If you’ve taken the time to read part 1 of Donlen’s truck leasing services blogs (which you can find here), then you have a basic understanding of both full service leasing and unbundled services. But is one of these options better than the other? How can you tell? Well, some folks may feel differently, but we can tell you what we think.
If you have little to no experience managing a fleet of vehicles and you would rather just hand off all the responsibilities associated with your fleet to a provider, then full service leasing may be the thing for you.
However, although unbundled leasing services may require a bit more effort and responsibility on your end, we think the extra work is definitely worth the reward.
Maintenance vendors that matter
“Typically, providers that offer full service leasing do not have access to an expanded maintenance network,” said Donlen’s vp, primary truck services Greg Wilson.
Say that you’re the owner of a truck leasing company with 750 locations across the US where you can take your trucks for maintenance. Now, that may sound like a lot, but it’s important to keep in mind that you don’t have access to one of those locations if it’s more than 50 miles away. It’s also important to note that, with full service leasing, most providers will only allow you use their maintenance locations. Basically, it’s their garage or no garage.
With an FMC like Donlen, that’s not an issue. Donlen has a maintenance network of more than 30,000 vendors in the US (and 3,000 more in Canada) and, if there is a local or independent vendor that you’d prefer to use for your fleet’s needs, our maintenance advisors will work with you to add them to our network.
One of the arguable pros of full service leasing is that the costs of service stay relatively predictable, meaning no surprise fees. However, while the price may be predictable, you don’t always know what it is you’re actually paying for.
For example, if you’re on full service leasing and your provider bills you $900 per month, that cost includes the lease and maintenance, meaning you don’t get an itemized receipt for services rendered. Essentially, that means that you’d have no idea if your provider was doubling the fees to license your trucks or if they’re adding a service fee on top of preventative maintenance. You’re not getting a true cost per mile for what it takes to operate your fleet vehicles and that’s not fair to you.
Flexible lease options
Under full service leasing, you’re locked into your lease contract for the full length of the term. If you try to turn in your trucks before the lease term has expired, you’ll be hit with some heavy penalty fees and you may even be forced to pay the full amount of the contract.
On the other hand, unbundled services presents flexible leasing options like the Open-End Term of Rental Adjustment Clause (TRAC) lease. Let’s say that a certain truck doesn’t fit the needs of your fleet anymore, but you still owe a significant amount for the lease. After 12 months, you can take it to auction and sell it. If it sells above the proceeds, then you can pay off that amount and reap the profits. If it sells below the truck’s value, then you pay the difference.
Either way, unbundled services gives you some much needed flexibility if a vehicle doesn’t meet your needs or if you have to downsize, etc. Compare that full service leasing, which locks you in for the full length of the contract, and it’s a no-brainer.
Every fleet is unique, and the same applies to every fleet’s needs. There are some fleets that lack the right personnel or experience handling fleet vehicles, which might make them a better fit for full service leasing. However, we strongly believe that, although it may be a little more work, the access to an expanded maintenance vendor network, transparency to the true costs of service, and flexible lease options (among other benefits) makes unbundled services the way to go.