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At   Drive FORWARD purchase is still part a part of a lease purchase.

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Lease purchase are
a means for experienced company drivers to become owner operators.

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Making the transition from company driver to owner operator is difficult.  So difficult in fact that it remains a dream for many would be business owners.  Depending on who you ask, owner operators will share their stories of great success, or of miserable failure.  

The single biggest obstacle for most owner operators is the purchase of their first truck.  Banks are hesitant to loan, some dealers have programs that are difficult to qualify for, and most drivers lack the resources to purchase a reliable truck in good condition.  To make matters worse, many carriers require that owner operators have a truck that is 5 years old or newer to secure a contract.

For many years the industry solution has been Lease / Purchase programs.  These programs often provide unutilized tractors from a carriers fleet to a driver, deducting it's cost in form of weekly settlement deductions.  The drivers are then paid in a similar or equal manner as the fleets owner operators.  At the end of the lease term, the driver has a baloon payment that is due to complete the purchase of the truck and transfer of title.

Depending on the program offered there can be some unfavorable terms in the lease/purchase contract.  You may want to have a lawyer go over the agreement with you to be certain the terms are favorable.  Here are a few things you should watch out for:

  • Large baloon payments at the end of the term. Many carriers will charge a lease purchase operator a payment equal to or greater than their own financial obligation for the truck.  Then at the end of the lease when the company receives the title to the truck (that the driver paid for), they ask the lease/ purchase driver for a baloon payment of $10-20k to receive the title.  Be certain that any total amount that you pay for a lease/purchase truck is equal to it's purchase price plus a reasonable amount of interest.  You will pay more than a traditionally financed truck, but it should not add up to 60% interest, with a $10k baloon payment.  15-20% interest is typical in hard lending, and a baloon should not exceed $1k.

  • Paying full term for used equipment.  If you are being offered the payments of a new truck for a slightly used truck, you should not have 60 months worth of payments.  If the truck is 1 year old, then you should have 1 year less to pay it off, or the payment amount should be significantly lower.

  • Five year or older equipment with unreasonable terms. Any well used truck is usually fully owned by the carrier.  The total cost of any lease purchase on this type of equipment should be extremely favorable to the lease/purchse driver.  Depending on it's condition, it's retail value is typically $20-40k.  You should not be paying much more to the carrier by the end of the term.
  • Walk away penalties.  Beware of significant penalties if you leave in the middle of the program.  Some contracts require the driver pay 6 months or more in payments if they quit in the middleof the program.  Most reputable programs will have a $0 walk-away (no penalty).
While this only scratches the surface of some of the perils that await you when considering lease/purchase programs, there are many trucking companies that offer reasonable programs that are a valuable stepping stone towards becoming an owner operator.  Drive Forward Solutions has favorable lease purchase contracts available at multiple carriers.

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