Pros and Cons of Leasing a Commercial Truck
If you’re working as a company truck driver, you may at some point think about leasing a truck. The appeal is a higher profit margin and more control over the truck. However, you’ll need to think about the substantial risks in addition to the potential gains. Leasing a truck is a complicated process that contains some pitfalls for the unsuspecting driver. For this reason, many experienced drivers recommend not leasing.
Pro: Hope of Long-Term Financial Gain
Lease drivers and owner operators typically make slightly more profits than a company driver. According to Trucking Truth, drivers who lease or own have an average profit margin of about 3%. This means that you could be making roughly 3% more as a leaser than as a company driver. This slim profit margin may not be worth the added risks and responsibilities of leasing, however. The bigger draw is the opportunity to own your own truck one day. Many drivers lease with the option to buy out their truck. This is an appealing option for drivers with a long-term commitment to the industry.
Pro: Increased Authority
Many drivers like the idea of leasing because they want more independent control. Most lease agreements give the driver more authority over choosing where to park and which freights to accept, for example. In theory, this increased authority is attractive to drivers who enjoy being independent.
Con: Regular Payments
The biggest downside to leasing a truck is paying for it. Your method of payment will depend on the kind of lease agreement you choose. For most carrier leases, the company will deduct your lease payment directly from your weekly or monthly paycheck. Some drivers do not always cover enough miles to make their lease payment and make a profit. That mean you may owe the company money in addition to what they take out of your paycheck. These regular payments mean that you will need consistent work. If you’re not covering enough miles every month, you’re going to end up losing money. While leasing a truck may appear to give you more flexibility, realistically, you need to keep driving and keep taking freights in order to cover your lease payments. The risk of losing money is a significant downside for many drivers.
Con: Untrustworthy Companies
The unfortunate truth is that some companies want to take advantage of truck drivers. If you lease from one of these companies, they may not provide you with enough freight to save any money in addition to making your lease payments. This means that at the end of the lease, you’ll likely be unable to buy the truck. The company makes a large profit from all of your lease payments, and you’re left without a truck of your own. If you decide to lease, make sure that you take your time to choose a reputable company. Ask around and talk to other truckers. Your fellow drivers will have a good idea of which companies are reasonable and which should be avoided at all costs.