Full Maintenace Lease

M

mac

Member
Oct 8, 2010
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Hello:

Our company is looking at getting into a full maintenance lease. What were finding is that we are keeping our trucks too long and near the end of the life were are getting hit with heavy repair bills. With the full maintenance lease were hoping it softens the blow over the course of the truck life. Any thoughts, experience or advise on this matter would be appreciated?

Background: We have a fleet of 15 units all Mack daycabs servicing primarily the GTA/Golden Horseshoe/and the North. On average we put on 90,000KM/year.
 
Advantages
1. Brand new vehicle with low down payment.
2. Monthly payments over 5 years that will be comparable to a bank payment.
3. M&R costs are based on per kilometer normally around .06 to .08 per kilometer.
4. Cost is 100% tax deductible as opposed to depreciation only.
5. 24/7 roadside assistance anywhere in North America (depending on lease provider)
6. Easier to finance without getting the bank involved

Disadvantages.
1. You will never own the truck.
2. Over the term your M&R cost wont be much different, just spread out over the term.
3. Once you sign on, it is tough to get out of if things change.

Typically the full service lease route works best for companies that have trucks but are not in the trucking business. Over the long run a full service lease will cost you more however there is some peace of mind that is hard to put a price on. Do the math and decide for yourself. You might want to start with one unit, spec it exactly the way you want it and compare your cost month by month to your other units.

Good luck!
 
whatiship you are bang on on you advantages and disadvantages, another big advantage is if your truck breaks down they will supply a replacement truck after a reasonable amount of time for repair with us it is 4 hours but you can negotiate whatever works for your company. We have 50 trucks mostly over the road and we now lease 36 units, we are finding that with all the new engine specs etc the gap on cost savings of owning your own units is almost equal and that is not even taking into account of downtime for the truck and driver. We do not lease day cabs we find for what you can buy them for you should get 6 to 7 years out of them the biggest thing is once they are paid off decide what is acceptable for repairs versus purchasing a new truck and when you hit that tipping point pull the trigger don't try another month trust me we got burned numerous times.....not completely sure we learned our lesson but here is hoping. We deal mainly with Penske tried Ryder but found there where a few extra charges when the bill came in that was never discussed. If you are in the east end I can supply you with our Penske rep very good technically and a good guy.
 
Great info. Thank you guys.

Why is it more attractive to companies that have trucks but are not in the trucking business? When I asked the sales rep if a lot of his customers went this route he mentioned a brewery and a water bottling facility but no trucking companies which scared me.
 
we are trucking company and we do it, CAT just changed to all leased equipment after years of owning, TransForce as well does.......

Depends on a lot of what others have said below but new technology has pushed more towards leasing IMO......



mac said:
Great info. Thank you guys.

Why is it more attractive to companies that have trucks but are not in the trucking business? When I asked the sales rep if a lot of his customers went this route he mentioned a brewery and a water bottling facility but no trucking companies which scared me.
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mac said:
Why is it more attractive to companies that have trucks but are not in the trucking business? When I asked the sales rep if a lot of his customers went this route he mentioned a brewery and a water bottling facility but no trucking companies which scared me.
Click to expand...

Private fleets are concentrating on their core business, whether it's beer or food. That being said more and more trucking fleets are migrating to full maintenance leases due to the emission related breakdowns and the cost of the repairs.
 
We have started to switch over to the full maintenance leases as well with the majority of our highway units as well. Seems the trucks are less dependable these days and more expensive to maintain. Lowmiler made a great point about the lack of downtime as well. We lease through Penske, and can offer a good contact on the west side of Toronto as well if needed depending on where you are located.
 
Also with full maintenance leases a company is more secure of being up to date with their safety & compliance of the equipment. If you are ever audited, all equipment is in line with the requirements and it's a great peace of mind.
 
How much per mile is fair to pay and for how long the lease should be?
 
We're also starting to consider the FML. The basic reason is the maintenance part. With all of the new electronics you need to have a fully equipped shop and fully trained mechanics. For a small company such as ourselves, that is an impractial expense. Additionally, warranty on new units sucks. You can buy extended, but when you figure it out, it's cheaper to lease than it is to buy the extended warranty. Also, manufacturers, will do anything to get out of warranty claims, so it's always a fight. My take is to let someone else deal with the headache.
As for never owning the truck, do the math ... you pay for the privilege of owning the equity.
 
bigt said:
How much per mile is fair to pay and for how long the lease should be?
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- standard leases are 5 or 6 years. Depending if you are looking for highway unit or city unit. City unit I would go with 6 year lease, and highway unit I would go with 5 year lease. Reson being is you are allowed so many kms per lease term. Standard charges for for units on a per kms is anywhere from $0.07 to $ 0.08 ontop of your flat monthly rate of course.
 
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