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Raising the Standards of the Trucking Industry

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Common Sense Trucking: Avoiding Predatory Lending

Predatory Lending

Predatory Lending

The trucking industry certainly has its share of problematic issues which most often are aimed at the drivers’ ability to succeed or fail in their chosen career. On average, the beginning trucker will last only six months before calling it quits and with the ongoing regulatory process constantly working to appease various political groups, more veteran truck drivers are slowly shifting away from the over-the-road (OTR) sector.

Although one would hope to see the industry step up and take responsibility for its own downfall, one of the most serious issues within the industry which is still very prevalent today and one which is largely responsible for many drivers’ financial ruin: the motor carrier truck leasing program.

Although a precise and definite interpretation has yet to be established, defines predatory lending as: “any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower doesn’t need, doesn’t want or can’t afford.”

Especially in a poor job economy, many will look to OTR trucking simply because the “jobs” are always available, a red flag in itself. Regardless, this scenario is all too often the perfect set-up for those motor carriers operating a predatory lending program. For the most part, the majority of veteran drivers will advise any newcomer to the industry to stay away from these trucking companies’ leases. They are, in general, the very epitome of the characterization and delineation of predatory lending.

Predatory lenders will look for those people with poor credit, no cash available for down payment and especially, those who are just starting out in their trucking “job” career. They will work to convince them that they will make a great deal more money as an “owner operator” under their lease program. As discussed many times before, these trucks are most often used and have been “sold” many times over to previous “owner operators.”

Many drivers continue to be taken advantage of via these programs consisting of an over-priced,often mechanically compromised vehicle with a high interest or balloon pay-off rate or through the industry’s “starving out” process. The carrier will play on the driver’s entrepreneurial spirit, giving them the hope of achieving the American Dream. In reality, these lease programs are nothing more than a money-making scheme for the company.

To avoid becoming a victim of the industry’s predatory lending market, common sense is the most affective preventive measure, although it is most often ignored due to the unethical practices by such carriers. If at all possible, one should not even consider a trucking company lease option program, specifically as a new, uniformed driver. Although drivers have been successful in such leases, these are often those drivers who have gained experience and business knowledge of the industry first, before jumping into a company lease.

If financial reasons play a role in one’s decision, a “common sense” approach when considering a trucking company lease option program is not to allow the carrier to intimidate or play on your emotions where you end up with a truck you cannot afford. If you are feeling pressured or intimidated by the carrier, red flags should again be recognized.

Furthermore, the best practice a driver can utilize is to absolutely stay away from those lease programs offered by the most recognized, large-sized “starter companies.”

In addition, common sense can easily be noted by simply remembering to follow the old adage:

“If it sounds too good to be true, then it probably is.”

The absolute best common sense approach to take if you feel there is no alternative but to deal with a company lease option is to do nothing without the presence and final approval of your attorney.

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By: Allen Smith

Allen Smith is a 37 year veteran who started at an early age in a household goods family moving business. He began driving straight trucks in 1977 and moved to the big rigs in 1982. His experience within the industry includes; owner operator, company driver, operations manager, and owner of a long distance HHG moving business, taking many of the long haul moves himself when needed. Allen Smith, a truck driver advocate who is driven by the desire to help others succeed within an industry where injustice, unrewarded sacrifice, and lack of respect and recognition exists. Allen and his wife Donna are hosts of Truth About Trucking ”Live” on Blog Talk Radio. Other websites include AskTheTrucker, TruckingSocialMedia, NorthAmericanTruckingALerts, TruthAboutTrucking, and many Social Media websites. In 2011 Allen and Donna hosted the first Truck Driver Social Media Convention, designed to create unity and solutions for the trucking industry. This is now being extended through the North American Trucking Alerts network as those within the industry join forces for the betterment of the industry. Allen strongly supports other industry advocates who are also stepping up to the plate to help those who share honesty, guidance and direction. He believes that all those involved in trucking need to be accountable for their part within the industry, including drivers, carriers, brokers, shippers, receivers, etc… The list of supporters and likeminded people grow daily, networking together and sharing thoughts and ideas for the betterment of trucking. He has coined the popular phrase "Raising the standards of the trucking industry"

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One Response to Common Sense Trucking: Avoiding Predatory Lending. - Post a Comment

  1. Redrocka

    Great article. I hope all new drivers see it. I recommend using a factoring company if you need working capital. One that can pay you with discounted fuel cards which help cover some of the freight factoring costs. I use and have been very satisfied.

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