What is the meaning of lease? Moreover, what is the meaning of leased owner operator?
People new in the trucking industry who are about to become owner-operators often ask these two questions.
In general, leasing is the same as paying a fee to use someone else’s equipment.
For example: If you want to lease a truck, the leasing agreement can vary, starting from month by month, or even the leasing agreement can be for years.
Moreover, the development of this branch of the trucking industry is due to the fact that leasing owner-operators represent the quickest way for a company to increase fleet’s capacity.
So, if you want to become a leased owner operator then you should remember the key point that once you are leased onto a carrier, the FMCSA will consider the truck altogether with you/the leased owner operator driver as the carrier’s for compliance purposes.
Remember: Leasing owner-operators into a fleet is fairly complicated and tricky process.
Further, in this article you will have the chance to read 15 trucking expert advices that you must hear before you become leased owner operator.
So, let’s take a look!
1. The Basics Of Becoming Leased Owner Operator
Since you are one step further in becoming leased owner operator you should make sure to cover the basics.
Thereupon, there are few points that you as a future leased owner operator should cover.
First and foremost, you will have to identify the parties involved, and get signature by parties to the agreement. Straight after you will have to define the duration of the lease and identify all equipment involved.
Moreover, the leased owner operator should clearly state that the carrier has possession and control for the term of the lease.
In addition, the process of defining the lease termination procedures should not be put aside.
On the other hand, when it comes to the payment process, we can notice that there are several rules that leased owner operators are leading themselves by.
So, the rules that a leased owner operator should lead himself by are the following:
- The method of payment should be clearly stated in the lease – according to the mileage, tons, trips and percentage of revenue;
- Remember that it is not allowed for the payment period to be longer than 15 days from the submission of proof of delivery;
- The lease must include the right to inspect the carrier billing if the payment is based on a percentage of revenue;
2. Primarly Issues That Must Be Addressed In The Lease Agreement
In the lease agreement, the carrier should assume the responsibility for fines.
The fines might come due to overweight and oversize trailers when the trailers are pre-loaded, sealed or if the load is outside of the leased owner operator.
Therefore, the carrier as well, should assume the responsibility for fines due to improperly permitted overdimensonal/overweight loads.
Yet, the carrier will be as well required to reimburse the lessor for any fines paid by the leased owner operator.
Tip: If the leased owner operator feels like some of the primary issues are not regulated, then he at any point during the leasing process should address it at the time.
On the other hand, if it happens that the leased owner operator is not understanding one of the terms of the lease-the process should be stopped and the issue should be clarified immediately.
3. What Comes Next After The Leased Owner Operator Makes The Agreement
The receipt of equipment is the very first thing that the carrier and the leased owner operator should focus on after the agreement is made and signed.
Hence, the receipt of equipment serves as a declaration – when the vehicle is considered to be under the carrier’s control. The carrier is allowed to take the step of inspecting the leased owner operator equipment.
Also, the vehicle must have proof of the lease on board and the power unit must be marked as well. In addition, the marking must include the carrier’s name and DOT number (must be easily visible from 50 feet away).
4. Lease Purchase Program or Lease To Own
Trucking companies in general have a lease purchase program. This program is allowing them to let their truck driver to lease a truck with intention to buy.
Surprisingly there are many leased owner operators that have started this program. That is so mainly because that way they get to invest their own money in a smart way.
Moreover, this program requires no or little money up front, and don’t have a credit score requirement.
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5. Lease Program
If you want to make monthly payments of a determined amount, then you should take into consideration the lease program.
The lease program is allowing truck drivers to lease a truck from a company or dealership.
6. Important Facts And Figures About Leasing A Truck
- There are leasing programs that do not come by the trucking company;
- As well, there are leased owner operator walk away programs;
- If it happens that you want to buy a truck, then you should take into consideration a credit union or a bank;
- Being a leased owner operator won’t let you take time off like company truck drivers can;
- Always carefully find out the information needed about the trucking company that you will lease on to;
7. Never Lease/Purchase a Truck From a Trucking Company And Haul For Them At The Same Time
The prime reason why you as a leased owner operator should never lease/purchase a truck from a trucking company and haul for them at the same time is because of the ridiculously low percentage that they will offer you to work for them.
Yet, trucking companies are always open for leased owner operators, but be extremely careful, because their programs can set you up to bleed you dry and make more money off you.
