If you ask around, old hands will tell you the best way to make the jump from driving someone else’s truck to driving your own truck is straightforward. You need on-the-road experience, a head for business, financial discipline and a very strong work ethic. Then, you need enough money saved to make a down payment on a used or new truck and still have enough operational cash to pay expenses until the settlements start coming in. Hooking up with a motor carrier that gets you enough miles to pay not only your expenses, but yourself as well is the final piece you need in place.

There are other alternatives. Some drivers have found success by signing up for a truck lease program with their carrier or through a finance company. But while a number of drivers have been successful taking this route, others have been less so. Much depends upon the terms of the agreement; and there are as many types of agreements as there are motor carrier’s offering such programs. Some carrier truck lease programs, in fact, have been challenged in court in recent years for failing to follow truth in leasing and contract laws. Yet leasing could still work for some drivers. The key: know what your are signing before you sign.

Truck leasing means completely different things for a fleet as opposed to an owner operator. Large truck leasing firms seldom if ever lease trucks to single vehicle owner operators. Instead, their customers are usually private fleet operations or carriers.

For these operations, leasing is a way for fleets to have “controlled costs,” says Kerry Davies, lease manager of CTS Lease & Renting in Winnipeg. Fleets can know what their transportation costs will be each month over the term of the lease, minus fuel and driver costs. This makes budgeting easier and allows a company to easily add equipment as needed.

For the owner operator, it’s a different story. “There are basically two types of leases,” says Gary Green, business services manager with the Owner-Operator Independent Drivers Association, Grain Valley, Mo. “There’s a lease purchase program that’s usually through a motor carrier and then there’s a straight-up lease agreement. But the latter are getting pretty hard to find. They want the same kind of credit as you’d need on an outright buy in most cases.”

Leasing a truck through a motor carriers lease-purchase program usually doesn’t require a perfectly clean credit check and they usually do not require a huge sum of money down, although that varies depending upon the program. The leases are typically for three years on a new truck. Some fleets offer shorter leases on used trucks. When the lease is completed, the truck can be purchased for what’s termed the residual value, turned in for another leased truck, or a driver can “cash out” by selling the truck and pocketing the difference between what he can sell it for and the residual.

Some fleets collect a cent or so for a performance fund that goes to the driver on completion of the leases. C.R. England, for instance, says its drivers can earn a completion bonus of more than $20,000 after a three-year lease.

Most lease agreements require a security deposit or down payment to begin. Then, the truck payment is due every week. Depending upon the type of lease and the equipment, that could be anywhere from $550 to $650 a week. Most agreements also call for a few cents a mile to be paid toward a maintenance fund to take care of large repairs. The truck operator will be responsible for minor repairs and service. There may be an escrow account that costs a cent or two a mile and there may be a tire account. Typically, these accounts earn interest and are returned to the driver at the completion of the lease. Some leases also charge an excess mileage charge of 1 cent or so per mile for any miles above a maximum monthly mileage.

On top of that, the driver will be responsible for buying fuel and a number of other expenses that may be paid for company drivers including health benefits, showers, layover pay, fuel card transaction fees, etc.

Green argues that most lease-purchase programs through carriers are “never a good option,” for someone wanting to get into their own truck. “Many lease purchase agreements takes the ability to run your program away from you. All the expense of owning the equipment is stacked against you. Before getting into one of these, you have to be a businessman and do your math,” Green says. Before signing on to a lease-purchase program, a driver needs to take a look at everything in terms of costs and revenue.

“You have to understand what all these deductions and costs are going to be,” Green says. And some costs will be charged by the week while others are charged by the mile. A guy has to know what it means in terms of how hard he will have to run in order make any money. Look at the lease agreement side by side with the hauling agreement. On some of these, once you work the numbers, you’re better off staying a company driver.”

Despite the downsides, many owner-operators have had success with lease-purchase programs. “It was probably the best thing that ever happened to me,” says Harvey Zander, an owner operator based in Minneapolis who has been hauling for Dart Transit for almost 24 years.

Next week: Part II looks at the ins and outs of truck leasing