Becoming a truck operator isn’t easy; you have to account for several things. Most important of which is whether you will lease or buy a semi-truck. Leasing a semi-truck at the very beginning of your owner-operator career is a brilliant decision.
What Does Leasing A Semi-Truck Entail?
It means getting a truck for a temporary period from a company. The truck won’t be in your possession, but you can avail the option of buying it outright at a predetermined price. Companies worry about the truck’s condition after the lease is up, so certain conditions are applicable on the lease terms.
The Leasing Process:
If you don’t have any financial backing and want to become an entrepreneur, you have no other choice but to lease a truck. Outlined below are some instructions that will help you choose a carrier and lease a semi-truck from them.
Take Advice From Drivers:
Talking to other drivers can help you with some reliable inputs. However, it would be best if you didn’t take this advice at its face value. It would help if you did your thorough homework before forming an opinion. You should inquire about the good, bad and the ugly about any given carriers from drivers and ultimately decide how accurate each report is.
Asking lots of questions will be our advice as it helps you make a good decision.
The Leasing Contract:
Knowing what exactly the contract states is very important. How much money you make from the leased semi-truck will depend on what it costs to run the truck. There are several other requirements that your carrier may ask you to pay for:
- A down payment
- Payment for Base Plates and permits
- Cargo insurance coverage
- Accept freight claims responsibility
- Maintenance costs like towing, tires and other repairs.
Know about the details of your credit accounts before signing the contract. Make sure the agreed-upon terms will ultimately make you a profit.
Check The Numbers:
Before officially signing the lease, it is essential to run the numbers and ensure that you will have a profit margin. If you can’t make money on paper, you certainly can’t make money in real life.
When figuring out your earning, it is recommended to have realistic numbers. For example, if you calculate your profits on the basis that you’ll be driving 3800 miles in a week, you can’t simply meet this threshold accounting for 4-5 holidays in a month.
We recommend running several sets of numbers with varying mileage totals to accurately estimate if you will be able to meet your income needs. Add additional expenses in these estimates as well.
Tax And Insurance Expenses:
Company drivers enjoy various benefits like health, dental and life insurance which the carriers offer, but as a lease operator, you won’t get these benefits. In addition to these expenses, you need to figure out your retirement plans. This expense will have to come out of your dwindling pool of money at the end of every week.
Taxes will be another responsibility that you’ll be performing for yourself. You will have to file quarterly federal and state income tax returns and make estimated payments based on those returns. Also, remember that you will need to manage self-employment taxes like employer’s share of social security and Medicare taxes as a self-employed individual.
Leasing a semi-truck will be a daunting experience for you financially, even if you get the best circumstances. However, with their persistence and business savvy senses, some drivers make their mark in the industry.
If you evaluate and oversee everything vigilantly, studying every little detail, you will be able to make your way as a professional driver.
Also Read: Best Truck Stops In The USA