If you've recently made the decision to transition from an over the road (OTR) trucker to an owner operator trucking jobs, you may be wondering where to begin. The process of purchasing, insuring, and maintaining your own truck can be overwhelming -- as well as costly. However, choosing this path can give you the opportunity to substantially increase your salary. Read on to learn more about how you can make this career change as simple and streamlined as possible.
How can you finance your truck purchase?
Your first step is identifying and securing your rig. In some cases, if you're transitioning from driver to owner operator, you may be able to purchase the truck you currently use at a lower cost, privately financed by your company. In this situation, you'll pay a portion of your salary to your company each year until the truck is fully paid, and you may be required to maintain employment at this company during this time. After you've made your last payment, you should be free to switch employment as needed, as well as able to keep your full paycheck.
In other cases, you may need to go outside your company to purchase and finance your truck. Many large commercial lenders offer transportation loans, and some are fairly forgiving of poor credit. You may need a small down payment so that you're not "upside down" on the purchase -- otherwise you'll be required to purchase gap insurance, which will help fully pay the truck loan if the truck is totaled in an accident. These costs are usually relatively easy to cover on your new, increased salary.
What type of insurance should you have?
In addition to gap insurance to protect against total loss, you'll need to carry liability As a driver, most of these insurance costs are paid by your employer -- but as an owner operator, you'll need to pay them out of pocket.
In general, you'll have to purchase traditional collision and liability insurance, which help protect other drivers who are injured or whose vehicles are damaged in a crash, as well as help repair your vehicle if you're involved in an accident that is your fault. You'll also want to purchase medical payments coverage, which provides additional protection to those who incur medical costs as a result of an at-fault accident.
To protect the cargo you're hauling, you'll purchase bob-tail insurance or non-trucking liability insurance. This can reimburse the owner of the cargo if it is stolen or damaged in an accident. You may also investigate the purchase of personal item coverage -- especially if you stay in your truck overnight. Making a personal item claim can help replace any items you'll need after your involvement in an accident.
How much will you earn?
Most owner operator truck drivers earn an average salary of $141,000 per year -- however, depending upon route and miles driven, some owner operators can earn as much as $270,000 per year. Keep in mind that you'll be responsible for paying fuel and maintenance costs for your vehicle, as well as other costs.
What other costs may you expect?
An owner operator's average salary is substantially higher than the average employee's salary. A portion of this increase is due to the number of costs the owner operator trucker must carry. In addition to paying for insurance and fuel, you'll need to set aside funds to pay for oil and fluid changes, tune ups, and new tires and brakes. However, many of these costs may be deductible as business costs on your federal income tax return. Performing timely maintenance on your rig is highly important -- a mechanical problem can cost you not only in lost wages, but in damages due to the last-minute cargo transfer required if your truck will be in the shop a few days.