If you are thinking about becoming a lease-purchase owner-operator, there are a few things to consider before signing an agreement. Leasing a truck is a big commitment and you want to make sure you are entering into something that will work for the long term.
In order to help make this decision a little easier, check out these things we suggest you know before signing a lease-purchase trucking agreement.
Know what your monthly truck payments are going to be
Leasing a truck through a carrier means you will commit to making monthly payments to the carrier in order to drive the truck. Carriers should clearly state how much the monthly payment is going to be and when you have to start making payments. If a carrier is not clearly stating the amount of the monthly payments, you should not sign an agreement with that carrier.
Some carriers also offer different truck payment options depending on the truck model and age. Knowing how much you can afford each month is something you must understand before signing a lease purchase trucking agreement. It can also be one of the more important factors to determine which lease is right for you.
Know how long the term is
Another important thing to know about the lease-purchase trucking agreement is how long the term of the lease is. It is common for carriers to have lease terms between one and three years. After the term is up, you may have the option to start up another lease agreement with the carrier, or walk away. Some carriers may also provide the option to purchase the truck after the lease term is up with the monthly payments you have been making applied to the purchase price.
A lease-purchase agreement is a contract between you and the carrier or the carrier finance subsidiary. Most carriers will not allow you to simply walk away from a lease-purchase agreement whenever you want. That means it may be difficult or costly to get out of an agreement before the term is up. This makes knowing the term of the lease agreement even more important.
Know what costs will be covered by the company
As a company driver, you are an employee of the carrier you pull for. This means they will cover the costs that come with driving a truck. As a lease-purchase owner-operator, you are the boss of your own trucking company. This means you will be responsible for the majority of the costs. However, some carriers will offer to cover a few of the costs in order to incentivize you to sign a lease-purchase trucking agreement with them.
One of the more common cost coverages you will see is a truck warranty. This coverage can save you from catastrophic maintenance costs so it's important to understand what is covered. Some of the other costs that may be covered by your carrier are license and permit fees, Federal Highway Use Tax (FHUT), Qualcomm fees, trailer fees, and cargo insurance fees. There are many costs associated with being an owner-operator, so any costs that are covered by the carrier are helpful.
Know what kind of truck you will be leasing
The variety of trucks you have to choose from differs from carrier to carrier. Some will offer new trucks while others will offer three to four year old trucks. Many carriers offer only one brand and model of a truck while others offer two or three.
Aside from spending most of your time in the truck, knowing what kind of truck you will be leasing is important for two reasons. If you are leasing a truck that is older, the cost of maintenance will typically be higher. The other reason is if your goal at the end of the lease is to purchase the truck, you won’t want to purchase an older truck that will cost more to maintain and upgrade. These are just two of the more important reasons for why you should know what kind of truck you will be leasing.
Ready to sign a lease-purchase trucking agreement?
Hopefully, you find this information valuable when deciding which carrier you want to lease a truck with. These are all things that are very important for you to know before signing any contract or agreement. If you have any questions or concerns about signing a lease-purchase trucking agreement, feel free to give us a call at (888) 640-4829.