There’s a lot of rewards for an owner-operator truck driver, some of which are independence, flexibility and higher earning potential. For anyone who would like to become a lease purchase truck driver, this article will take you through the process.
There are 3 different types of owner-operators:
- Lease operators
- Leased owner-operators
- Independent owner-operators
Here, you will learn how to successfully transition from a trucker who drives for one company to an owner-operator.
What is a Lease Purchase Program?
There are many drivers who want to have their own business, but few have the financial means to make this a reality. For this reason, lease purchase programs are very attractive. They help reduce expensive one-time payments on equipment as well as assist truck drivers in getting past credit constraints.
- Benefits of Full-Service Lease Companies
Hiring a full-service leasing company gives you added advantages because they will handle scheduling maintenance check-ups, driver training, performance reporting, and many others.
- Fewer Administrative Costs
If you lease from a carrier, you’ll get more guidance with certain administrative tasks like managing your loads and tracking your hours. Leased owner-operators work under the IFTA license of their carrier. In some cases, the company will also manage IFTA reports and taxes. This means you get to spend less time on administrative services.
- Access to New Trucks at Lower Prices
Lease purchase programs typically let drivers choose the type of truck they want. They get the option to choose between cheap, used vehicles, or pick new trucks and avoid issues with car maintenance.
- Help with Permits
When working as an independent contractor for a carrier, they are responsible for securing all the necessary permits, license plates and any other required paperwork for the driver.
It is also important to know that different trucking companies have unique terms and conditions. Drivers should do their research about the lease purchase program and the carrier, before making any decision.
While there are many benefits to being a lease purchase owner-operator, there are also disadvantages. Unfortunately, many drivers do not want to join lease purchase programs because there are many fraudulent carriers out there that offer programs that put the drivers at a disadvantage.
According to a survey done by Truth About Trucking, LLC, a high percentage of lease purchase truck drivers earn lower salaries and drive fewer miles per week than what was initially promised by the carrier.
In the survey, one of the questions asked was centered on the annual earnings the carrier initially offered their drivers. 39.2% of the drivers that responded were promised over $100,000, 38.1% were promised initial earnings between $66,000 and $100,000 and 22.7% were promised $65,000 or less.
But it turned out that only 21% of the drivers made $66,000 or more, while 73% earned between $35,000 and $45,000.
What can we deduce from these statistics?
There’s a major gap between the expectations of drivers and the realities of the job.
However, there are still lots of drivers who find success in this type of program. a survey by Owner-Operator Independent Drivers Association (OOIDA), shows that 66% of owner-operators who have been in the trucking business for more than 26 years already paid off their lease-purchase trucks.
So, is it right for you?
Many owner-operators warn against working with the same company that you lease your truck from.
Keep in mind that fraudulent carriers use contracts that give them full control over your freight. They do not bear expensive costs like truck maintenance and repairs. It is the responsibility of the owner-operator.
You may find yourself in a situation where the terms of the contract are about to be met and suddenly, the carrier runs out of freight for you to haul. This is why, as a future lease purchase owner-operator, you have to be careful of the companies you strike a deal with.
Tips to Note before you join a lease purchase program
- Find Carriers With Load Boards
A load board, also known as freight boards, allows you to book your own freight on your own time. Remember to always use the load board your carrier provides.
- Accept Loads on Your Own
Make sure to have your contract checked by a lawyer familiar with the trucking industry. You do not have to accept all the terms and conditions they throw at you. Understand the terms of the contract before you sign your signature.
- Speak with Other Drivers
Talk to other drivers about the reputation of the carrier. Contact other drivers who have experience in the industry. They will know the genuine carriers. You could also join a truck driving community. It is a perfect place to connect with other truck drivers.
- Get Caught up on Industry Regulations
Make sure you are updated on new regulations in the trucking industry, especially the ELD (Electronic Logging Device) mandate.
An ELD helps to keep a record of the hours of service and duty status information, as per federal regulations. ELDs also help to reduce administrative work like log auditing and IFTA reporting.
Buying an ELD for your new truck isn’t expensive. You can get some for as low as $20 a month.
- Act Like an Entrepreneur
You have to think like an entrepreneur. Act smart and make sacrifices especially with your time at home. To be honest, you won’t have a successful business if you spend most of your weekends at home.
To become a successful lease purchase owner-operator, you need to combine experience, connections and the industry know-how you established.