The straight answer is “Maybe!”
Leasing a truck is a big commitment, no matter who you are – a rookie, veteran or fleet operator. Going the carrier route makes sense in some situations and absolutely none in others – the decision will all depend on your own personal situation.
With the economy turning around and demand for drivers and haulers increasing, carriers are going to be turning to lease deals to attract new blood and help retain existing drivers. Underwriting the lease, or offering a lease to a driver makes good commercial sense from the carrier’s perspective because this ties the driver and rig to that carrier – creating a captive supplier who effectively must accept whatever trade terms are offered. This is the biggest issue for critics of carrier leases, because once you’re in, they’ve got you no matter what.
From a driver’s perspective, the issues are much more varied and complex. One thing to understand is that a carrier lease is a short-term route to truck ownership. Each year, thousands of would-be owner-operators bite at the dangling bait of a carrier lease and to be fair, for those with a poor credit score or lack the deposit required to get into a truck by other methods, then this is a potential solution. Carrier leases are heavily marketed with this in mind, and it is usual to find lease features which include:
- Zero or low down payment;
- Short term commitment (or frequent break clauses);
- High spec equipment;
- No credit checks or a relaxed approach with credit scoring; and
- Buyback opportunity on lease completion.
The carrier lease does provide an opportunity to limit the financial risks associated with becoming an owner-operator, but at the same time, there is a limit to the financial upside, which can cripple any operator.
Carrier leases have their critics – just ask a driver association!
The Owner-Operator Independent Driver Association (OOIDA) has sued carriers on numerous occasions, for amongst other things, illegal lease terms, restrictive practices or predatory lending. Some carriers have found themselves on the wrong side of the law, including some big name carriers such as CR England, Ledar Express and Arctic Express. Sample issues include failure to return funds held in escrow by carriers on behalf of drivers, or the illegal termination of a lease and of course, in some instances there has been outright fraud.
Drivers themselves have found out the hard way what the downsides for a carrier lease have been. Low miles is a continuous complaint, with the financial consequences of not getting enough mileage only too apparent – financial disaster! Other issues include unauthorized deductions from paychecks, repairs and maintenance carried out by carrier mandated suppliers at their rates and terms. In additional, there is also the generally one-sided nature of the leasing contracts which are strongly worded in favor of the carrier – drivers essentially have to take it or leave it.
The bottom line – look very carefully at whether a carrier lease is the route to ownership for you. Compare widely, and in today’s climate ask seller’s whether they can do a deal on that truck for sale before you commit to a carrier.