To Lease or Not to Lease ??

The following is a re-print of an article written by Paul Taylor , Lead Attorney at the Truckers Justice Center , a firm specializing in labor law in the transportation industry.

Drivers, as a general rule I strongly recommend against entering into truck lease purchase programs sponsored by trucking companies. I get an average of 5 to 7 calls per week from drivers who entered into lease purchase programs sponsored by motor carriers. In the 31 years that I have been an attorney for drivers, I have probably spoken to only 3 drivers who claim that they actually ended up owning the truck they had leased. I think two of them may have been lying.

There are typically three reasons why drivers enter lease purchase programs. (1) "I always wanted to own my own truck." (2) "I thought I would make more money as a leased contractor." and (3) "I wanted to be independent so I could pick and choose which loads I would haul."

To the first category of drivers who cite that they always wanted to own their own truck as the reason for entering into one of these horrendous deals, my typical reply is "your name is not on the title, is it?" This is usually after the carrier has already taken the truck away. These arrangements transfer the truck payment responsibility and most of the operating costs to the driver. The payment is usually unmanageable, so the driver rarely ends up owning the truck. Sometimes he gets fired for a bogus reason before he gets the title. Other times he quits the carrier because he is not making any money and is restricted from putting "his truck" on elsewhere.

To the second category of drivers who cite that they thought they would make more money as a "lease contractor" as the reason for entering a lease purchase program, I typically reply "Are you making more money now than you did as a company driver?" The answer is almost always "No." You sit on the West Coast because produce is slow - you pay the truck payment. You need to go home for 3 weeks because your kid is sick - you pay the truck payment. You blow an engine you usually pay for that and still owe the truck payment while the truck is in the shop. You have no workers comp coverage if you get hurt. The carrier makes no contribution to your social security.

When contemplating entering into one of these egregious contracts, ask yourself this question "If I could make more money entering into a lease purchase than I did as an employee, why wouldn't the carrier keep me as an employee and keep all that extra money for itself?" The answer is obvious that the lease purchase is good for the carrier because you are paying the cost of operating the truck, often at a marked up cost. You are also likely to forfeit "your" maintenance escrow if you terminate early.

To the third category of drivers who cite their desire to be an independent contractor as a reason for entering into a lease purchase program, I ask "Are you really an independent contractor when they can take the truck at any time by firing you as a so-called "owner-operator."? Are you really an independent contractor when you can be punished for refusing too many loads? Are you really an independent contractor when you have to use the company card to buy fuel? Are you really an independent contractor when you are stuck driving for one carrier?

If you always wanted to own a truck, improve your credit, make some dough as a company driver, and go borrow from a bank or other lender.

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What are your thoughts?