How NOT to Buy a Truck
Posted on Jan 29, 2008 - 8:36am by Wayne Weisser in Business
Look at any of the freebie recruiting mags at truck stops and a lot of ads read something like
Become an Owner Operator, Zero Cash Down, Bad Credit okay.
Sounds like one of those late night used car commercials. I don’t even think I could drive for a company that does that. These companies prey on people’s desire to own a business and make money. Why would you be a company driver making .35 a mile when you can own your own truck and make three times as much?
This is a great deal for companies, a really, really bad deal for drivers. Far too many reasons to list here, these are such a bad deals. You will find more people that fail in these programs than succeed. The driver will fail, but the company and their truck move on to someone else.
If you can’t take “your” truck with you from one company to another, it’s not your truck, period. Why are you making payments on something that’s not yours?
If you don’t have at least a little cash for a down payment, a decent credit score, otherwise you’re going to be paying an outrageous interest rate. Go to a reputable dealer or financing. If you can’t afford a down payment and monthly payment that’s too high, you are going to fail.
Used Truck Dealers
The worse financing deal from a used truck dealer is going to be better than a lease deal from a carrier. One of the problems of leasing a truck from a carrier is the carrier has too much control in your business. They know how much your payment is and how much they have to work you to make that payment and no more. You fail on your payments because you’re not working, they take the truck back and you get nothing. They lease that truck to someone else. These companies get their trucks paid for over and over again.
My first truck was from a used truck dealer and with 50% cash down because my credit wasn’t so great, but cash has a way of talking, who knew? That wasn’t the greatest deal, but I could take that truck anywhere to any company. Even when the company I was with failed and went bankrupt, I still had a truck I could work with.
If it sounds too good…
If you really want a truck and a business, it takes work. If your credit isn’t the best it takes time to repair your credit (or cash). Owning a truck is about owning a business not being a tool for someone else. I may be more than a little cynical when it comes to corporations, but this deal is NOT what truck ownership is about.
Tim Brady has written more detail on this subject, check out the entire article.
Dreaming of being an owner-operator
by Timothy D. Brady
Mar 2, 2006 5:30 PM
Be careful of the trap.
The earning figures many major trucking companies provide to potential lessees are not an “apples to apples” comparison. Yes, owner-operators with these companies are getting $105,000 to $115,000 annually. But these amounts reflect gross revenue– not the owner-operator’s net take-home pay. On those gross revenue amounts, a well-disciplined owner-operator would take home between $34,999 and $38,333– about the same as an inexperienced company driver. From my 23 years’ experience as an owner-operator and as several other experienced O/Os who are excellent money managers, we concur a trucker who watches his dollars will take home approximately 1/3 of what he grosses in a year.
As I see it, the only reason for a company to hire leased owner-operator is because it benefits the company. The company no longer has to pay its half of FICA tax, and benefits like heath insurance and 401(k) go out the window. It no longer has to pay for tractors or their upkeep. In a majority of cases, the trucking company or one of its subsidiaries, leases the tractor to the owner-operator at a staggering rate; in some cases, as high as $800 per week.
O/O's May be Barred from the Ports of L.A. and Long Beach
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Just go to any of the companies offering the deal and watch their garage. I know when I was affiliated with one of the largest companies running the scam, there was ALWAYS somebody sitting on all their gear outside of a truck they were turning back in.
This company had a very, very nice terminal in Missouri and I know how they paid for it. They will speak of success stories, but you’re hard pressed to find them in person. If folks were getting a good business going with virtually no risk, you would not have to hunt one down to hear the success story.
It is very tempting to take them up on the offer. It sounds so nice to have your own business, but it’s an all-out scam. Have a lawyer look over the contract and he’ll laugh you out of the office as soon as you write him his check of course.
Just READ the contract and you’ll run. I seen guys signing the contracts who didn’t even read the thing and others who just glanced over it. I’ve been employed by businesses where they never signed an original contract, it was always redlined and negotiated. It’s common business practice. None of these companies would change one word of that contract I’m sure.
Some folks have their lives ruined by this. They keep trying and the company will keep telling them that they’re doing this or that wrong. Meanwhile, the driver is running his bank account on empty and foregoing house payments to keep going. The driver I was with owned his truck and they couldn’t keep him going. They would come up with the craziest reports to try and show you the failure was your fault. Fuel and mileage reports that didn’t match records you keep, mileage rates that were lower than quoted when you took the load, and there were multiple fees that you were never notified of in advance. When they were mentioned, it was deep in the fine print of the contract. These fees would always appear just as the truck was starting to pull a decent income.
I am very glad I was able to witness this while just being a hired driver for an owner-operator. It was easy to see what was going on if you were not unlucky enough to be caught up in it.
I did see a way to make it with a big Arkansas outfit. The guy had no family and lived in his truck. He made just enough to survive. He almost had the 3 year lease completed when I talked to him.
listen to him folks you can get a truck easy but remember you have to pay for it to
It’s just amazing, to me, that these scams can continue. All kinds of companies were forced out of this type of business practice, and I choke as I write the words “business practice”, back in the eighties.
Everybody who’s ever thought of doing something like this really needs to read this post and Mark’s comment. It’s really a sad situation. I can’t imagine how demoralizing it must have been for Mark to “ALWAYS (see) somebody sitting on all their gear outside of a truck they were turning back in.” It would break my heart.
You can always say that drivers should know better and, with more experience, maybe they would. I’m guessing that the majority of those caught in the trap are relative newcomers to the business and just don’t have anyone in their circle of friends and family that can advise them.
I think about a guy talking over the prospects with his wife after he’s just spoken with the company con artist. He’s trying to do the best he can for his family and has no idea that, in a matter of time, he’ll be sitting on all he has left after he turns in his truck. I just can’t get that image out of my mind.
The 2 biggest offenders of the lease scam have been taken to court and lost numerous times, but they still keep growing. I don’t understand how they do it, but they do. Do a search for C.R. England and Prime and you’ll see numerous lost court cases. Search any of them and you’ll see lost court cases.
I’m guessing it’s a numbers game for them. Only a few have the resources left to go to court when it’s all finished.
The company I was talking about had a sister company that the owner of the truck I drove was leased to. The guys losing their trucks would ask about the sister company not even knowing or caring that the company that just bamboozled them was part of the same company, just running an even bigger scam with more expensive trucks and only taking on experienced drivers.
When I went through orientation at the sister company, you could hear the phone recruiters working. They took calls non-stop all day. There was no lack of interest in the scam.
Is there ever a time to ‘buy ‘ a truck this way? Maybe as long as the buyer knows they will walk out with a lesson not a truck. Now who needs this lesson ? How about the people that want to learn how to be an o/o but are the first in the family to get with in 20 feet of a truck.You can use the lease to learn but you need to know from the start you will not get the truck an will spend alot of money to learn.For most people this is a scam .
Thank you so much for this posting. As a Newbie i was going to look into the Leasing of a truck with one of the big name companies. To think i was going to fall for this in hopes of owning a truck. Now i am willing to be a company driver until i can save enough up for a down payment so i can not get ripped off. This site should put together a book for the Newbies on the proper way to go about trucking and also how to suceed in trucking. Thank you all for helping. I do not want to stuck sitting on my gear as my truck is taking away.