Wanting to Lease. Advice Please...

[LonghornIII]

I am Interested In leasing a truck and trying to be a owner operator. I am a single driver now and I would like to lease a truck and run team with a person I have known for years.
Please give me some advice as to what I am In for. What should I be watching out for? What company's are good to lease from? I am with Transport America right now and they won't hire my team member without sending him back through training and he does not need It so I thought I could lease a truck and then just bring him on with me. What do you think? I know I want to do better than what I am doing right now and I would love to run my own truck. Is It worth It?

[pro1driver]

Originally Posted by LonghornIII

I am Interested In leasing a truck and trying to be a owner operator. I am a single driver now and I would like to lease a truck and run team with a person I have known for years.
Please give me some advice as to what I am In for. What should I be watching out for? What company's are good to lease from? I am with Transport America right now and they won't hire my team member without sending him back through training and he does not need It so I thought I could lease a truck and then just bring him on with me. What do you think? I know I want to do better than what I am doing right now and I would love to run my own truck. Is It worth It?

i do know that at one time i worked for an o/o. he was leased to a company. even though it was HIS truck, i had to fill out an application for the company he was leased on with. they had FINAL SAY as to whether or not i could drive for him. SO, you would need to ask that question, "can you hire anybody under your lease"

then you have all the usual expenses like, fuel (very, very high now), insurance, taxes and boy, so on and so forth. hopefully, an o/o will be here to help you furthur.

[pcuthbert]

Longhorn;

For the next couple of months, keep records of all the costs of operating the truck you drive.

Learn what you would be paid for your truck if you leased on.

Get any contracts a couple of weeks before you sign on, and take them to your accountant (with your figures) and lawyer for them to read through.

If your lawyer does not like the contract offered, then get him to make changes to the contract to suit him and you.

Once you sign a contract, you are stuck with the terms. If you can negotiate more favourable terms, then you will be ahead of the game from the start.

As to whether or not leasing is right for you, only you can make that determination. Your professionals will be able to offer you the best advice, and you will need them as you run your business.

They will also be able to warn you of any pitfalls that may come along.

[JLKKLJ777]

You said you want to do "better "than what you are doing.
I would be interested to know how much you are currently making and what kind of benefits Transport America is giving you.

I will attempt to give you some rough figures to see if you will do "better" or worse. I will use 50 weeks for the year assuming you will take a 2 week vacation.

Leasing a truck through the company you work for will usually cost you around 500 to 750 per WEEK (depends on the company but lets use the lowest payment of 500).

Now lets get a cpm cost. For a solo driver that drives 2500 pay miles with pay of .90 cpm plus a .35 cpm fuel surcharge equates to $1.25 per mile.
The truck payment equates to .20 cpm.

Now for your fuel cost. Assuming your truck gets 6.25 mpg at 2500 miles you will have had to purchase 400 gallons of fuel at an average national cost of $3.35 per gallon will cost you $1,340.00. This equates to .43 cpm for fuel costs.

Now you have 2 types of insurance necessary for an o/o or l/p which is collision coverage for your truck and bobtail insurance. This is a cost which varies widely based upon the truck, your experience, your mvr, and the company you select. For this example I will use 350.00 per month. This equates to 87.50 per week and will cost .028 cpm.

You will have to get workers comp insurance (depending on the state you may be elegible for occupational accident insurance which has a celing of 100,000.00 benefit) which has no limit and does cost more. This will cost about 125.00 per month or $31.25 per week. This is .01 cpm.

Now many companies will require you to se aside .08 cpm for a maintenance account which should be used for pm's , breakdowns, tires, etc.

Now lets look at medical insurance. Many will claim you don't need it but I disagree. You better have some insurance either for yourself or through your spouse. Having the medical costs factored into your business plan it becomes 100% deductible for the company side as opposed to paying for it yourself and only getting a portion of your premiums deducted. For a good insurance plan with prescription plan for a solo driver (non family in good health) will cost about $400.00 per month or $100.00 per week. This is .032 cpm.

Now you have road use taxes, fuel taxes, and 2290. The road and fuel taxes may be calculated and paid under your lease agreement but be sure to check if they charge it back to you. The 2290 is $550.00 per year alone. Each state has a different tax on the fuel and roads so I will just set aside .04 cpm for these. This should cover all your road, fuel, and 2290 taxes.

Now to figure out your benefits for the 2 weeks vacation. Lets assume you want 1000.00 for a week off. This will be a total of 2000.00 that you will have to set aside which equates to .0128 cpm.

Now being off for 2 weeks means no revenue for the truck so you should have built in the fixed expenses for the truck payments and insurances into your business plan. The costs for 2 weeks fixed expenses would be 1,437.50. this is .0092

So based upon these figures your cpm cost should be .762 per mile.

Now these figures assume the company you lease on to will pay for the plates, permits, and liability insurance (while under dispatch, laden and pulling their trailer).

Other expenses that can take a bite of you are scales, tolls, and lumpers. The company might cover these then again they may charge it back to you.

For the tax implications you are now an independant contractor and must pay your estimated quarterly tax. Your lease carrier will not do this for you. Remember too you now are on the hook for the full 15% tax for fica and medicare. As an employee your employer paid 7.5 % on your behalf andyou paid the other half.

Be leery of additional chargebacks such as trailer rental fees, qualcomm installation and usage charges, trip pak fees, Administrative charges for calculating your road use and fuel taxes.

So in summation you will have about .488 cpm to pay yourself from which you then calculate your tax burden. It would be a good idea to set aside money for a retirement account and replacement costs of the truck. I recommend .10 cpm for these. Half toward a new truck and half for retirement savings. This would drop you down to .388 cpm.

You should also be aware that any breakdowns or pm's will have to be taken care of by you or YOU will have to hire someone to do them. Ideally your maintenance account will cover this.

In the event you hire your friend to drive you will have to pay his workers comp, and calculate all his taxes including withholding and pay half of his social security. Of course with 2 guys on the truck your revenue will go up and operating costs over all will go down (after you have met your fixed costs that is).

1 more note is many of these lease deals have a clause in them for mileage and over usage penalties in the event you exceed a set amount of mileage per year. Much the same way a lease car has an allowance of 12000 miles per year your lease truck may have a 120,000 limit with a penalty assessed for each mile over that.


Now after all that if you are making more than .388 cpm and have paid benefits such as discounted medical, dental, vision, 401k with employer match, paid sick days and/or holidays then I think you will be making LESS in the long run overall AND have alot more head aches than a company driver does.

Lets not forget the truck you will be leasing is probably identical to the trucks the company drivers are driving too.

[LonghornIII]

First off It's not what I am making at Transport America. It's the fact that no matter what I do they will not give me the miles. I am running between 1000 to 2000 miles a week. More closer to 1000 miles. I know I can do much better than that and I have but they won't give It to me. They keep me on the east coast. mostly northeast. won't send me south or west.
I want to team but the person I want to run with has been out of a truck for a year and they want him to go back to school. He has 5 yrs exp.
Thanks (JLKKLJ777) you really gave It to me In a nut shell and thats what I was looking for. Now I just need some advice as to some good company's that do the no money down, no credit check, lease.