Path of Lease Assistance

Max Kvidera | June 02, 2011

After leaving the road to drive locally, the Oregon resident returned to owner-operator status in 2010. Leery of another carrier lease-purchase plan, she signed on with Lone Mountain. She put $3,500 down and is paying $1,095 a month for 42 months for a 2006 truck with an initial 450,000 miles. She moved on to Landstar last December and estimates she’s averaging about 2,500 miles weekly.

Todd Long:

In 42-month contract

Accustomed to self-employment in construction, Long wanted to be an owner-operator after driving for carriers. Yet as his wife, Kate, says, “I didn’t think anybody would lease to us because our credit was so horrible,” even though they had kept up with house and vehicle payments.

Carriers were quoting weekly payments up to $800 with no money down. She eventually found Lone Mountain. After about two months spent providing documents, the Tennessee couple signed a lease-purchase contract. They put $3,200 down and are paying $1,150 a month over 42 months.

Recently, Todd Long signed on with Landstar and hopes to make more money than he was making with his previous flatbed carrier.

George Mills:

One lease, three carriers

After more than 35 years as a company driver, Mills turned to independent status when the dispatcher at his carrier in 2009 told him “to buy out your truck or you’re out of a job” as the company was being bought out. He signed on with ATBS Leasco for a lease-purchase contract on a 2006 truck.

His 28-month lease required $2,000 down and an $8,000 buyout at the end. His $600 weekly payment includes $350 for the truck, $200 for maintenance and the rest for an accountant to take care of his taxes. What’s left over in the maintenance account can be applied to the buyout when the lease is completed in December.

He’s been on the same lease as he’s worked with three carriers, finally landing at Risinger Bros. last July.

Tax implications

Leasing a truck with an option to buy has tax benefits. As an owner-operator, you can deduct expenses, including truck payments, or you can elect to depreciate the vehicle.

David Blair, owner of Blair Tax Service, recommends deducting the down payment and lease payments, along with other truck expenses. “The truck is 100 percent deductible,” he says, and the deductions stay relatively constant over the term of the lease-purchase.

His argument against depreciation involves the financial hit you could take in the second half of the depreciation cycle. Assume an $80,000 truck in a three-year depreciation schedule, which can be spread over four years. The first year’s depreciation is $26,664, or 33.3 percent of the value. The second year’s depreciation is $35,560, or 44.5 percent. He says those first two years are “almost like untaxed money.”

  • Travis

    Before you sign a lease-purchase, you may want to check out
    my Kindle book, “Bare-Knuckle Trucking; Strategies for Owner-Operator
    Survival.” I wrote this book to detail many of the ways motor carriers and
    their captive finance companies transfer the capital cost and tax burdens to
    lease-purchase operators while retaining ownership of the truck to indirectly
    control the lease-purchase operator. I actually got the title to my truck, but
    it was through a unique set of circumstances that will not be easily replicated
    at a large fleet. I did learn a lot about the mechanics of the lease-purchase
    process, along with the way motor carriers use lease-purchases to the carrier’s
    advantage. strives to maintain an open forum for reader opinions. Click here to read our comment policy.