What's the point of leasing?

Here we go again.

 

Because they have bad credit. No money down. No money saved up for operating expenses. And no desire to fix either of those three things. So they go for the easy button no money down no credit check instant gratification lease.

 

A subprime loan at a traditional dealer is for a guy with good credit buying his first truck with a good down payment. 12 to 16 percent interest. Guys with bad credit are looking at buy here pay here lots and lease purchase.

 

Cash is king.

Debt is dumb.

 

My background includes 19 years as Executive Director of a group of banks. So let me explain somethings to help clear up the discussion.

No one and I mean no one who does a lease purchase through a company does it because it is a good way to purchase a truck. They do it because the company they are hiring on to requires them to do so. The companies do it that way because they then can report their employees as private contractors and avoid taxes and medical benefits. The side benefit is that the companies get an employee who is less likely to quit, will work harder, and will not misuse the equipment.

The Economics that you have so clearly laid out have nothing to do with it. Like Vegas nothing new ever comes up that benefits the players. Lease purchases always benefit the house.

If you wish to lease purchase a truck you do so through a third party. Lone Mountain or some other outfit. You still pay higher then you would if you had good credit and could borrow through a bank. They also boost the price of their equipment by around $20,000 but at the end of the lease the product is yours. If you go to Lone Mountains website you will see that the payments are about 650 or so a week. They are in the business of selling trucks not hauling freight so they have a reason to not suck every dime out of you.

I worked for Hirschbach out of East Dubuque, Illinois. They will hire you one as a lease with option to buy. The lease payment is 615 or so a week. They govern the trucks at 64 mph. (They fire you for turning it up) At the end of the lease you have the option to buy the truck for around 40,000. Most never do as you get a new truck after 3 years. The below is my pay for the last week and my year to date for the first 13 weeks.

So my average pay was $1,489.42 per week. It is a good company and if have six months in and are not making that much then the "Lease Purchase Program" could be for you. Remember you have to pay 7.5 % more taxes as you pay both sides of your Social Security and there are no medical benefits. And those bas tards fired me. But I did turn up the speed on the truck.

Revenue/Reimbursement/Deduction Summary

Description Weekly Year To Date
Trip Pay $ 3,605.46 $45,860.86
Add $ 21.10 $ 41.34
RETENTION $ 100.00 $ 1,600.00
STOP/PICKUP $ 100.00 $ 400.00
Compensation: $ 3,826.56 $47,902.20
TOLLS $ 55.00 $ 254.25
Lumper $ 334.00 $ 1,717.00
Reimbursements: $ 389.00 $ 1,971.25
51 - Prepass ( 2.00) ( 32.00)
52 - Truck Payment ( 614.00) ( 9,824.00)
53 - OCC/ACC Ins ( 26.08) ( 417.28)
55 - Physical Damage Ins. ( 150.00) ( 2,400.00)
58 - Acc Phys Dam ( 500.00) ( 590.12)
60 - Chg Comdata ( 1.75) ( 6.25)
61 - .999 Fuel Plan ( 340.58) ( 6,519.11)
66 - Fuel ( 433.80) ( 769.83)
71 - Notes 450.00 450.00
73 - Escrow Fund ( 48.71) ( 827.65)
78 - Bob Ins New ( 7.62) ( 121.92)
82 - Comdata ( 449.00) ( 4,085.54)
84 - License-LP ( 44.00) ( 704.00)
86 - HVUT-LP ( 11.00) ( 176.00)
87 - Fuel & Use Tax ( 75.45) ( 1,319.25)
88 - Full Srvc Maint ( 213.78) ( 3,737.92)
95 - O-O-R Fuel ( 84.17)
97 - Unauthorized Fuel ( 655.12)
98 - Fuel Ded. Refund 754.22
Deductions: ($ 2,467.77) ($31,065.94)

Type Weekly Year To Date
Compensation $ 3,826.56 $47,902.20
Reimbursements $ 389.00 $ 1,971.25
Deductions ($ 2,467.77) ($31,065.94)
Net Pay $ 1,747.79 $18,807.51


Your Pay Before Personal Deductions

Type Weekly Year To Date
Net Pay $ 1,747.79 $18,807.51
Pay Advances $ 60.00 $ 504.94
Balance Forward to Next O/S ($ 0.00) ($ 0.00)
58-ACCIDENT CLAIM - 1160314110919 500.00 500.00
71-LOAN SET UP -500.00 -500.00
71-LOAN $50/WEEK 50.00 50.00
Your Real Pay $ 1,857.79 $19,362.45




Compensation

Order Dispatch Dispatch
Date Pay Type Loaded
Miles Empty
Miles Total
Miles Pay
Quantity Rate of
Pay Pay Amount
1327998 01 04/17/2016 Trip Pay 578 65 643 0 1.05 $ 675.15
Route: Denver CO E Ft Collins CO L Wichita KS
1328257 03 04/13/2016 STOP/PICKUP 0 0 0 0 $ 50.00
1328257 03 04/13/2016 Trip Pay 205 0 205 0 1.47 $ 301.35
Route: Abbott TX L Houston TX L Houston TX
1328691 01 04/14/2016 Trip Pay 1169 140 1309 0 0.90 $ 1,178.10
Route: Beaumont TX E Clute TX L Denver CO
1328784 01 04/11/2016 STOP/PICKUP 0 0 0 0 $ 50.00
1328784 01 04/11/2016 Trip Pay 783 101 884 0 1.02 $ 901.68
Route: Willey IA E CouncilBlf IA L Terrell TX L Abbott TX
1329421 01 04/18/2016 Add Minimum Pay 0 0 0 0 $ 21.10
1329421 01 04/18/2016 Trip Pay 95 0 95 0 1.62 $ 153.90
Route: Wichita KS L Emporia KS
1330748 02 04/19/2016 Trip Pay 324 0 324 0 1.22 $ 395.28
Route: Emporia KS L Clinton OK
RETENT 12/31/2015 RETENTION BONUS 0 0 0 0 $ 100.00
Compensation: $ 3,826.56


Reimbursments

Order Dispatch Reimbursement Type Amount
1328257 03 LUMPER REIMBURSEMENT $ 180.00
1328257 03 LUMPER REIMBURSEMENT $ 84.00
1328257 03 LUMPER REIMBURSEMENT $ 20.00
1328784 01 LUMPER REIMBURSEMENT $ 50.00
1328784 01 TOLLS $ 26.25
1329421 01 TOLLS $ 9.75
1330748 02 TOLLS $ 19.00
Reimbursements: $ 389.00


Deductions

Order Dispatch Deduction Type Amount
SETUP LOAN SET UP $ 500.00
500.00 LOAN $50/WEEK $( 50.00)
1329421 01 EMPOKS-Tractor -0001922578 $( 106.14)
1328784 01 WILMIA-Tractor -0051179028 $( 207.79)
1328784 01 OK-Tractor -0051282235 $( 226.01)
1328691 01 SANGTX-Tractor -0061582850 $( 99.45)
1328691 01 1328257 11 HOUSTX $( 1.75)
1328691 01 1328257 11 HOUSTX $( 185.00)
1328257 03 26170-64579-85083382 HOUSTX $( 180.00)
1328257 03 26170-64608-85631193 HOUSTX $( 84.00)
1327998 01 AUROCO-Tractor -0001742949 $( 134.99)
PREPASS-SCALES $( 2.00)
TRACTOR PAYMENTS - WEEKLY $( 614.00)
OCC/ACC INSURANCE $( 26.08)
PHYS DAMAGE INSURANCE $( 150.00)
ACCIDENT CLAIM - 1160314110919 $( 500.00)
LICENSE - LEASE PURCHASE $( 44.00)
HVUT - LEASE PURCHASE $( 11.00)
FUEL AND USE TAX OFFSET $( 75.45)
FULL SERVICE MAINTENANCE $( 213.78)
ESCROW FUND $( 25.00)
LEASE COMPLETION INCENTIVE $( 23.71)
BOBTAIL INSURANCE NEW $( 7.62)
Total Deductions: $ 2,467.77


Escrow/Loan Summary

Type Description Date Amount
Performance Escrow Beginning Balance 04/21/2016 525.00
Change in Escrow $ 25.00
Ending Balance $ 550.00
Lease Completion Beginning Balance 04/21/2016 577.22
Change in Escrow $ 23.71
Ending Balance $ 600.93


Out of Route

Order
Number Odometer
Miles Pay
Miles Mileage
Difference
1330748 312 324 -12
5% Allowance 16

Total: 312 340 (-28)

 

I guess the only "point" is those $1 buy-out fleases but you better make sure you can last the three or four years it takes to get there. Otherwise there are zero advantages to working as an independent contractor. You have no benefits and are still treated like an employee and set yourself up for a lot of tax liability come April.

 

Looks like a long list of headaches.
Pay higher taxes and pay into your own ss account.
My headaches as a company driver...finding a parking spot.
Have $1000 to spend on me,each week...

 

You my friend are not the most business savvy. Research leveraging money. Why spend money to make money when you can not a spend it to make it? It I wanted to invest in houses and I had 100k for an easy example what would you do? Would you buy a 100k home and be done with it? Two 50k homes etc? Me, I would put 20k down on 5 100k homes. Then I could recoup my costs quicker with 5 that one. Return on investment is greater with credit.