Western Express Lease Purchase....thoughts???

I like you Errol, you are the reason I believe in blogs like this..... you debate your point well, but accept other's at the same time. Its a natural choice to want to be right.... this is just a situation where everyone is right and defending their opinion. EVERYONE is right, because some people should, some people should not, some succeed, some fail, some never make more than they did as a company driver, some make exceedingly more........ so we are all correct!

David, I'm sorry, I appreciate the effort to put out actual numbers, but I have some questions/doubts:

A) who are you?

B) who do you work for?

C) who is driver A, and are they a real person or just a hypothetical?

D) where are the rest of the numbers in detail? I'm not a lease/owner op, but I know enough to see that this is a highly simplified set of data.

E) how do I know you didn't just pull these numbers out of thin air? I.e. "I made $32,452,744.97 last month." Easy to do.

Call me a skeptic, but I think these are valid questions.

The most compelling reasons I'm hearing to lease is the freedom it gives a person, not the profit it brings. Companies are probably putting these restrictions on drivers to make more profit. If it wasn't good for the companies to have these lease programs I don't think they'd have them.

For a straight answer as Beth stated...... Freedom is one reason for being an Owner Operator. So is pride in ownership and flexibility to move between companies if needed. Next is the Profit one can make from their business if they do it correctly. An AVERAGE LP driver here (we are not talking about other companies just this one), as described in great detail on earlier pages, will take home between $1150 - $1550 per week (before taxes) after paying for all operating expenses (truck, insurance, permits, plates, tags, maintenance account, escrow, Qualcomm , etc...). The top 35% will take home $2000.00 - $2650.00 as a single operator (after all expenses / before taxes). Teams will take home $3150.00 - $4325.00 (after expenses / before taxes), and trainers will typically make more than a Top Earning single, but less than a team.

Taxes are actually a whole other ball game since the shear volume of write offs will topple the bulk of tax you would typically pay in as an employee driver. As an owner, practically everything you touch is a write off, not to mention all the current Federal tax codes geared toward helping small business owners get started and flourish in the post-bubble economy. You could better your information on that through organizations like the OOIDA , or your local tax professional.

SO FOR A STRAIGHT TO THE POINT ANSWER..... Driver A, from January 1st through August 14th has driven 87,112, for a total gross income of $138,880.00. His 35 truck payments this year to date would be $13,333.41, his fuel expenses to date this year has averaged $0.3211 cents per mile OR $27,971.66 in fuel expense, putting this owner at $97,574.93 (before taxes / after all other expenses). If he continues at a rate (discounted for holidays at 70%) for the remainder of the year, his income (before taxes) would be $131,726.16.

Please keep in mind maintenance is already included in the numbers above for a maintenance account AND an escrow account that allows for cash or early payoff of the truck.

Is this a get rich quick ploy, absolutely not!!.... Its hard work and takes dedication and a lot of planning to make your fuel come out correctly. Fuel is by far the largest contributors to one's success or failure as an owner. Hope this helps.

How much was put into the maintenance and escrow? How much does a 2 or 3-year-old truck typically cost to maintain and repair over the course of a year? How much would a company driver doing the same miles have made?

so we are all correct!

David, you like to simplify things that shouldn't be simplified. We can't all be correct - this is the goof ball kind of thinking and reasoning we are teaching our kids when we give them trophies just for playing on a team in sports, instead of rewarding them for making the tough commitments it takes to win at the game The decision to lease a truck is much more complicated than deciding whether we prefer Chocolate or Vanilla ice cream. That is something we consume, but leasing a truck could quite possibly consume a person's livelihood, and has many times over.

David, we cannot all be correct when some of us aren't even telling the truth. I've been all over the halls of Western Express, know many of the good folks there, and can get many of them on the phone in a matter of minutes. I defy you to produce a driver who has a net income of 131,000 dollars - I would love to speak to them.

I've always said that numbers don't lie, but you my friend, have an uncanny ability to make me question that theory. What really concerns me about you is that you seem to believe your own rhetoric and your crazy math. I am real good with numbers David, I was a pretty good business man in the private sector for thirty years before I started driving trucks for a second career. I know all about the entrepreneurial spirit, and I loved being self employed all those years. Furthermore I am happy for anyone to be a lease operator or an owner operator , but I sure don't want them to jump into it misinformed. That is the primary difficulty I have with you. It doesn't seem to bother you one little bit to lead folks down a primrose path to ruin as long as you are benefiting from their rendezvous with disaster.

so we are all correct!

David, you like to simplify things that shouldn't be simplified. We can't all be correct - this is the goof ball kind of thinking and reasoning we are teaching our kids when we give them trophies just for playing on a team in sports, instead of rewarding them for making the tough commitments it takes to win at the game The decision to lease a truck is much more complicated than deciding whether we prefer Chocolate or Vanilla ice cream. That is something we consume, but leasing a truck could quite possibly consume a person's livelihood, and has many times over.

David, we cannot all be correct when some of us aren't even telling the truth. I've been all over the halls of Western Express, know many of the good folks there, and can get many of them on the phone in a matter of minutes. I defy you to produce a driver who has a net income of 131,000 dollars - I would love to speak to them.

I've always said that numbers don't lie, but you my friend, have an uncanny ability to make me question that theory. What really concerns me about you is that you seem to believe your own rhetoric and your crazy math. I am real good with numbers David, I was a pretty good business man in the private sector for thirty years before I started driving trucks for a second career. I know all about the entrepreneurial spirit, and I loved being self employed all those years. Furthermore I am happy for anyone to be a lease operator or an owner operator , but I sure don't want them to jump into it misinformed. That is the primary difficulty I have with you. It doesn't seem to bother you one little bit to lead folks down a primrose path to ruin as long as you are benefiting from their rendezvous with disaster.

Hey again Old School..... I am 100 percent agreement with you again and again! I grew up in an age where Participation Trophies and 12th place ribbons did not exist..... I don't believe in them and never will. Every person is going to be different, have a different outlook on life and a different path that leads them from cradle to grave. I've never been to a horse race where EVERY horse came in first.... the same way I will never see two business owners operate in exactly the same manner. I have worked with thousands of owner operators in my life including family and friends and teach and learn through experience and comprehension. The hard fact is Everyone CANNOT!! Why isn't everyone a millionaire? Why do we need Microsoft or Apple, when we could just build it ourselves??.... Simple.. Because everyone cannot!! BUT I think you are saying NO ONE CAN?

When everyone asked for the math, I laid it out as simply as I could with detailed accounting of ownership, fuel, maintenance, tires, pm services, rate per mile, fuel surcharge,.... etc. Using examples from several owners, I think you would agree that it would be disrespectful to post names on a blog, but think that if anyone here reads the numbers and follows the calculations it is simple to see that they DO ADD UP and they paint the picture of a successful owner. For an opposing argument I could easily say with factual certainty that some people will not be any more successful at owning a business as they would taking a weekend class to become a heart-surgeon. Classic mistakes of an Owner gone-wrong is: "I can do what ever I want because I own this truck", "I don't have to take that load, I would rather sit and that's my decision", "I only want to run Monday through Friday because I am an owner", "I don't have time to keep up with fuel prices". All pretty similar mindset and often very similar outcome.

As a WARNING to anyone that is considering a Lease to Own program...: 1. You may or may not be successful if your business plan is flawed, 2. If you are becoming an Owner for the freedom just to turn down loads this is NOT for you, 3. Success and failure is pending almost exclusively on your fueling practices, 4. Some people are not cut out to own their own business. 5. To be completely frank with you, if you resemble numbers 1-4 the COMPANY DOES NOT WANT YOU ANYWAY!!....

Questions to ask any potential company offering a Lease Purchase Plan.... (97% of companies its not really a Lease to Own, just a Lease to Lease with a balloon.....) Search for ICP plans (true Lease to Own, Not these lease to lease or rental plans) 1. Does your Lease have a balloon payment at the end? (balloon payments are almost never reachable amounts) 2. Am I paid ALL miles or just loaded miles? (Pay should always be based on ALL miles, not just loaded to get a clearer picture) 3. Ask about Gross Revenue versus Miles driven...? What is the Net Revenue to Truck on a weekly average? 4. If your truck goes in the shop does the payment continue? (most companies it will) 5. Does the company offer business support and continuing education for their business owners? 6. Does the company offer Tax help or accounting totals for your business come tax time? 7. Can you hire a co-driver? Can you hire someone to run your truck?

How much was put into the maintenance and escrow? How much does a 2 or 3-year-old truck typically cost to maintain and repair over the course of a year? How much would a company driver doing the same miles have made?

Most Owner's with experience will put approximately $0.09 - $0.14 cents per mile in their maintenance and $0.02 - $0.04 in escrow for a rainy day/vacation/tax purposes. The average cost of a 2 year old truck under warranty will maintain an standardized cost of 5 - 8 cents per mile, a 3 year old truck 6 - 9 depending on motor and trans setup. Remember the cost of 4 years or less is much less due to warranty coverage, policy write-offs and recall parts. This leaves most owners in a very good position financially for the future in gross savings at a rate of 5 - 7 cpm (x) 2500 avg miles per week (x) 36 months = approx. $22,000 - $24,000 in ADDITIONAL maintenance savings for the future. (Again... make sure its a maintenance SAVINGS account, not a Maintenance FUND!!) That way the money belongs to you, not the company.

For comparison: Company Driver: 2500 miles x .30 cpm = $750.00 2500 miles x .40 cpm = $1000.00 2500 miles x .44 cpm = $1100.00

Owner / LP: INCOME 2500 miles x 1.05 cpm = $2625.00 2500 miles x .32 fsc = $800.00 OR: = $3425.00 GROSS

OUTPUT 2500 miles x (avg) $0.29 to $0.34 cpm in fuel exp. = $725.00 to $850.00 Tractor package at = $560.00 weekly Maintenance at $0.09 cpm x 2500 = $225.00 Escrow fund at $0.02 cpm x 2500 = $50.00 Total output at: $1560.00 (including maintenance, escrow, permits, plates, tags, IFTA, tires, PM services, tolls, fuel, etc..)

Total Earnings for Comparison: Owner / LP: $1490.00 to $1865.00 (before taxes / depending on fuel.) Company Driver: $750.00 to $1100.00 (before taxes / depending on paid rate per mile)

Let me know if I left anything out......

Under no circumstances do you ever LEASE anything from a company, especially one that is providing you with a paycheck. You might as well say hey, I love working for free. Why? You're paying for the company's vehicle with your blood, sweat and tears. Once it's paid off, you don't own it. The company still does. That'd be like me leasing my M249 from the Army. Yes, I want to pay money monthly (or weekly) to carry around a 20lb paper weight. Makes no sense, right?

If you are becoming an Owner for the freedom just to turn down loads this is NOT for you

Excellent point and I agree. A lot of people lease or buy trucks exactly for that reason. They think they're going to have full control over every load they haul and every vacation they take but they don't realize they're going to lose a pile of money if they run their business that way. You can not simply keep turning down loads or keep taking vacations and think you're going to survive for long as a business owner. It doesn't work that way.

But you're going to have to rectify these two statements:

Success and failure is pending almost exclusively on your fueling practices

Owner / LP: $1490.00 to $1865.00 (before taxes / depending on fuel.) Company Driver: $750.00 to $1100.00

Ok now I agree completely that your fuel practices are going to be the difference between making a profit or making nothing as an Owner/Lease. But you're saying that an Owner/Lease driver is going to make $750/week more than a company driver? That's just about double what the company driver is making. If that were true:

1) Explain to me how you're going to save $750/week in fuel?

2) If you can make $750/week more by owning the truck then why would any companies hire owner operators or lease drivers in the first place? They wouldn't. If there was that much more money to be made owning the truck then every company in America would be 100% company drivers. They wouldn't be giving away their profits to lease drivers and owner operators if they could hire a driver and make more.

3) If you could make double as an Owner/Lease driver then why isn't everyone an Owner/Lease driver. All you have to do is save a bunch of fuel, right? I mean, what else can you do? How else can you get a competitive advantage in trucking?

You can't.

And when you can't find a competitive advantage then you can't demand higher profits. Simple as that. Why would someone pay Company A more money to haul their freight than Company B? They wouldn't.

The bottom line for me is simple - a company is going to do whatever makes them the most money. If an Owner/Lease driver is making $750/week more than a company driver that implies the company is giving away $750/week in profits for every Owner/Lease driver they hire. Why would they do that?

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The bottom line for me is simple - a company is going to do whatever makes them the most money. If an Owner/Lease driver is making $750/week more than a company driver that implies the company is giving away $750/week in profits for every Owner/Lease driver they hire. Why would they do that?

Your argument makes the assumption that all drivers are basically the same in their driving practices. But that's not true. Many company drivers are excessively hard on their trucks in the way they drive, causing increased maintenance costs to the company. Many company drivers waste fuel by poor driving practices, poor planning and unnecessary idling. I know drivers that have the attitude that "it's not my truck, it's not my problem if it breaks down.... I'm not paying for the fuel, so why not idle all the time,.. etc..) The average company driver truck operation costs are probably much greater than the average expenses of astute O/O's.

....

The bottom line for me is simple - a company is going to do whatever makes them the most money. If an Owner/Lease driver is making $750/week more than a company driver that implies the company is giving away $750/week in profits for every Owner/Lease driver they hire. Why would they do that?

Your argument makes the assumption that all drivers are basically the same in their driving practices. But that's not true. Many company drivers are excessively hard on their trucks in the way they drive, causing increased maintenance costs to the company. Many company drivers waste fuel by poor driving practices, poor planning and unnecessary idling. I know drivers that have the attitude that "it's not my truck, it's not my problem if it breaks down.... I'm not paying for the fuel, so why not idle all the time,.. etc..) The average company driver truck operation costs are probably much greater than the average expenses of astute O/O's.

I agree completely. But how much more money is there to be made by saving fuel? $750/week? No way.

And don't forget a lot of companies are already enforcing strict fuel savings standards on their company drivers. They govern the trucks at slow speeds, they set a cap on idle time, they're buying automatic transmissions, they're putting trailer skirts and rear tail fairings on the trailers, they're monitoring tire pressures closely, they're buying APU's , etc. So how much more can you squeeze out of fuel savings? There is some to be had, but not that much. There certainly isn't enough money sitting on the table to make it worth starting your own business to go after it.

And a lot of companies offer bigger engines and higher governed speeds on the trucks to entice people to lease. So it seems you might be able to make more as a lease driver through fuel savings but that's not going to happen with a bigger engine and higher speeds.

APU:

Auxiliary Power Unit

On tractor trailers, and APU is a small diesel engine that powers a heat and air conditioning unit while charging the truck's main batteries at the same time. This allows the driver to remain comfortable in the cab and have access to electric power without running the main truck engine.

Having an APU helps save money in fuel costs and saves wear and tear on the main engine, though they tend to be expensive to install and maintain. Therefore only a very small percentage of the trucks on the road today come equipped with an APU.

APU's:

Auxiliary Power Unit

On tractor trailers, and APU is a small diesel engine that powers a heat and air conditioning unit while charging the truck's main batteries at the same time. This allows the driver to remain comfortable in the cab and have access to electric power without running the main truck engine.

Having an APU helps save money in fuel costs and saves wear and tear on the main engine, though they tend to be expensive to install and maintain. Therefore only a very small percentage of the trucks on the road today come equipped with an APU.