivers. But like I said, I'm just trying to stay busy much as possible. Got my family for support, and love beside me.. Keep seeking after GOD, and spend my $$$$ wisely. But thank u all so much for the details. I'm definitely reading over and over, thinking of ways to dodge these hardships. Love drivers

 

[mndriver]

I'll echo this.


For now, just get a good company gig. There's huge value in others dealing with the headaches.

 

[Injun]

When you lease your truck, you are making a payment to someone.

Add up your payments you have made. You'll find it is significantly higher than any purchase price plus the interest on a loan.

Someone is paying the interest on it. It sure isn't the financing company.

There is no interest, but there is a replacement in the terms of a lease fee, which is typically more than typical interest. It's why leasing a truck will usually cost more than financing the same truck.

Different wording, but same result and cost.

Lease (rent) a house to live in. If you end up buying the same house, the results would be the same. You will end up, when adding the rent you paid (lease payments) to the purchase price, paying way more than the house is worth. That's what I mean when I say it's not a fair comparison to put a lease next to a straight purchase. It's apples and oranges.

You can compare the purchase contract I signed with IEL with the purchase contract you signed with whoever financed your purchase and we would be making a fair comparison. When I chose to purchase this truck, I could just as easily have gone to Arrow and bought one just like it...for almost $20K more cash price...plus financing. For a completely unknown item that might have been an asset, but might have been a disaster.

I didn't buy a new truck. I rented one.

Then, I bought a used truck. And got a good deal on it.

Just happens to be the same truck.

If I hadn't bought it, it would have been given back to International to detail and sell...for almost $20K more than my purchase price...plus financing.

 

[Tazz]

How many do that besides Swift? Prime and England are just straight leases yeah?

Pumpkin will sell you one I think but after looking at the ones in Charlotte

 

[Injun]

How many do that besides Swift? Prime and England are just straight leases yeah?

Pumpkin will sell you one I think but after looking at the ones in Charlotte

@ironpony leased and then bought his truck through Prime's Success Leasing, if I've been reading him right. They made it clear, when I leased there, that it was a straight lease, period. Purchases were a whole 'nother ballgame.

 

[Tazz]

Yeah but I hear he is in to S+M so refused to leave.










Ok I thought they were just straight leases. Still just company spec'ed trucks though right?They do not do a deal like @Mike

 

[Injun]

Yeah but I hear he is in to S+M so refused to leave.










Ok I thought they were just straight leases. Still just company spec'ed trucks though right?They do not do a deal like @Mike

Mine was company spec. Not too bad, except I missed having a trolley brake and suspension dump.

They had APUs and 1,500W inverters, but I really don't miss those on this truck.

 

[ironpony]

There is no interest on a lease. It's a lease: a rental. RENTAL. You are not in a purchase contract when you lease a truck. You are RENTING it. Some lessors offer a purchase at the end of the agreed-to rental period. That is a separate contract altogether. I chose to enter the purchase agreement when my lease on this truck ended.

Here's what I BOUGHT on that contract: A five year old International ProStar Eagle in good condition, with a 14.7/435 Cummins engine, 13 speed E-F standard transmission, 3.58 Rockwell rears and 555K miles on it. I also bought a 3-year, 300K mile extended warranty. For my PURCHASE, I will have paid a total of right at $58K, all-inclusive.

I priced out similar ProStars on the open market at the time of my purchase. They were going anywhere from $55K for rolling junk to $75K+ for something decent. Had I chosen to go on the open market, the purchased truck would have been a big question mark. What needs to be fixed, how was it used, what type of work did it do, how hard was it pushed, was it a fleet company truck, how much abuse did it take, what type of maintenance and care did it receive, etc. With all of those questions would have come the interest paid to some financial institution that doesn't care whether you sink or swim.

I bought a truck I knew because I put all the miles on it, for less than the going rate for a similar setup, through an entity that I know, with an interest rate far below what any financial institution would have offered, with safeguards built in.

I was in a similar situation... @Injun your lease contract with Success Leasing was identical to mine. A good truck (no emission issues) which I was intimately familiar with, and had a hand in all of the maintenance. At the end of the lease term, I entered into a purchase agreement. The price was specified in an addendum to the lease agreement, and was $20,000 below market because of a number of factors. It simply was too good a deal to pass up.

The mistake a lot of people make is including the RENTAL agreement in the final purchase price. It's not a fair comparison. It's like renting a house for ten years and paying the landlord, then the landlord gives you first right of refusal when he decides to sell the property. He's going to sell it one way or another, but you have now been given the option to buy it yourself. Do you honestly think the landlord is going to deduct the ten years' rent you've paid him from the purchase price of the house? The answer is of course not. He might give you a break on the sale price, but he's going to get a relatively reasonable price for it, whether you buy it or somebody else buys it. That's why it's not fair to include the rental payments (an entirely different type of agreenent) in the purchase price.

I actually had people advising me to turn this truck in and buy on the open market when my lease was up. Given the facts I just laid out, wouldn't that have been a little stupid?



This is the key, whether you're in a purchase agreement or a rental.



My fixed overhead costs, plus cost of fuel to meet them, are met within the first two days of my work week, even with the $550/week purchase payment. I may not be pocketing as much until this truck is paid off, but I don't feel like I'm working any harder or gone any longer than anybody else. Quite the contrary, actually.

Once the truck is paid off (a couple of months) I will have all of my expenses, including fuel for the entire week, met on the first day. Everything past that is money in my pocket...or, rather, business profit, to disperse as I please.

I do not pay rental for trailers at Swift, I have an agreed-upon mileage rate, coupled with a variable fuel surcharge based on fuel price, which is spelled out in the contract I have with Swift.





My total fixed costs (including current tractor payment) each week, at the moment equal $685. This includes my various insurances such as bobtail, work injury and glass coverage, plus QualComm.

My HUT runs $550/year, paid at $15/week, July through February. I did not include this in my total above because it won't start back up again until July. This time, since I will no longer have the tractor payment, I'm going to offer to pay it in a lump sum. Swift pays for all other licensing and permits.


I'm going to paraphrase you, since you're putting it out there: If you don't know, don't say. You just make yourself look like a jackass.

Thanks pal! You'll note I said nothing about your carrier.

Swift is largely dry-van freight. If I was running that OTR, I'd be making more than I am now due to rate changes in the past couple of years for the OTR folks. I've seen some modest rate changes in the WalMart contract, but not as significant as the OTR guys got. If I was running OTR, my fuel costs would be lower because of a lot less city and surface driving. Regardless, I'm doing just fine with my mileage rate and FSC...and I get to be home several times each week in addition to the two days I always take off.

If you're paying over $1K/week in fixed costs, you really need to examine the contract you're leasing under and the business practices of the company you're leased to.

Depends on the terms of the lease, and the potential income stream. FYI, Prime bases their lease on a three year note for the tractor, rather than a more common five year note. Yep, the payments are higher, but only for tbree years.

I don't pay for reefer fuel. Ever. It's not my load. It's Swift's load. If it requires a reefer, Swift pays for the fuel.

The reason Prime has its contractors paying for reefer fuel is so that they would pay attention to what they were doing with the reefer... not just running it full blast all the time. Prime does pay the first fill to protect the contractor from being gouged for an empty tank when the hook on. In practice its not a very big expense. The rationale for this is largely gone since they started monitoring all of the reefers by satellite.

Unlike Prime, with all the complicated expense codes they use to nickel and dime your settlement away, Swift uses plain language for all entries on the settlement. They have nothing to hide from their lease-ops...or anybody, for that matter. There are no hidden costs, fees, penalties or whatever.

I'll say the same about Prime... nothing is hidden, and instead of having one big amorphous number you get to pay each week, they do break it down on your settlement so you know what your paying for. The line that says "Qualcomm Rental" is just that. Yep they do include the code (QR) that relates that item to the accounting program... but that's to help out the accounting staff if there's some kind of major SNAFU with your settlement.

The settlement format that Prime uses is logical, easy to go through so you can catch any mistakes... especially if you have someone explain it to you. Its rather tame compared to some of the nonsense I've dealt with in engineering and retail accounting.

There is no separate tire fund for the tractor. There is only an optional maintenance fund that can be added to at whatever rate the lease-op chooses from 3cpm to 20cpm. I choose 10cpm. Tires, unwarranted repairs, parts.. all come out of it, with full accounting of what was paid for any time the fund is used. I have 24/7 access to that money and can drain the account dry at 0300 Sunday morning if I want to, without any explanation or human dialogue at all.

I choose where work on my tractor is done and who does it. If that means I buy my new headlight assemblies from an outside source and my man does all the work and rewires the whole thing, that's my choice. He's a mechanic. He knows what he's doing. Swift doesn't have a thing to say about it except: who's getting paid? (If I choose to use my maintenance account)

Prime does not offer that sort of latitude. At least, they didn't while I was there. My fixed costs each week were in excess of $1,300. Bradenton freight could not support that.

Sure they did... no offense, but you didn't read your contract. It conforms to the FMCSRs, so yes they cannot force you to use any particular shop or service. This is only true for contracts that pay percentage, but not for those that pay a mileage rate.

Bradenton freight? You mean welfare juice? LOL! That's what I've been saying about buck-a-mile cheap stuff.

Lease (rent) a house to live in. If you end up buying the same house, the results would be the same. You will end up, when adding the rent you paid (lease payments) to the purchase price, paying way more than the house is worth. That's what I mean when I say it's not a fair comparison to put a lease next to a straight purchase. It's apples and oranges.

You can compare the purchase contract I signed with IEL with the purchase contract you signed with whoever financed your purchase and we would be making a fair comparison. When I chose to purchase this truck, I could just as easily have gone to Arrow and bought one just like it...for almost $20K more cash price...plus financing. For a completely unknown item that might have been an asset, but might have been a disaster.

I didn't buy a new truck. I rented one.

Then, I bought a used truck. And got a good deal on it.

Just happens to be the same truck.

If I hadn't bought it, it would have been given back to International to detail and sell...for almost $20K more than my purchase price...plus financing.

Yep... sometimes the carrier really does do you a favor.

@ironpony leased and then bought his truck through Prime's Success Leasing, if I've been reading him right. They made it clear, when I leased there, that it was a straight lease, period. Purchases were a whole 'nother ballgame.

They weren't letting first time lease operators into a purchase agreement back then... unfortunately, IMO that's changed. They want $13,000 down in all cases, discounted by $1,000 per year that you've been with them. The principle is divided equally into the term, with a $100 cash payment when they surrender the title. I didn't have any interest charges on my purchase contract, and both the down and final payment (nearly $10,000 in my case) will be used as the basis for depreciation. There's no penalty for paying the truck off early.

Mine was company spec. Not too bad, except I missed having a trolley brake and suspension dump.

They had APUs and 1,500W inverters, but I really don't miss those on this truck.

I really like my APU... different strokes, eh?

To the OP... this is illustrative of the different kinds of deals that are out there on the lease side.

 

[Injun]

I really like my APU... different strokes, eh?

I liked having it. I considered putting one on this truck. Considered it very strongly, as a matter of fact. Once I crunched the actual numbers, having had first-hand experience with one, knowing the costs and benefits, shortcomings, etc.. I could not, with any business sense at all, justify it.

Hell, I've even crunched the numbers to replace my Webasto heater and can't justify it. As little as I idle for heat, it wouldn't pay for itself in ten years. No way I can install an APU with any kind of logic attached.

It was nice to have. It did help make truck living a little more comfortable. However, I run a business in which I do all the "grunt" work. I don't have a hired driver who needs to be coddled and pampered so he doesn't cry about me on RipOff Report because I put the wrong brand of baby powder in the truck and didn't hire a pretty enough girl to sprinkle it on his ass for him. I have no intention of ever hiring a driver. I wouldn't be able to tolerate the whining.

So.. no reason to install an APU.

(yes, that really is how I feel about company drivers who demand Pete 379s with refrigerators, inverters and microwaves already installed and think they can't sleep unlless the ambient temperature is somewhere between 68 and 70 degrees F)

 

[ironpony]

So, most drivers don't look at the long term consequences of their decisions when getting their pen tuned up to start signin' th' ol' lease...

3 yrs, typical round numbers...

$1000 per week x 52 weeks x 3 years =

$156,000

5 yrs, typical round numbers...

$700 per week x 52 weeks x 5 years =

$182,000

Interesting, yes?

Another one is the common tactic of telling the lease guy to not fuel up just before payroll cutoff. This inflates what the operator sees as a settlement check, because frequently that tank full of fuel is the difference between being in the hole and having some money. It also usualy means that the driver will pay out something like $1000 to $3000 more per year in fuel costs, by passing up cheaper fuel rates... on the average.

 

[Injun]

So, most drivers don't look at the long term consequences of their decisions when getting their pen tuned up to start signin' th' ol' lease...

3 yrs, typical round numbers...

$1000 per week x 52 weeks x 3 years =

$156,000

5 yrs, typical round numbers...

$700 per week x 52 weeks x 5 years =

$182,000

Interesting, yes?

Another one is the common tactic of telling the lease guy to not fuel up just before payroll cutoff. This inflates what the operator sees as a settlement check, because frequently that tank full of fuel is the difference between being in the hole and having some money. It also usualy means that the driver will pay out something like $1000 to $3000 more per year in fuel costs, by passing up cheaper fuel rates... on the average.

Last time I checked, Prime's lease payment was $1,100. That was last year.

$1,100 x 156 weeks = $171,600 for a company fleet-spec'ed truck.

My lease payment was $525 x 4.5 years.

$525 x 234 weeks = $122,850 for a higher spec'ed truck. Not quite O/O, but not low-end either.

Yeh, I'd say that's a bit of a difference, isn't it?

 

[mndriver]

Freightliner Leasing Daimler, will lease you a new Cascadia evolution for 1800 to $1,900 per month

 

[ironpony]

Freightliner Leasing Daimler, will lease you a new Cascadia evolution for 1800 to $1,900 per month

If you have the credit for it. Most folks don't, and banks are very gun shy, especially when it comes to truck loans, double that for inexperienced owner operators.

Remember, the OP doesn't have authority, and would most likely be needing to deal with either a carrier lease, or would need to do a third party lease or purchase on an older tractor and go with Landstar or Mercer.

@Injun ... I'm not pushing Prime, just throwing out representative numbers. In fact let me say, I'd much rather see any of these guys save their money, and buy an older tractor outright. Its much less risk, and capital investment to get going.

With Prime you have the potential to bring in an average above $1.50 per mile in good years with reefer freight, but that's not guaranteed. So the cash flow can be there to support the higher weekly payment - and thats what I found. I also started after the economy was rebounding in 2010... sure helps, such as it was. The real advantage is the three year term... because you can be off to earning much more without a big truck payment in years four and five. Gotta save your bucks to make the tractor purchase.

To the OP... Swift is a bottom end deal moneywise as far as payments (was that 5 years @Injun ?) SNI is more in the $700ish for 5 years, and Prime is in the neighborhood of $1000 to $1300 per week for three years, depending on truck model and whether you choose to lease an APU. If you want the lease/ purchase deal on a new tractor at Prime, there's a $13,000 down payment, and a 4-year lease to keep it affordable. These numbers are representative for new equipment, through a carrier lease.

Maintenance-wise, you'll have a five year, 500,000 mile warranty on the engine. Prime does an additional 3-year power train warranty. Not sure about the others, so there's that too. That helps keep your maintenance costs down in the 5-cpm range during most of the lease term, but expect that to jump up to nearly 15-cpm (give or take) on an emissions truck outside of warranty. Its imperative that you have some real cash to fall back on towards the end of any lease... more on that later. You're going to need to consider tires as well, and my budgets usually have me setting aside something north of 5-cpm for this, just because of the way tires happen. You can substitute a different four letter substance in there, and not be far off!

If you're going to approach on of the manufacturers or a third party leasing company, you should prepare a business plan, and get pre-approved with Landstar or Mercer. Most first time truck buyers/ leassors need sterling credit to swing this. That's why the options through a carrier are popular (but risky) - the carriers don't care about your credit because there is always someone else they can lease it to.

@mndriver keeps bringing up the purchase option through a bank or manufacturers lease. First, how's your credit? Above 700 at all three major credit reporting agencies? Hope so. If you have to swing commercial insurance, its going to be expensive... more so if you have any moving violation tickets or out-of-service violations on federal inspections - personal or equipment related. Also, if you live in a high risk zip code, the premium will go through the roof. SelecTrucks in particular will steer a new guy with average credit away from a new truck into an older used one. I don't have any experience with Paccar/Volvo/International to share on this.

Next... due diligence.

 

[Injun]

As @mndriver pointed out early on, the key answer is whether you're making money or not. If you're not, something needs to change.

If you can make adequate money in a Prime lease, perhaps that's the place for you. I couldn't. I tried everything and had roadblocks placed in front of me by my own fleet manager with asinine claims of his little set of rules being Prime's policy...like restrictions on who can haul hi-val loads, who is allowed to go west over the Rockies and other stupid shit. No way I could make it there with the limitations he placed on me. I wanted a different fleet manager early on, but was refused time and time again until the day I was turning in my keys. So, the change I chose to make was to lease from Swift. (Stan was pretty upset about that one..)

There are many who can't make a go of the Swift lease for a variety of reasons from lack of ambition on their own part to, yes, in some rare cases, a vendetta from someone in the office they pissed off at some point.

I have done exceptionally well at Swift. But I have a decent truck that I maintain carefully, an excellent track record of service and safety, I work a reasonable amount without taking excessive time off, I have a great relationship with my office staff and I'm careful where I spend my money.

I make money and am happy where I am. I am not treated like just another truck number.

@ironpony, you are apparently happy with Prime and it has worked for you.

I have first-hand experience with both companies. I have first-hand experience with being paid by percentage and by mileage rate. I know what hasn't worked for me and I know what is working for me.

 

[ironpony]

As @mndriver pointed out early on, the key answer is whether you're making money or not. If you're not, something needs to change.

If you can make adequate money in a Prime lease, perhaps that's the place for you. I couldn't. I tried everything and had roadblocks placed in front of me by my own fleet manager with asinine claims of his little set of rules being Prime's policy...like restrictions on who can haul hi-val loads, who is allowed to go west over the Rockies and other stupid ****. No way I could make it there with the limitations he placed on me. I wanted a different fleet manager early on, but was refused time and time again until the day I was turning in my keys. So, the change I chose to make was to lease from Swift. (Stan was pretty upset about that one..)

There are many who can't make a go of the Swift lease for a variety of reasons from lack of ambition on their own part to, yes, in some rare cases, a vendetta from someone in the office they pissed off at some point.

I have done exceptionally well at Swift. But I have a decent truck that I maintain carefully, an excellent track record of service and safety, I work a reasonable amount without taking excessive time off, I have a great relationship with my office staff and I'm careful where I spend my money.

I make money and am happy where I am. I am not treated like just another truck number.

@ironpony, you are apparently happy with Prime and it has worked for you.

I have first-hand experience with both companies. I have first-hand experience with being paid by percentage and by mileage rate. I know what has'nt worked for me and I know what is working for me.

Yep, all of this is quite true, and @Injun is very correct in that the fleet manager at Prime has a huge effect on your potential for success... I'll say right now, I've been very lucky.

@mndriver (and many others) like to point out their irrational hate for both Swift and Prime. That's exactly what it is. @Injun has found something that works really well for her at Swift, and I applaud her for that. I keep comparing my numbers with owner ops at Landstar and Mercer, and I believe at this point I'd be loosing over 20-cpm net before taxes if I'd jump at this point. I just laugh at the idjits over at Crete who keep telling me how much better off I'd be making half of what I'm doing at Prime.

I'm also very leary of going fully independent with equipment payments and a cash poor position in this economy. When the conditions are right... mostly at the bank account, I'll make a move, but until then it would be beyond stupid to make a move just so I could join the folks who delight in looking down their nose at Prime.

Y'all have fun with that, now, and don't forget to pass me four or five times, ya hear?

Cautionary tale... got a buddy at Mercer who just had to take a $6000 loan to finance truck repairs. Immediately paid off $2000 of it back to Mercer because of one of those rare home run loads, but still has a big private loan to pay off just to keep going down the road. Another shot of bad truck luck before summer, and y'all can stick a fork in him. IMO, most owner ops are one big truck repair from stepping up to a company driver job. I don't want to have a ticket on that boat.

 

[mndriver]

Has nothing to do with looking down at prime or at Swift. It has everything to do with looking at it from a business point of view and realizing that $4,000 a month in fixed overhead cost is slow death the

 

[Injun]

Has nothing to do with looking down at prime or at Swift. It has everything to do with looking at it from a business point of view and realizing that $4,000 a month in fixed overhead cost is slow death the

It's only "slow death" if there is no net left after expenses have been met.

You can easily weather $4K/month in expenses plus fuel if you're grossing $12K.

I don't think IP's expenses are near that, now that his truck is paid off. My own fixed expenses are just under $3K/month (not week). That will drop to less than $700/month in May because Girly will be paid off.

 

[ironpony]

Has nothing to do with looking down at prime or at Swift. It has everything to do with looking at it from a business point of view and realizing that $4,000 a month in fixed overhead cost is slow death the

That's nice. Got 700+ credit? Forget about the bank... they ain't heard of a thing used to be known as "a commercial loan," since they got bailed out.

 

[ironpony]

It's only "slow death" if there is no net left after expenses have been met.

You can easily weather $4K/month in expenses plus fuel if you're grossing $12K.

I don't think IP's expenses are near that, now that his truck is paid off. My own fixed expenses are just under $3K/month (not week). That will drop to less than $700/month in May because Girly will be paid off.

$450 a month for me. You're really gonna be likin' life pretty soon! When's the party?

 

[Injun]

That's nice. Got 400+ credit? Forget about the bank... they ain't heard of a thing used to be known as "a commercial loan," since they got bailed out.

Psst...400 credit is actually pretty abysmal. My friend's dog probably has at least a 400 credit score.

Banks are looking for 700+ for business loans.