Signing a lease-purchase agree-ment is a gamble where the odds are against you; it’s like you are the player and the Motor Carrier is the house. Perhaps one of the biggest gambles in the trucking industry right now.
You need to know if you are dealing with a reputable house or a parking lot con artist. There continues to be an alarming increase in people signing into lease-purchase programs with large motor carriers. Once the owner operators (O/O) have reviewed the contracts, numerous complaints arise saying the contracts do not benefit the O/O at all; it is a one sided contract in favor of the motor carrier. A lease-purchase agreement can seem attractive to obtain a new truck with no down payment or credit check however, monthly payments will arise from the load pay.
What may not be clear if you fail to read the fine print where it says: “You will not have ownership of the truck until it’s paid off”. One catch is the truck must remain under lease with the company that “Owns” it, meaning you are tied to the company and unable to drive the truck wherever you want.
Also, truck payments are usually deducted weekly instead of monthly. The truck payment is taken out before you receive a paycheck even if it means you receive a negative check.
Here is some of the complaints I receive from O/O who have entered those agreements:
- Truck needs constant repairs
- Never receive a paycheck
- Miles have been cut
- Not enough freight and getting behind in payments with the carrier
- Company has no freight and you are not allowed to go look for work
- Returned the truck to the company and become a company driver but they still taken monthly payments.
- Company requires a deposit or escrow maintenance account, but when the truck needs repairs they take out of your paycheck.
In one instance an O/O had only 3 payments left but the truck was repossessed by the bank because they took the payments but never sent to the bank.
When considering a lease-purchase, remember that until the final payment is made you are paying the bills, expenses, insurance, maintenance, repairs and taxes on equipment owned and controlled by someone else. At any time during your agreement you could lose the equipment and all your investment.
The best way to avoid being ripped off in a lease-purchase agreement situation is not to enter into one.The motor carrier who lease-purchased the truck to you does not own the truck; they don’t have the title the finance company does nor are they aware the truck is been double-lease. Do they know the payments are coming from you? If there was money to be made by owning a truck why would the company be trying to sell theirs?
If you are considering signing a lease-purchase agreement give me a call first and I will look at the contract. If you have any questions: Carlos Alarcon at 909.390.3656