Lease On vs Your Own Authority: Which Pays More?

If you own a truck, you can either lease it onto a motor carrier and haul under that carrier's authority, or get your own MC and run as your own carrier. Leasing on is simpler and steadier.

Your own authority gives you more control and more of the revenue, along with every cost and risk. Here's how they compare, what to check in a lease, and how to decide.

What each option means

Leased on: you sign a lease with a carrier that holds operating authority. Your truck runs under its USDOT and MC numbers, usually with its insurance, and you're paid a percentage of each load's revenue or a rate per mile. The carrier finds freight, handles billing and often provides fuel discounts and a trailer.

Your own authority: you get your own USDOT and MC numbers, buy your own insurance, find your own freight (or hire a dispatcher), bill brokers and handle all the compliance. Every dollar the broker pays comes to you, and every cost is yours.

Side by side

The money: a worked comparison

Here's a simple illustration for a dry van on a $3,000 linehaul load. Lease terms and costs vary widely, so use your own numbers.

Example numbers only. Leases differ in percentage, chargebacks and who pays fuel, insurance and trailer costs.

The $570 gap on this load has to cover your own liability and cargo insurance, authority and compliance costs, slower broker payments and the loads you might not find. For some carriers that's easy.

For others, especially in the first year, it isn't. The only fair way to decide is to run both options against your real cost to run the truck over a full year.

What to check in a lease

Federal leasing rules, often called Truth-in-Leasing, are in 49 CFR 376.12. They require a written lease and give you specific rights. Check that yours spells out:

• Your pay, stated clearly before any trip, as a percentage, per-mile rate or other method
• Who pays what: fuel, fuel taxes, empty miles, permits, tolls, detention, accessorials and plates
• Payment timing. The rule requires payment within 15 days after you submit the required paperwork
• Freight bills. If you're paid a percentage of revenue, you're entitled to a copy of the rated freight bill, so you can check the revenue your pay is based on
• Chargebacks. Every deduction must be listed with how it's calculated, and you can ask for supporting documents
• Escrow. If the carrier holds escrow, the lease must say how much and how it's used, pay interest on it, give you an accounting, and return it within 45 days after the lease ends
• Insurance. What the carrier covers, what you must carry, and any amounts charged back to you
• No forced purchases. You can't be required to buy or rent products or services from the carrier as a condition of the lease

What running your own authority takes

• USDOT number and MC authority, BOC-3 and UCR. Here's how the MC and USDOT numbers differ.
• Insurance that meets broker expectations, usually $1,000,000 liability and $100,000 cargo. See our new authority insurance guide.
• A drug and alcohol program, driver qualification file and ELD, plus the new entrant safety audit.
• Cash to cover fuel and expenses while you wait for broker payments, or a factoring company.
• A way to find freight: load boards and broker relationships, or a dispatcher.

Which is right for you?

Switching from leased on to your own authority

Many owner-operators lease on first, then get their own authority after a year or two. To make the switch smoothly:

1. Apply for your authority before your lease ends, so the protest period and filings are done in time.
2. Get insurance quotes early, and have coverage start the day your lease ends.
3. Check your lease's termination terms, escrow return and equipment return requirements.
4. Save enough to cover at least a month of expenses while the first broker payments arrive.
5. Line up brokers that accept new authorities before your first day. Here's how to get loads with a new MC.

When you're running your own authority, we can be the dispatch team you don't have to hire: one dedicated dispatcher, no forced dispatch, and a flat 6% or 8% of your gross. See how we work with new authorities.