At first glance, a lease-to-purchase contract seems like a no-brainer. There’s no down payment, no credit check and minimal start-up costs. You can be your own boss, work your own hours, and control your own home time. It all sounds really great, however, it’s important to do your homework and completely evaluate all of your options before signing on the dotted line.
To put it simply: look before you leap into a truck lease purchase option with a trucking company. Because once you’re under contract, you’re committed and it could be very costly to get out if you find it’s not everything you thought it would be.
Of course, the practicality of a truck lease purchase option will vary from trucker to trucker and there are many companies who do in fact offer a legitimate, attractive truck lease-to-own arrangement. But to fully understand this type of contract, let’s first look at it from the trucking company’s perspective.
What The Trucking Company Claims
For many years carriers have been heavily marketing and promoting truck lease purchase options as a way for truckers with low credit scores and limited financial means to become owner operators. New drivers especially are vulnerable to the concept of a lease to own and, unfortunately, some companies use their own in-house training programs to exert pressure on their students. Here are a just a few claims being used to entice new drivers into a truck lease purchase agreement:
- low or zero down payment
- no long-term commitment to the company (walk-away lease)
- low deposits
- work for yourself
- make a lot of money
- own your own truck
Basically, from the companies’ perspective, they are giving drivers a first-hand taste of ownership while also mitigating the associated financial risk. And there is some truth to that….
Lease To Purchase Complaints
Many drivers and driver advocacy groups have a much different take on truck lease-to-own agreements. In fact, leasing a truck has resulted in financial devastation for many drivers. Some of these truckers have alleged that, among other things, they were victimized by:
- overcharges for fuel taxes
- company-ordered repairs at company-owner facilities with fixed repair rates designated by the carrier
- inflated monthly payments
- unfair deductions
- low miles
- unclear lease contracts
Some driver advocacy organizations, namely the owner-Operator Independent Drivers Association (OOIDA), have filed class action lawsuits against several prominent carriers such as Landstar, Inc., and Ledar Express. Perhaps the most notorious of them all is C. R. England, Inc., who found itself engaged in a 10-year legal battle in the courts.
Fortunately, although it’s taken some time, many drivers have been able to financially recover. Large settlements have been awarded to drivers whose claims of being a victim of illegal leasing practices by trucking carriers were found to be valid and justified.
Things To Consider
Many drivers have done well financially with a truck lease to purchase option. At the end of the day, it’s at the discretion of the driver to determine whether leasing is the right option. And sometimes that’s a very hard decision to make. The following tips and pointers may help you make an informed decision:
Remember, you don’t really own your truck
Any time you lease your truck from a company, it means that you’re not the owner. THEY are. This means that you are at the mercy of the carrier if they cut your miles, charge you more or pay you less. A loan from the bank so that you can purchase a truck outright, however, means you can simply switch companies if things aren’t working out.
Talk to other drivers
Talking to those who have first-hand experience with lease-to-own deals will help you learn about the successes and failures of drivers who have been there. However, some sources are more trustworthy than others, so it’s up to you to assemble all the information and draw an accurate conclusion.
Make sure you fully understand the terms of the Agreement
While it may seem obvious, you may be surprised at how many people sign a contract without fully comprehending the terms. It’s not enough to simply trust what the company representative tells you. Remember, nothing is enforceable unless it’s in writing – and signed.
Do your homework on the carrier
Not all trucking companies are cut from the same mold. While you’ll find that there are many reputable carriers in the trucking industry, there is no shortage of unscrupulous ones either. Make sure you do your due diligence and sign on with a company that you can trust.
Always look before you leap before signing any contract
It’s up to you to take the responsibility to be informed about the pros and cons of any commitment you are considering. Especially a financial commitment such as leasing a truck that can have such an impact on both your professional and personal lifestyle.
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