Trucking

Is It Profitable for New Owner-Operators to Rent a Truck?

Table of Contents

Obtaining a truck is a pre-requisite to being an owner-operator. As an owner-operator, your truck will be essential to your business success, and the source of the majority of your ongoing costs. When it comes to obtaining your first truck you have several options, some better known than others. At first, it may seem a daunting and overwhelming task to decide whether to rent or buy your new truck. However, the best course of action is to ask a lot of questions.

  • Is your credit rating good enough for a loan to purchase the truck?
  • Do you have enough for the down payment?
  • Is it better to lease or purchase a truck?
  • Can you rent a semi truck?

Granted, these are but a few of the many questions to ask and they are focused on the method you use to get that first truck. Reading articles such as this one, watching videos, and asking other drivers, either in person or via internet forums, is a good way to expand your knowledge about the very important step of starting your owner-operator business. 

What Aspects You Should Consider Before Making Your Decision?

Budget

The amount of money you have allocated or available in your budget for acquiring a truck will determine the extent of your options. If you have a large starting budget, it will be easier to purchase a truck. However, if your budget is limited you may find it difficult to purchase a truck. That leaves leasing and renting as the most viable options for your circumstances. 

What type of truck do you need? Which make/model?

Your operating range and type of freight can dictate the type of truck that you need. 

  • Will your owner-operator business focus on local freight, regional freight, or nationwide?
  • Depending on the answer to the above question, will you need a day-cab, a light-weight tractor configuration, or a standard OTR sleeper berth truck?
  • When it comes to make and model, newer is always better, despite the higher upfront costs. This is because you will save money over the next several years with the lower maintenance needs and costs. 
  • Maintenance will be one of your greatest ongoing expenses aside from fuel and your truck payment. So some extra research and planning can help you operate cheaper and more profitably. Consult with the major truck repair chains and review their charges according to make and model. Some will be cheaper than others.
  • Research up-to-date data on replacement parts availability and costs according to make and model. 
  • Freightliners and Peterbilt/Kenworths have typically been the most owner-operator friendly makes, but always do your research to ensure this is still the case. 

Leasing vs. Renting

With most companies, leasing a truck means sacrificing a large chunk of your freedom as an owner-operator. Many of the mega-carriers have leasing programs, but these are often so restrictive that, rather than the full freedoms of an owner-operator, you may find yourself as nothing more than a glorified company driver. Leasing on with a carrier typically means you’ll have consistent loads, but you will earn far less than you would as a fully independent owner-operator. 

But, if you’re wanting independence, control, and higher load revenues, then renting is a viable option to explore. When you rent from a truck rental company, you’ll be able to operate as a fully independent owner-operator. However, the big downside to renting is that you’ll pay a higher monthly average than a lease, perhaps as much as it would cost you per month to purchase a truck.

Should You Buy or Rent Your First Truck as a New Owner-Operator?

Benefits of owning your truck

There are more hoops to jump through, and the upfront costs may be slightly higher, but after reviewing leasing and renting, it may be that owning your truck is the most desirable route for you. So let’s take a look at the benefits of owning your truck:

  • The benefit of purchasing a semi is that, once fully paid for, it is all yours. 
  • Every monthly payment you make if you finance it and have to pay it off over time will increase your equity. But if you purchase it outright, you won't even have to worry about making regular payments—it will be yours right away.
  • Once the loan is paid off, all you'll have to worry about is the expense of upkeep and keeping it in excellent condition to maximize its worth. You are free to use the car for as long as you like in the interim.
  • Other benefits of financing your truck include lower insurance costs and possibly tax advantages that could help you save money.

Benefits of leasing/renting your truck

  • If you desire a new truck every few years, leasing might be a better option. 
  • If you choose this course of action, you might be given the choice to buy the truck at the conclusion of the lease.
  • Although you may try a lease-to-own arrangement, keep in mind that you'd need the necessary funds to do so. The alternative would be to just exchange your current lease for a new one.
  • One benefit of leasing a truck is that you might be able to save money on vehicle maintenance in addition to perhaps allowing you access to reduced monthly payments, a lower down payment, and tax savings. 
  • As was already mentioned, leasing might give you more options if you have bad credit than trying to buy a truck would.

How Does the Process of Renting/Leasing a Truck Work?

Let’s take a more in-depth look at how renting/leasing a semi truck works. The better you understand the ins-and-outs of leasing/renting, the more informed your decision will be, and the more successful your business will be. 

Understand what is the rental agreement

  • No matter how long you plan to rent, you must comprehend every detail of the rental agreement. Always read the fine print, if there is something you don’t understand in the agreement, seek out an attorney or an industry expert to review the paperwork to ensure you’re not inadvertently putting yourself in a bad lease/rental agreement. As with everything else in the trucking industry, don’t be too hasty to sign your name to a document without fully understanding what it is you’re agreeing to. 
  • The truck's driver may be subject to restrictions set by the lender. These restrictions may limit the number of miles you can operate the truck during the year, where you can go, or the types of freight you can transport. It does no good to rent a truck only to find out the company limits the miles you can put on the truck to 75,000 miles per year. Companies that use these sorts of limitations like to add on additional fees and surcharges that make renting from them a sucker’s deal. 
  • They can ask for documentation proving you have your own qualified driver or they might have their own drivers. Whether you’re an owner-operator, or a new company owner, you need to maintain as much freedom as possible. So always be wary of a company that tries to intrude upon your business by specifying that you must use their drivers. It’s best not to give companies like this your business, because better options are available. 
  • The procedure for maintenance emergencies and accidents is something else you should be aware of. This is a big issue, since maintenance problems will arise, and the leasing/rental company’s procedures for maintenance and accidents will be set to favor them and not you. Do the math on these issues, seek as much control as possible. If the numbers don’t add up in your favor, or if you find you’ll be surrendering too much control, do not give these companies your business.  
  • In the event of a malfunction or disaster, be aware of what they anticipate you to do.
  • And, because it’s so important we’ll say it again,  before signing anything, be sure you thoroughly comprehend the rental agreement.

Is leasing a semi-truck a good option? How does it work?

Leasing a semi-truck is more akin to borrowing a truck from a corporation for a predetermined amount of time. Even though the truck is not yours once the lease time is over, you have the choice to purchase it entirely for a set fee.

Keep in mind that the person who owns the truck  will require you to pay a monthly leasing fee, part of which will go toward the truck's purchase price. They may also attach a variety of miscellaneous fees, so make sure you understand the additional costs that they like to tack on later before making a final decision.

Keep in mind that if you want to purchase the truck at the end of the lease, you will need to make a final balloon payment, often $10,000 or more,  at the conclusion of the lease period before the truck becomes yours.

Things to consider on a leasing agreement:

  • Your monthly Budget.
  • How much is the down Payment?
  • What are the leasing company’s insurance requirements?
  • Does the leasing company specifically limit the annual mileage? If they limit the mileage, can you still operate successfully? Always be ready to put companies that restrict mileage on the back-burner and look for a better company to lease from. 
  • What is their fuel policy? This is mainly a factor when you lease from a mega-carrier like Swift, Prime Inc., etc. Even if you’re not leasing from a major carrier, look for fuel policies to make sure you’re not signing into a bad deal. 
  • How restrictive are they when it comes to maintenance? Do you get to choose or do they specify where you can have the truck worked on?
  • If the leasing/rental company requires you to use a certain chain of service centers, are these service centers readily available in the region you intend to operate? 

What to consider before deciding to rent a truck?

  • What is your anticipated load volume?
  • How many shipping clients do you have? 
  • How many are you planning to get?
  • What’s your credit score?
  • How much are you willing to pay for a monthly truck rent/lease fee?
  • You need to make a financial projection and analyze your projected income/earnings vs. your projected expenses. 
  • Take into consideration important external aspects like inflation, possible recession, negative impact caused by the pandemic
  • Also consider that you need to invest in preventive and routine maintenance
Your first truck is one of the most important business decisions you’ll ever make in your career. Smart, well researched decisions will increase your odds of success.

On the other hand, jumping into a truck contract without doing your homework may put you out of business a few months down the road. Always do your homework, research companies, thoroughly read the paperwork, and never sign your name to a document that you don’t fully understand. 

Starting out as an owner-operator is a lot of work with a lot of dangerous missteps to avoid, but you don’t have to go through it alone. CloudTrucks has been designed from the ground up to be your backup. We are in your corner with the resources, industry connections, and tools to help you successfully grow your trucking business.

All you have to do is sign up today to take advantage of all that CloudTrucks has to offer, including assistance with obtaining your first truck on terms favorable to you. Plus, with CloudTrucks you remain free and independent, while having access to the best rates, 100% control of your schedule, 100% control of your loads, our route planning, business intelligence, same-day pay, and more.

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