How To Lease My Semi Truck To A Company?
Can You Lease Your Semi Truck To A Company?
Yes, you can lease your semi-truck to trucking companies. This means that you allow the company to use your semi, but you do not have to drive it yourself. This is referred to as leasing a truck on with/leasing a truck to. Taking the step toward leasing a semi makes you an owner-operator.
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Semi-truck leasing is a way for someone else to use your vehicle for a predetermined and contracted amount of time for a sum of money, with the ownership remaining with you as the owner. At the end of the lease, you will receive the vehicle back into your possession.
Drivers who cannot afford to purchase their own semi or who are just getting started with their career and are not sure if they want to drive semis for a long time have the option to lease a semi to limit their level of financial commitment and to lower their risk of ownership.
How Does Semi Truck Leasing Work?
Truck leasing companies make money by leasing the vehicles for a much higher price than their monthly expenses, thus creating a profit. In addition to that, they keep the ownership of the vehicle, allowing for tax write-offs on a depreciating asset, any maintenance expenses etc.
In order to start a lease, you need at least three things: a semi truck, a lease contract, and a company that will lease your truck. Within the confines of the lease agreement, you (the owner-operator) are the lessor, since you are contracting your truck service to the lessee (the company or carrier).
Further, make sure you consider your overall cost to own and operate the vehicle, including regular maintenance, tire replacement, insurance and other overhead. Also, consider whether you want to include warranty and roadside assistance with the lease contract. Make sure everything is documented in writing and signed by both parties.
When it comes to terms of the lease, you can decide the term duration and the payment options, incl. any down-payment/security deposit etc. in case of default or negligent damage not covered by insurance.
How Much Does It Cost To Lease To A Trucking Company?
While the rates differ significantly based on one’s personal financial situation, as well as the economy, below is a ballpark idea to prepare someone for the financial numbers that you could see:
“In general, rates for experienced owner-operators with a bad credit score and no balloon payment range from $1,200 to $1,400 for a dated truck. Owner-operators with no previous experience might have to pay up to $1,800.
For a new truck, the rates range from $1,600 to $2,500, depending on your credit score and previous experience. If you can provide a down payment, you can significantly decrease the rate.” (Source: https://moneyqanda.com/lease-a-semi-truck/)
It shouldn’t cost you anything to lease your truck to a company in terms of fees; however, since the company is also in the business of making a profit and will provide this vehicle to one of their drivers at a cost that is higher than what you charge them in lease terms, the gap between your lease amount and the driver lease amount would be the voluntary “loss of profit”, because you are using a middle-man/company.
You can always lease your semi to a driver directly, as well; just make sure you are reducing your risk of vehicle damage, loss and liability by performing your due diligence prior to the lease agreement, as well as through purchase of adequate insurance.
4 Steps To Leasing Your Semi Truck To A Company
Understanding “Leasing-On With” vs. “Leasing To”
The terms “Leasing-on with” and “Leasing to” are interchangeable. They mean that many owner-operators lease their truck to a trucking company, which means they do business with that particular company to move freight but do not work directly for them. Think of it in terms of being a contractor.
However, the term “Leasing from” means that you are leasing your semi from a specific company. This would be the other side of the contract,as you would be acting as the driver leasing a vehicle FROM the trucking company.
Decide The Type Of Freights You Want To Haul
Depending on what freight you want to haul will narrow down the companies you want to lease your truck to, as well as what kind of semi you want to lease out. “Opportunities could range from hauling dry van truckload freight to tanker loads to shipping containers and more. Whatever type of freight you want to haul will determine what company you lease to, what equipment you’re required to have and what kind of experience/qualifications you need.” (Source: schneiderowneroperators.com)
Getting The Necessary Qualifications
You will require a Class A CDL license as an operator-owner. You will also require the proper tractor to pull the semi-trailer, an adequate amount of experience, as well as proper insurance and other paperwork.
There are several Websites that offer legal services and assistance in drafting a lease agreement for you, as well as providing CPA or business setup advice. You can also hire a local legal firm and consult your personal CPA for proper advice on business setup and making sure that you are making sound business decisions and are covered legally.
Some online sources are: fmcsaregistration.com or truckstop.com
Look And Apply For Business Opportunities
Below are some Websites of best companies to lease your semi-truck to:
- Schneider: schneiderowneroperators.com
- Stageline Express: www.stagelineexpress.com
- Nova Lines: novalines.com
- E. Garrison Trucking: www.regarrison.com
- Roehl Transport: www.roehl.jobs
- Barlow: www.barlowtruckline.com
- Dart: www.dartamerica.com
- Roadrunner Freight: freight.rrts.com .
Make sure you fully research potential companies to see if they are a fit when it comes to the 3 Cs: cargo choice, compensation and contract flexibility. You should have a business plan and make sure that your choice of partnering company matches your business strategy.
What Is An Owner Operator Lease To Company Agreement?
“An owner-operator lease agreement is a contract. This contract outlines specific terms when a trucking company leases services from independent truck drivers. Such an agreement is necessary because the owner-operators who provide service to a trucking company isn’t an employee.” (Source: truckstop.com. )
While both lease purchase drivers and owner-operators are responsible for all aspects of their business, the difference between owner operator and lease operator is that owner operators own their truck outright, so they do not have to make lease payments.
Principal Elements Of The Agreement
Some things that should be included in the contract are the specific terms of the lease agreement:
definition and identification of contracted parties, type and duration of the lease, compensation (amount, frequency, currency, form of accepted payment), scope as to what is included and what is not included, intended use, any use limitations/restrictions, what to do when contract is breached, contract termination process, owner-operator legal obligations, what to do if there is damage to the leased property etc.
Benefits Of Leasing Your Semi Truck To A Company
There are several benefits of leasing your semi truck to a company:
- Profit (ideally, you crunched your numbers and figured out the right lease amount)
- No need to drive the truck yourself if you don’t want to
- No need to find jobs (this is a great way to generate passive income)
- Consistent payment (large trucking companies don’t usually skip on paying their bills on time)
- You keep the ownership of the vehicle
- Tax write-offs (depreciation, maintenance, overhead etc.)
- Fairly low risk ownership (insurance, incl. company’s shared).
FAQs
How long is a semi-truck lease?
This depends largely on a person’s credit, the leasing company’s terms and one’s budget; however, the range of a semi-truck lease is 3-4 years, on average.
What is a walk-away lease for a semi-truck?
A walk-away lease is a lease that allows the lessee to return the vehicle at the end of the lease period without any financial obligations based on the vehicle’s residual value.
Do you need good credit to lease a semi-truck?
Ideally, yes, you have better chances at securing a lease, since you will be a lower default risk for the company. Having a good credit also helps you to negotiate better lease terms.
Do you need operator truck insurance to lease your truck?
Yes, as it will protect you from any damage or loss incurred. Not having any insurance on your expensive asset would be foolish. If you are financing, the bank will require insurance to protect their investment against loss and claims.