Which Drivers Make Good Lease-Purchase Candidates?
While capacity is important, the DOT's new CSA enforcement regime and ever-nosier agencies like the IRS make it clear that you simply can't take people that need to be led by the hand into a lease-purchase program.
Many fleets recruiting owner-operators are having a hard time finding enough qualified applicants -- so are turning to grow-your-own tactics with lease-purchase programs. (Read more about such programs in the July issue of HDT.)
But who qualifies as a good prospective lease-purchase candidate? If you said anyone who can fog up a mirror, you're out of touch. While capacity is important, the DOT's new CSA enforcement regime and ever-nosier agencies like the IRS make it clear that you simply can't take people that need to be led by the hand into a lease-purchase program. The oversight required to keep them on track would bear a dangerous resemblance to an employer-employee relationship.
Scheider National, for example, maintains that separation through a company called Schneider Finance Inc. It's operated at arm's length from the carrier. Grailing Jones, the small business owner-operator development manager at SFI, calls the program the Schneider Career Path Option.
"We don't recruit and we don't draft people into the program," he says. "We offer it as an option – like the name says – to people with ambitions of starting a small business with a future."
Most of the clients are referrals, Jones says, but the program accepts clients from several streams. Former military drivers, CDL school graduates, current Schneider National company drivers and literally walk-ins. Depending on the individual, Jones is looking for six months to a year's experience as a company driver, or previous owner-operator experience.
"It's not something we offer to everyone," he says. "The individual has to have the desire and then explain to us why they want to be an owner before we'll consider them. We're not being elitist; it's our money. If we're going to take a risk, we're going to do it on our terms."
Jones says it's important that the client fits the company and vice versa. They usually insist on a minimum six-month period for each party to get comfortable with each other – a familiarization period and on-the-job training rolled into one.
"That gives us time to look at them and them to look at us," he says. "We're not in this to make money from leasing trucks; we're in this to provide capacity. The last thing we want to do is waste our company assets on an individual who is not sure."
Both Grailing and David Strand, president of Wholesale Truck & Finance, say one of the traditional barriers to truck ownership, credit scores, isn't critically important, but it is considered.
"We look at what the whole person is about," Strand says. "I can think of a dozen reasons why good people get stuck with bad credit. As long they are not in open bankruptcy, and they don't owe back child support, we'll look at them."
What Strand wants to see is some personal commitment – a $4,000 down payment. When they have some skin in the game, they tend to take ownership more seriously, he says.
"We often have carriers asking if they can make the down payment for the driver, but my very simple answer is it doesn't work. We will take $2,000 from the sign-on bonus, but the driver has to have at least $2,000 of his or her own money in the deal."
Strand also looks at employment history. He won't look at anyone with more than two jobs in the past three years. "We want to see some evidence that they've tried to work with carriers rather than just bailing at the first sign of trouble or anytime the grass starts looking greener somewhere else."
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