Are You Being Overcharged? 6 Fleet Management Fees to Avoid
Everyone hates paying fees. Whether it’s an ATM fee, service fee, or luggage fee, we all do our best to avoid them at all costs. The same holds true for businesses that work with fleet management companies.
However, if you’re not sure what to look for, confusing contracts and deceptive invoices could result in your company paying thousands of dollars in excess charges. In this article, we’ll shed light on the additional fleet management fees that your current management company may be charging you, as well as explain Motorlease’s unique approach to the industry.
One of the very first fees that you’re likely to encounter when dealing with some fleet management companies is what’s termed an acquisition fee. This fee is essentially a charge for the privilege of doing business with the fleet management company and leasing a vehicle with them. The fee is charged on every vehicle you acquire and can often reach $400 or more, depending on the company.
At Motorlease, this isn’t our practice, and when you’re leasing a car from us, you can rest assured that your invoice will never contain an acquisition fee.
Courtesy Delivery Fees
Not only do some fleet management companies charge you simply for acquiring a vehicle, but they also tack on a charge for the delivery as well. This charge, known as a courtesy delivery fee, can cost you hundreds of dollars per vehicle.
With Motorlease, our customers rarely see a courtesy delivery fee added to their invoice. That’s because we cover all costs of delivery on our closed-end lease vehicles and cover the first $250 of delivery costs on our equity-lease vehicles. The result is thousands of dollars in savings for our clients.
One of the most overlooked fees that many fleet management clients unknowingly pay is called interim rent/interest.
The fee, typically seen on equity leases, works like this: Imagine that you have a vehicle delivered on the 10th of the month; naturally, you receive a pro-rated bill for the remainder of that month. Sounds fair? The problem is, your vehicle isn’t technically placed “on rent” until the 1st of the next month. Therefore, that pro-rated payment that you made (consisting of both principal and interest) was not applied towards your balance. It was just pure profit for the fleet management company. The only way to avoid this charge from a company that employs this practice is for each and every vehicle to be delivered on exactly the 1st of the month –– a near impossibility.
This isn’t a practice that Motorlease believes in. To be as fair as possible with our equity lease clients, we employ what’s called the “half-month convention”. Any vehicle delivered between the 1st and the 15th is placed on rent as of the 1st of the month it was delivered. Any vehicle delivered between the 16th and the end of the month will go on rent as of the 1st of the following month. We feel this to be the most equitable and fair way to operate. And you can rest assured that the entirety of the principal and interest payments that you make go towards paying down your balance.
Driver Interaction Fees
Interacting with your drivers is an important part of what we do. Whether it’s discussing delivery procedures, fielding a maintenance call, or handling any other question they may have, we not only welcome driver calls, we encourage it.
Unfortunately, not all fleet management companies feel the same. Sure, they’ll still take calls from your drivers, but it will cost you. Don’t want to pay the fees? Be prepared for your drivers to come back to you with every single question or concern.
Out-of-Network Maintenance Fees
Most fleet management companies will offer some form of maintenance program to their clients. However, many of these plans come with restrictive policies that dictate where your drivers can bring their vehicles for service. They advertise it as a benefit to you, saying how easy it is to bring the vehicle in and get work performed. However, if you choose to utilize a provider outside of their closed network, you may incur stiff out-of-network fees as a result.
While Motorlease also has relationships with many of the larger service facilities across the country, unlike many of our competitors, we don’t impose any restrictions on where your driver can take their vehicles for service (with the exception of warranty work, which must be performed by a dealership). We realize that drivers may have a preferred mechanic or may not be in close proximity to a national account. That’s why we allow drivers to have control over where they have their vehicle serviced. We’ll work with their preferred shop and make arrangements to pay them directly.
Lease Termination/Disposition Fees
Many of those same fleet management companies who charge you an acquisition fee on the front end will also turn around and charge you a lease termination or disposition fee on the back end. This fee is often $300 – $400 or more. Multiply that by the number of vehicles in your fleet and you could be paying thousands of dollars for merely returning your vehicle.
Like with acquisition fees, we at Motorlease think that’s outrageous, and never charge our customers a termination or disposition fee on our closed-end leases.
The fleet management industry is notorious for its fees and upcharges, and for good reason. However, that doesn’t mean every fleet management company operates that way. At Motorlease, we pride ourselves on honest, straightforward pricing that allows you to accurately budget your fleet expenses for years in advance.