Avoiding 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, Debt.org 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. Read more…