The Real Truth on Lease(Fleece) Purchase Deals.

[Iamabroker]

Ok Drivers here it comes what you really want to know about (Most) Fleece Purchase's in the Trucking Industry.

First of all why I am an expert... I have been through 2 Lease Purchase deals... Fool me once shame on you ..fool me twice..well you know the rest.....

So I regress ..I mean progress..lol

Bottom line is this there is ONLY one reason a company will offer a Lease Purchase..and it is the same reason EVERY company with 100+ trucks does it.

MONEY!!!

Trucks are money whore's they require fuel, maint. and some monkey to pilot the thing.

Which are ALL variable cost..... Have you noticed the same things in (Most) Fleece Purchase deals????

They ALL:

Pay Flat Rate.. Ugh!! ... $.80 to $.90 cents per mile.....REALLY!

The company is glad to pay all your fix cost..well ok so they pay some..or at least that claim they do.

Most will claim they pay your Cargo Insurance out of the kindness of the own heart....Please! They are required to cover the Cargo insurance as they hold the Carrier Authority.

They provide your Plate...then they charge you back for it.
Your BOB Tail and collision Ins. Charged back by most.

They deduct a maint. escrow ..which by the way is your PAY by federal Law! You will be taxed on it ...but I will bet you a buffalo nickle you will NEVER see a dime of it!

and lets not forget the Qual Com charge..what a scam avg. cost by carrier is $25 to $30 per week. How much do you think they ACTUALLY pay Qual comm for there service...no where near $25 per week per truck!

So why do they push this so hard??? .....Well let's do the Math...Fuzzy as it is.. most of you drivers that have been in a Fleece Purchase know this all to well!

Avg. Freight Rate's unless it is dry van which is only true some of the time, ... most frt rates will exceed $2.00 per mile. Now I am talking contract rate NOT what a truck sees ok..so don't flame me just yet.....

That being said let's compare True rate to Fleece rate!

But first to get an accurate comparison we need to know what the Cost per mile is for the truck...right?

ok we know the fix cost that is easy ..you are being charged by you company for this.. or if you are smart paying for them yourself.. it is way cheaper.
even so it must be figured in.

Fix cost: based on 125000 miles per year-10417 per month-2400 per wk.

Plate apox. $1800 per year for most states with 48 state authority. $.014 per mile
Col/Bobtail Ins. apox $2100 per year $.017 per mile
Workers comp. apox $1300 per year $.01 per mile
Maint (avg.) apox $20,000 per year (If your in a typical lease tractor)$.16 per mile
Fuel (5.5mpg)apox $70,000 per year $.56 per mile
* Note FSC will offset this amount
Qual Comm apox $1200 per year $.01 per mile
Misc, Fees apox $10,000 $.08 per mile
___________
$.851 per mile

So you can well see if your Fleece company is only paying you $.87 cents per mile ..your ONLY profit is your FSC! ...WOW! that's scary!

You notice you have not been paid yet..and what if you don't get a FSC..not all loads pay a FSC... I bet that makes you feel all warm and fuzzy inside!

Now the truth of the matter.... If I am a Carrier and I am contracting frt for $2+ per mile... and I can con unsuspecting drivers in signing a Fleece deal for $.87 per mile.... I am very much a happy camper!

Why because I just turned all my freight cost into a FIXED cost... and when I go to a company and am competing against Brokers for the same frt... Which I know for a fact the brokers cannot move for $.87 per mile.... but I can!! Gives me the Carrier the edge. ..and you the Driver the shaft!!

Believe it or not the the real losers are the Carriers ( such as Independents) who only have a few trucks and try to maintain with all those variable cost and pay a driver. It is very hard for them to compete for freight direct from customers and so they tend to use brokers for customers they cannot get.

So now you know the Truth.....If you feel you must get into a Lease Purchase.. I suggest you at the very least sign with a company that pays percentage....and be very careful.. best case buy yourself a truck and make sure it has YOUR plate and NAME on the registration, as well as your own ins. That way you hold the cards not the carrier.

 

[Gwynplaine]

Wow, that was quite the education -
Thanks for the heads-up...!!

I was looking into this to see if it was the way to go when I'm ready to own my own rig -
It would seem like it's not...

 

[Tommy43302]

I have never participated in a lease or lease purchase of any kind. But I can say this, the beauty of having a CDL is the options that came with it. If you sign a lease you just relinquished most of those options.

 

[max7]

I am in a least purchase now. While a lot of what you have said is true, there are lots of bad things that are associated when doing a least purchase and like you alluded too, if you can avoid it then don't lease purchase. But believe it or not there is good associated with lease purchase and I'll try to share some of them with you.

Why do drivers get into a least purchase to begin with:
a. Can't get a loan from a bank because of bad credit
b. Don't have the down payment to put on a new truck
c. To get out a company truck and have a little flexibility

Now there are many other reasons that you are doing a least purchase, I'll share some benefits as well:
a. With a least purchase through a legitimate company if there is a problem making your payments company will be aware of it and will work with you to get caught up.
b. They will also assist with breakdowns and deduct in the case of my company $350 per week along with your other fixed expenses until caught up
c. While the flat rate is correct "ugh" you are at least getting good miles the first 3 years of your purchase (take a $100s out of each check ever week that you are able and put it in the bank and don’t touch it, it will come in handy when your least is about up)
d. Regardless what type of finance you get always try to get repairs done in-house (by your companies’ mechanics) you'll save a lot if you do this.
e. Always fuel at companies discounted fuel-stops (all savings adds up)
f. Get a laptop and good software to keep out-of-route miles down (huge savings)
g. Touchy one here... Try and keep a good standing with your fleet manager or dispatcher. (They can make or break you)

I have a lot of other things you can do to make a lease purchase a little less painful but lease purchase or not the few steps I mentioned above can help you out in an enormous way as it has with me. It’s called making the best out of a bad situation and that is why my truck will be paid off by the end of January 2011(next month… Yeah). I will return with more ways of making it work under the worst of conditions because not everyone can do it the way it should be done but we can do it the best way we can.

This is only advice... nothing more... nothing less.

 

[Judah 8406]

Very Good, sound like some of these guys who did a lease was lazy and did not know how to be a businessman

 

[UnkaD]

Unfortunately, most drivers who want to be O/O's don't appreciate the costs of doing business. So many companies have lease programs that are almost criminal in the number of "extra" fees they charge drivers. Do the research first. If the company won't give you a copy of the lease to talk over with your accountant and or lawyer, don't go with them. Repeat DO NOT GO WITH THEM!!! You will end up broke and sore!!!!

 

[norotos]

iamabroker says: "So now you know the Truth.....If you feel you must get into a Lease Purchase.. I suggest you at the very least sign with a company that pays percentage....and be very careful.. best case buy yourself a truck and make sure it has YOUR plate and NAME on the registration, as well as your own ins. That way you hold the cards not the carrier."

here is a link to the schneider lease package. would you consider this an ok percentage?
Owner Operator Lease Agreement

ron-

 

[norotos]

i forgot to add.. my research is almost done and am thinking of using schneider as my first company. they seem to have updated equipment and the training after school is about as good as it gets for newbies.

ron-

 

[FastTrack76]

Unfortunately, most drivers who want to be O/O's don't appreciate the costs of doing business. So many companies have lease programs that are almost criminal in the number of "extra" fees they charge drivers. Do the research first. If the company won't give you a copy of the lease to talk over with your accountant and or lawyer, don't go with them. Repeat DO NOT GO WITH THEM!!! You will end up broke and sore!!!!

That goes without saying. There is never an easy way out of anything.

 

[Captain]

Ask yourself this.... If there is good money being made owning a truck, then why are they trying so hard to sell me theirs?

This thread just answered that question for you.

Truth is, they hold the cards. Dealer wins...

 

[krelithous]

true captin. and i wouldn't want to be tied down to one company if things get shady of if the dm is an butt hole i would rather take my shiny toys and move on to somewhere else and not be a company slave!! way i see it if i'm flipping the bills then i should be able to go where i want with my shiny toys as part of being an O/O is planning your own vacations. and theres an 84% faliure rate in lease purchase programs. talked to a driver that was leasing beore she leased she had money in the bank and everything but after her truck kept breaking down and her company not giving her any miles she's flat out broke. not saying there all bad but i have always been skeptical of em if it sounds to good to be true than it probily is. and it's amazing how some of these companies use math tricks to make it look like you'll be making a whole bunch of money. but there after the newbies as newbies are there prey seeings how they have no experiance and dn't know how much it cost and what responsibilites it takes to run a truck as they just sighn there life away and grab the keys and off they go then they wind up crying there broke and they lost everything when they should have researched and talked to drivers first