Cottingham and Butler
  • About
  • News & Events
  • Contact
  • Careers
Menu
  • P&C Solutions
    • Insurance & Consulting
    • Safety Services
    • Claims Management
    • Captives & Programs
    • Personal Lines
    • Surety Bonds
  • Benefits Solutions
    • Insurance & Consulting
    • Health & Wellness
    • HR & Benefit Solutions
    • Medical Management
    • Benefits Administration
    • Benefits Stop Loss Captive
  • Industry Expertise
    • Transportation
    • Construction
    • Food & Agribusiness
    • Manufacturing
    • Waste & Recycling
    • Tribal Nations
  • Client Login
    • Infiniti-i
    • IRIS
    • MyWave Portal
    • Policy Passport
    • ProClaim
    • Reports Online
    • PPO Directory
    • RoadWorthy
    • Benefit Information Network
    • iFastrack
    • Risk Management Center
    • CSR 24
  • About
  • News & Events
  • Contact
  • Careers
  • Events
  • Webinars
  • C&B News
  • Case Studies
  • Industry News
  • Compliance
  • Videos

Owner Operator Best Practices Series: Lease Purchase Programs

August 25, 2017

Author: Ben Droessler

This 3 part series is for trucking companies offering, or considering offering equipment leasing programs for owner operators. As trucks become more expensive and owner operators have difficulty buying a truck on their own, lease purchase programs are a great way to attract owner operators.

Part 1: The Basics
Part 2: Physical Damage – Costly Mistakes
Part 3: Breaking Up is Hard To Do

The Basics

Setup: 3-year leases with a residual buyout are most common. Variable terms include down payments, security deposits, buyout clauses (to be covered in Part 3), maintenance, turn-in conditions, mileage overage, insurance, and other chargebacks. Make it clear to the owner operator what they can expect to pay. Hidden costs or unexpected expenses will tarnish your program’s reputation.

Structure: Form a separate company, ideally with different ownership structure to hold the equipment. Many states do not recognize owner operators as independent contractors when the trucking company leases equipment to the owner operator. Even when using excess or older trucking company equipment, the trucking company should “sell” that equipment to the leasing company prior to leasing to the owner operator.

Success: Lessor, lessee and trucking company must strike a balance so that each profits from the program. Higher margins for the leasing company will drive lower margins for the owner operator and higher turnover for the trucking company. Too lean of margins for the leasing company may make purchasing and financing equipment difficult, stifling capacity for growing the program. According to American Truck Business Services, the largest business service provider for owner operators, the average weekly truck payment is $530 per week. Build an owner operator P&L as part of your program. Can an owner operator make money at a reasonable workload?

Take action! A portion of Cottingham & Butler’s Owner Operator Scorecard evaluates lease purchase programs. It’s free, confidential and results are instantly emailed to you. Complete Independent Contractor Risk Scorecard.

Questions?
Contact Ben Droessler with Cottingham & Butler’s Contractor Services Team.

Ben Droessler CIC
Vice President, Independent Contractor Risk
563.587.5248
bdroessler@cottinghambutler.com

  • Tweet
  • Events
  • Webinars
  • C&B News
  • Case Studies
  • Industry News
  • Compliance
  • Videos
Copyright ©2023 Cottingham & Butler | Cottingham & Butler | 800 Main Street | Dubuque, Iowa 52001 | 800.793.5235
Iowa Web Services by Flying Hippo
Facebook LinkedIn Twitter Instagram