Cautionary Tales

If a driver calls the Owner-Operator Independent Drivers Association and asks if he or she should enter a lease-purchase agreement, the answer is almost always the same.

“The first thing we tell them is ‘don’t,’” said Trevor Williams, who works in OOIDA’s Business Services Department. “If they still think they want to do it, we tell them that we can look at the agreement beforehand for them. We can review it and give them some advice on things that don’t look right. But once it’s signed, it’s too late. There’s usually nothing we can do.”

OOIDA receives multiple calls regarding lease-purchase agreements every week, and Williams said that such deals usually end poorly for the driver.

“These guys are paying for a truck payment what most of us are paying on our mortgage,” Williams said. “It can have a huge snowball effect. If you miss that first payment, the leasing company can come after that truck. I’ve seen cases where they’ve repossessed the truck just 24 hours after missing a payment.

“When one of our agents gets a call from a driver who entered a lease-purchase, they get prepared that they’re probably going to have to give them bad news. It’s not uncommon for us to hear that they had to pay the company after a pay period. It’s not uncommon to hear that they grossed $2,500, but the paycheck was only $100 after all the fees and payments. These lease-purchase agreements bury a lot of people. It can destroy them.”

Land Line spoke to a pair of drivers who entered lease-purchase agreements with companies. In order to protect their anonymity and to avoid possible repercussions for the drivers, Land Line is not using their real names.

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“Joe” has been a truck driver for about 35 years. In November 2014, he entered a lease-purchase agreement with a company because he said he couldn’t afford the down payment for a truck of his own, but he didn’t want the lack of flexibility that comes with being a company driver.

“When you’re a company driver, they dictate when you do something, what you do, and how you do it,” Joe said. “As an owner-operator, I can go home when I’m ready to go home, and I can avoid driving in places like New York that I don’t want to drive in.”

Because of these reasons, Joe entered into a lease-purchase agreement.

“These agreements are set up against the driver, because they know you are in a bind,” Joe said. “They know you don’t have the money to put a down payment on a truck yourself.”

Joe purchased a 2007 Freightliner for about $44,000. He said his payments were a little more than $1,000 per month.

After the truck payment, insurance, fuel, and general maintenance, there isn’t much wiggle room. If one thing goes wrong, it could go bad fast. In Joe’s case, a lot went wrong.

Joe said it has been “one thing after another” with his Freightliner since signing the agreement. Most recently, he said he spent more than $14,000 on an engine overhaul and about $2,000 on new tires and other maintenance.

So while Joe said he has paid for the truck, he owes more than $90,000 to the company to repay for all of the repairs.

He said he’s paying $2,000 per month in repair bills, $1,000 per month for the trailer rental, and about $1,100 per month for insurance.

That doesn’t leave much left over for him and his family of seven.

Joe said he’s had loads worth $7,000 where he only took home a little more than $1,000. He had one paycheck that left him with only $28 after all the payments and fees.

“Imagine trying to take care of a family of seven on $28,” he said.

Now all Joe can do is plug along and hope nothing else goes wrong while he tries to pay off the repairs.

“If I leave, I still owe for the repairs,” Joe said. “The truck is worth less than the cost of the repairs. I can walk away if I want to, but I can’t walk away clean. They will come after the remaining balance.”

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“Bill” has been a truck driver for about 25 years and agreed to a lease-purchase arrangement in 2014. He said he felt like he was forced into the decision after his previous truck stopped running, and he wasn’t making any money while the wheels weren’t turning.

“The engine in my truck needed to be rebuilt, and I didn’t have the money to rebuild it,” Bill said. “I was stuck. I felt like I had no choice but to take this truck and start running it.”

Bill said the 2003 Freightliner he received in the lease-purchase has needed constant maintenance and repairs.

He said the truck was about $45,000, and he’s been hit with an additional $20,000 in repairs.

The costs show up in his checks.

“A recent check that would have been $5,900, I got $1,300 and some change.”

Now, Bill says he just wishes he could get out of the deal.

“If you’re going to do a lease purchase, do your homework,” he said. “Be sure to cover your ass.” LL