Let’s now continue the discussion about lease purchase trucking. This article tackle some advantages and disadvantages of lease purchase trucking and things you must avoid in your lease purchase contract.

The Pros And Cons Of Lease Purchase Trucking For Owner-Operators

In this part, we’re focusing on lease purchase programs. Below are the things you need to know:

The Advantages

1. Having Extra Benefits

Preventive maintenance charges, driver training, performance reviews, and other add-ons are included in certain leases as money-saving extras. Sometimes the lease will automatically include them. Other times, a small cost will be required to receive the desired services.

2. Having Brand-New Equipment

Most lease purchase agreements are for brand-new trucks; you can pick the one you want. This might be an excellent way to avoid potential issues with old equipment if you can’t afford to purchase a new truck entirely.

3. Having Administrative Benefits

Setting up a lease purchase with a carrier sometimes entails administrative tasks. You won’t have to worry about difficulties setting up your authority because you’ll operate under the carrier’s authority. The carrier may assist you in organizing your loads and tracking your HOS.

4. Taking Permits, License Plates, And Other Requirements

The carrier will often handle time- and money-consuming housekeeping chores like getting license plates, securing permits, and other papers.

The Disadvantages

1. Buyer Beware

The majority of carriers that offer lease purchase programs are open and honest. Confirm they can fulfill their commitments and know the lease purchase drivers’ requirements. 

Whatever you agree to, you could be held legally responsible for it. Therefore, be mindful of getting all agreements in writing. Consider having a lawyer review the deal before you sign it.

2. A Lack Of Freedom

Regardless of carrier quality, your leaseholder controls your working conditions. Lease purchase drivers often get tougher routes than business drivers. 

Other carriers may not let you pick up loads even in slack times. Make sure you understand all the terms before deciding.

3. Running Your Business

Depending on your business sense, all owner-operators may face this downside. Lease purchase drivers are independent contractors for the carrier. That means you run your business.

The Things You Need To Avoid In Lease Purchase Contract As Owner-Operators

1. Balloon Payments

A balloon payment will make up for a meager price at the contract’s start. Buying the truck at the end of your lease may be a significant amount. Seek a lease with equal payments or a tiny, affordable balloon.

2. Early Payoff Penalties

Paying off your equipment early will save you interest in the long term. It can also be a release clause if you don’t enjoy driving for that carrier. Some leases prohibit prepayment.

3. Super-Long Leases

Avoid very long leases. Ideal lease terms are two years. To reduce your payments, you might extend it to three or four years. Anything more than that isn’t economical.

4. Bloated Pricing

Look beyond the payments. Discover the overall vehicle ownership cost. Carriers usually mark up the price to cover leasing. 

5. Smaller Paychecks

Some carriers pay lease operators less than company drivers or independent owner-operators for the same loads. Be sure you’re getting the exact pricing by reading the contract.
These are just some of the things you should know about lease purchase trucking. If you have questions or you want to learn more about it, you may leave a comment or contact us now.