I Want to Lease my Truck to a Company: How does it work?

Disclaimer: This article is for informational purposes only. Truck Freighter does not guarantee the accuracy of the information. This information is not to be considered as legal advice. Please seek the counsel of a legal professional before signing onto a lease agreement with a motor carrier.

I Want to Lease my Truck to A Company. How does it work?

Leasing onto a carrier means a truck owner who also drives his/her truck is agreeing to contract transport services to a motor carrier. “Leasing on” is different from “lease” and “lease purchase”. An agreement that governs leasing onto a trucking company is still referred to as a lease agreement. In a scenario where the operator owns his truck then he/she is declared the lessor in the agreement because he/she is contracting service out to the lessee (carrier).

i-want-to-lease-my-truck-to-a-companyIt is required for the lessee to spell out how costs associated with fuel, fuel taxes, permits, empty miles, tolls, ferries, detention, layover, base plates, and insurance. Who pays for fuel and insurance are one of the primary determining factors that will classify an owner operator as an employee or independent contractor under federal or state/provincial employment standards law. Therefore, if your truck operation is more of an independent contractor arrangement, it can change. An independent contractor acts more like a traditional business owner in the sense that they can provide services to multiple customers (carriers). Dependent contractors are not covered under Part III of the Canada Labor Code and are not entitled to tax contributions. Most dependent contractors are classified as individual business owners or commonly referred to as sole proprietors. Violations and infractions that the owner operator is responsible for directly impacts the NSC profile of the carrier the O/O is leased onto. Most owner-operators are still considered employees for tax purposes and therefore federal pension and employment insurance with-holdings/contributions are required.

Overweight trailer fines can be the responsibility of the owner operator if they do not scale the trailer’s weight before departure, especially if it is written in the lease agreement. An owner operator works much like a company driver, but the primary difference is they own their own truck, and the budget the carrier would otherwise spend on maintenance is allocated to the O/O through an increased wage. Therefore, if an owner-operator can manage to take diligent care of his truck, he can pocket the extra monies that would otherwise be spent on repairs.

Following the signage of the lease agreement by both the carrier and owner operator, a receipt of equipment statement needs to be completed. This declares the vehicle is under the carrier’s control. At this point in time the carrier is responsible for mechanical violations and for establishing a maintenance program for the truck.

In future articles we will discuss how a trucking company owner operator lease agreement is to be drafted. If you have title ownership of a semi-truck and are thinking: “I want to lease my truck to a company”, then this information should be basic grounds to beginning your journey as an owner operator.