Don’t do it: FMCSA Task Force says lease purchases should be banned

It sounds so great.

You can own your own truck. You don’t need a good credit rating or even a credit card. All you need to do is run enough miles to cover the cost of the monthly (or weekly) payment and take good care of the truck. Comply with the terms of the lease, and the truck will be yours. After that, who knows? Carriers with fleets in the thousands started with a hard-working entrepreneur and a single truck.

Don’t do it.

That’s the advice from the Federal Motor Carrier Safety Administration’s (FMCSA’s) Truck Leasing Task Force (TLTF or Task Force). Mandated by the Infrastructure and Jobs Act signed into law in November, 2021, the TLTF reviewed thousands of documents, court documents and hard-luck stories from drivers who participated in lease-purchase agreements with carriers.

The TLTF officially ended on January 17, 2025. Their recommendation was as harsh as it was simple: lease-purchase agreements should be banned. If not banned, the recommendation was strict government oversight.

What does “lease” mean?

Before proceeding, it will be helpful to understand the trucking industry’s confusing use of the word “lease.” The Department of Transportation requires that a motor carrier be granted authority to operate in interstate commerce. To obtain authority, proof must be provided that the carrier can meet financial obligations and other standards. Truck owners who don’t have this authority can enter agreements to become Independent Contractors (ICs), running under a carrier’s authority. This arrangement is called a “lease” because the owner is granting the carrier permission to add the truck to their fleet. The contract that specifies the responsibilities of both parties is a “lease agreement.”

Rather than paying a rental fee for the truck, the carrier agrees to pay the Contractor a percentage of the income the truck brings in or a flat per-mile fee. Other obligations, such as the I/C providing a driver for the truck, are included in the lease agreement.

Rather than buying a truck, some drivers rent, or lease equipment from third-party suppliers. For this article, that arrangement is treated the same as truck ownership.

A “lease-purchase” is another matter. Carriers offer drivers who want to become independent contractors but don’t have the money or credit to purchase a truck an opportunity to lease (rent) one from the carrier. The driver agrees to pay a monthly (or weekly) amount, to be deducted from settlements, until a certain amount has been paid. There’s often a final payment, after which ownership of the truck is transferred to the IC. Until that final payment is made and ownership transfers, however, the would-be owner is simply renting the truck from the carrier.

So, in a bewildering twist, the driver leases a truck from the carrier and then enters into a lease agreement to become an IC for that carrier. two agreements are needed, a lease-purchase agreement to define truck ownership and then a lease agreement that determines the working relationship between the truck “owner” and the carrier.

What is the harm in a lease-purchase agreement?

While many drivers have had long, successful careers as ICs, the track record of those who entered Lease-Purchase Agreements is not a good one. The Task Force collected data that suggests that less than one in every hundred drivers who participate in a Lease-Purchase end up owning the truck.

The TLTF conclusion was, “The Task Force agrees unanimously that the costs and harms of lease-purchase programs are so great that these programs should not be permitted.” They added, “Lease-purchase programs are regularly established to enrich motor carriers at the expense of drivers.”

Carriers often use lease-purchase as a method of getting a larger return for used equipment than they could realize by trading it in. They can set their own price, rather than accepting a dealer’s offer. Since the agreement is a rental until the contract is completed, the driver builds no equity and can’t sell the truck to get out from under debt. It belongs to the carrier and can be leased to driver after driver, and the carrier determines how many miles or loads the driver gets.

The demands of the carrier

Maintenance costs on a truck increase as they age, especially after warranties run out. Lease-purchases transfer the responsibility for maintenance to the driver at a point when maintenance costs are expected to rise. Further, since the carrier still retains ownership, they often dictate where repairs must be made or place other requirements, sometimes even performing maintenance in carrier facilities and charging the cost to the driver.

Carriers have other demands, too. Some mandate where the driver buys fuel or obtains other services. Drivers can’t negotiate fuel surcharge agreements, accessorial pay such as detention and layover. Extra costs such as trailer washouts, loading or unloading fees and extra stops may be the driver’s responsibility. The driver may be required to purchase insurance through the carrier at greater cost. Carriers may require escrow accounts to cover maintenance, cargo claims, insurance deductibles or other costs. These thousands of dollars are often difficult for the driver to get back.

Many drivers don’t fully understand the costs of operating as an I/C. The carrier no longer pays health or retirement benefits. The I/C purchases their own Worker’s Compensation or Occupational Accident insurance and tax liability changes. IC’s are required to pay the 15.3% self-employment tax, on top of federal and state income taxes. For employees, the carrier pays half the Social Security and Medicare taxes owed, but ICs must foot the entire bill themselves.

The Task Force highlighted another problem with lease-purchases. In cases where the carrier doesn’t keep their part of the bargain, the driver must use an arbitration process instead of seeking legal recourse. The terms of arbitration often mean appearing for hearings in locations far from the driver’s home, with travel and lodging costs the responsibility of the driver. Another issue is that the arbitration proceedings are private. There is no public record, as there would be in a lawsuit.

Anyone considering a lease-purchase offer from any carrier would do well to read the 51-page final report from the Task Force. It’s available at www.fmcsa.dot.gov

Then, read the lease purchase agreement carefully, and decide wisely.

Cliff Abbott

Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.