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What are the best practices involving truck and trailer leasing options? We interviewed people from five companies that lease trucks and\/or trailers to the trucking industry with a focus on the small and micro-carrier.<\/p>\n
We interviewed the following industry leaders: Greg Maniscalco<\/strong>, vice president relationship manager with Navistar Capital, division of BMO (Bank of Montreal, Financial Group); Jim Lager<\/strong>, senior vice president of sales, Penske Truck Leasing; and Matt Svancara<\/strong>, executive vice president, Aim Leasing Company.<\/p>\n <\/p>\n Maniscalco:<\/strong><\/span> Cash flow improvement (lease payments typically lower than comparable loan payments) due to the inclusion of residual value. Getting newer equipment more frequently, setting the lease term to match mileage\/warranty coverages, and avoiding equipment obsolescence and used-equipment value fluctuations. Customized payment structures, and\u00a0the ability to reinvest cash flow savings back into the business.\u201d<\/p>\n Lager:<\/strong><\/span> The customer gets the full benefit of using the vehicle without the exposure of owning it. We provide a very manageable and consistent cost stream when it comes to equipment. They can utilize Penske\u2019s extensive network of facilities and our highly trained technicians for vehicle maintenance, ultimately leasing to better uptime. Our customers can rely on our company to counsel them through a maze of current and emerging regulations. Items include tax reporting, spec optimization, and regulatory compliance.<\/p>\n Svancara:<\/strong><\/span>\u00a0The days of the old-school technician diagnosing a truck by ear are gone. Extremely technical components introduced to trucks over the last decade require specialized training and specialized software for diagnosis and repair. TRALA members spend significant time and money to train technicians for each manufacturer and engine to deal with the technical challenges. When we meet with small fleets, they tell us the most significant challenges are training and software. It\u2019s understandable; the economies of scale a leasing firm can bring to the table make all the difference. There is also a significant increase in turnaround time over dealerships.<\/p>\n <\/p>\n Maniscalco:<\/strong><\/span>\u00a036- to 72-month terms available.<\/p>\n Lager:<\/strong><\/span>\u00a0The periods vary by customer, and we typically base the term on the annual mileage a customer would run. Terms range from three to seven years.<\/p>\n Svancara:<\/strong><\/span>\u00a0While leasing terms vary based on equipment type and annual mileage, many terms fall into traditional five-year or seven-year buckets. Just as lease options have increased, options on terms have too. This decision always remains dependent on the annual mileage needs of a customer, but typically [it\u2019s] the economic life of the equipment.<\/p>\n <\/p>\n Maniscalco:<\/strong>\u00a0<\/span>Shorter leases typically come with higher monthly rental payments. Longer leases tend to exceed warranty mileage limits, i.e., 60- or 72-month terms. Longer leases tend to experience more extensive terms and condition repairs at the time of return, based merely upon the length of equipment usage.<\/p>\nWhat are the benefits to a small trucking company in leasing their tractors and\/or trailers?<\/strong><\/h3>\n
What are the standard periods for most long-term leases?<\/strong><\/h3>\n
What are the advantages\/disadvantages of a longer lease and a shorter lease<\/strong>?<\/h3>\n