Lease Purchase Trucking: Pros, Cons, and Considerations
Here’s a helpful guide to walk you through the pros and cons of leasing a truck.
Thinking of becoming your own boss as a trucker? Then, it’s time to think about lease purchase trucking, as it might seem like a good way to start. Lease purchase allows you to move towards owning a truck in those cases when you can’t or don’t want to buy a vehicle outright. Yet, such an option also comes with some downsides – not only benefits! In this article, we’ve shared a simple breakdown so you can understand whether lease purchase is the correct way for you.
How lease-purchase programs work.
A lease-purchase (or, with other words, lease-to-own) program is a smart way to buy a truck by making regular payments. Unlike a basic lease, lease-purchase allows you to keep the truck once its full price is paid.
In most cases, when leasing a truck, you work for the same company that provides a vehicle for you. That means you have more operational freedom than when being employed by a company, yet you are not as independent as owner-operators who own their trucks.
3 Types of Programs
Usually, drivers can choose one of three main types of lease purchase trucking deals:
Lease Operators
You lease a truck from a company but can’t own it. This option can be beneficial if you are still undecided about working in the industry long-term.
Leased Owner-Operators
You lease-to-own the truck, making the upfront payment. While the carrier can still set certain limitations, such as delivery distance or types of transported items, you get some operational freedom.
Independent Owner-Operators
You sign an agreement with a third party, not a carrier. In such a case, you have maximal freedom, taking different orders or working for different carriers.
Pros and Cons of Lease-Purchase Deals
Benefits
Newer Trucks
Sometimes, lease-purchase deals are the only way to get a new, expensive vehicle. Even with a strictly limited budget, you don’t have to buy an old truck.
Support from Carrier
Many carriers willingly help to obtain necessary permits or to find clients.
Extra Services
Sometimes, when leasing a truck, you also get access to some perks, such as training and maintenance.
Path to Ownership
Even if you don’t have perfect credit, this can be a way to work toward owning a truck.
Drawbacks
Less Freedom
When you drive for a carrier and not for yourself, you are not always able to choose your routes or loads.
Business Responsibility
Unlike employed truckers, you act like an independent contractor, which means that you have to handle taxes, maintenance, and business planning on your own.
Risky Contracts
Often, there are risks of hidden fees or restrictions wrapped in a beautifully written contract. Always read the fine print.
How Much Can You Make?
Earnings of an independent contractor vary greatly. Lease-purchase drivers often earn more than company drivers but less than independent owner-operators.
5 Things to Watch Out for in a Lease Contract
Before signing any agreement, look out for these red flags:
Balloon Payments
A low monthly payment may seem attractive, but it could conceal a significant final payment. Try to get a deal with even payments or a final payment that you can afford.
Early Payoff Penalties
Some contracts punish you for paying off the truck early. Choose a lease that offers flexibility in case you decide to buy a truck before the contract ends.
Very Long Terms
A 2–4 year lease is standard. Choosing a longer leasing contract is not like a smart option – but more like a trap, especially if the truck’s value drops too much over time.
Overpriced Trucks
Compare the total cost of the truck to its actual value – it will help you to avoid overpaying.
Lower Pay Rates
Sometimes, the carrier may try to use the situation, offering slightly lower rates for delivery. Before signing a contract, discuss it with the carrier to ensure your rates are fair.
Summary
Lease purchase trucking can be a significant step to truck ownership, but it doesn’t work equally well for everyone. Do your research, ask questions, and don’t rush into any contract. With the right plan, a lease purchase can become a smart move for your career.