Don’t Let the Monthly Payment Drive the Decision

When you receive a quote for a business vehicle, it’s natural to look at one number first: the monthly payment.

But that number doesn’t always tell you the whole story.

Two quotes with similar monthly payments can be structured very differently. One may require considerably more money upfront. Another may include a maintenance program—but not everything you expect. There may be mileage charges, end-of-term obligations, sourcing limitations or additional fees.

And there is another question worth asking:

What is your vehicle provider actually doing for you beyond providing the vehicle?

Before you make a decision, it pays to look under the hood.

Here are six things to compare.

1. How Much Do You Have to Pay Upfront?

A lower monthly payment may come with a larger upfront expense.

Depending on how the agreement is structured, you may be asked to make a capitalized cost reduction, which reduces the amount being financed.

If the vehicle requires specialized equipment or an upfit, you should also find out whether those costs can be financed or whether you are expected to pay for them upfront.

Commercial vehicle upfits may include:

• Shelving and storage systems
• Ladder racks
• Commercial caps
• Partitions
• Liftgates
• Wheelchair-accessibility equipment
• Specialized seating
• Other vocational equipment

Taxes, registration and other charges may also be due before or at delivery.

So instead of asking only:

“What is my monthly payment?”

Also ask:

“How much cash do I need to put into this vehicle before I can put it to work?”

At Capital Lease Group, upfit costs can often be incorporated into the vehicle financing, helping businesses avoid a large upfront expense.

2. What Happens at the End?

If you are considering an open-end vehicle lease, pay attention to the residual or book value.

This is the amount remaining on the vehicle at the end of the term.

A lower book value generally means you have paid down more of the vehicle throughout the lease. If the vehicle is ultimately worth more than its book value, there may be equity in the vehicle.

But the residual number alone doesn’t tell the whole story.

Ask:

• What will the book value be at the end of the term?
• What happens if the vehicle is worth more?
• What happens if it is worth less?
• Who handles the sale or disposition?
• Can you purchase the vehicle?
• Are there termination, remarketing or disposition fees?

The end of the agreement should be something you understand before the vehicle ever goes into service.

3. What Does the Maintenance Program Actually Cover?

A maintenance program can make operating a business vehicle much easier.

But a program described as “full maintenance” may not necessarily include everything you assume it does.

Before adding a monthly maintenance charge, take a close look at exactly what is covered.

Ask about:

• Routine preventive maintenance
• Oil and filter changes
• Brakes
• Tires
• Roadside assistance
• Service coordination
• Replacement transportation
• Loaner vehicles

And don’t look only at the monthly fee. Consider what it costs over the full term.

A maintenance program that costs $90 per month, for example, becomes $5,400 over five years for one vehicle.

Across 10 vehicles, that becomes $54,000.

That doesn’t mean a maintenance program isn’t worthwhile. It means you should know exactly what you are receiving for that investment.

Capital Lease Group’s optional Full Maintenance Program is designed to provide predictable costs, help maximize vehicle uptime and reduce the administrative burden of managing maintenance.

Our program can include routine preventive maintenance, oil and filter changes, tires, brakes, batteries, shocks and struts, drivetrain repairs, service coordination and more.

Learn more about Capital Lease Group’s Full Maintenance Program

Download the Full Maintenance Program Brochure

4. Are You Paying for Mileage and Carrying the Residual Risk?

Commercial vehicles can accumulate mileage quickly.

That’s why any mileage provision deserves careful attention.

But there is an especially important question to ask when an agreement includes both an over-mileage charge and a residual or book value.

Higher mileage can already affect a vehicle’s resale value.

So if you are responsible for the vehicle’s end-of-term value, it is important to understand why you may also be paying an additional mileage charge.

Before signing, ask:

• Is there a contracted mileage amount?
• Is there an additional per-mile charge?
• Does that charge apply to the lease itself or to a maintenance program?
• Am I also responsible for the vehicle’s residual or book value?
• If higher mileage reduces the resale value, how is that handled?

Be careful about agreeing to both mileage charges and end-of-term value responsibility without understanding exactly how the two interact.

You want to make sure you are not exposed to the impact of mileage in more than one way without realizing it.

5. How Will Your Vehicle Be Sourced?

Factory ordering can be an excellent way to acquire commercial vehicles. It is our recommendation, and it is why planning is so important in fleet management. We’ve written quite a few bog posts on it!  When you have enough lead time, it allows you to specify the vehicle you want and coordinate the equipment or upfit you need.

But sometimes your business simply cannot wait.

Perhaps:

• An existing vehicle has unexpectedly gone out of service
• You have hired a new employee
• You have won a new contract
• Your organization needs an additional vehicle immediately
• A factory order has been delayed

In cases like that, sourcing flexibility becomes important.

A vehicle provider should be able to help you explore options such as:

• Factory orders
• Dealer stock
• Incoming inventory
• Previous-model-year vehicles
• Comparable makes and models
• Alternative configurations

Capital Lease Group is independent, which means we can look at multiple manufacturers and sourcing options rather than being tied to one brand or one acquisition method.

The goal should be to find the vehicle that works for your business—not simply the vehicle available through one purchasing channel.

6. What Is Your Vehicle Provider Doing Beyond the Quote?

This may be one of the most overlooked questions.

A good vehicle provider should do more than provide a price and hand over the keys.

Ask what happens before, during and after the vehicle acquisition.

Can They Help Finance Your Upfit?

Specialized equipment can add thousands of dollars to the cost of a commercial vehicle.

Being able to incorporate that upfit into your financing can help preserve working capital and make the overall vehicle acquisition easier to manage.

Will They Take Your Trade-In?

If you are replacing an existing vehicle, your provider should be able to help with the vehicle you are taking out of service too.

Capital Lease Group can evaluate your trade-in and provide a competitive market-based offer that can be incorporated into the vehicle transaction.

Will They Provide a Loaner if Your Vehicle Is Down?

Downtime matters.

If a work vehicle is out of service, your employees may not be able to do their jobs.

If the vehicle transports passengers, downtime can create an even bigger operational problem.

Ask whether your provider can supply replacement transportation while your vehicle is being repaired.

What if You Need a Wheelchair-Accessible Loaner?

For organizations transporting wheelchair users, a standard rental car is not an adequate replacement for an accessible vehicle.

That’s why access to wheelchair-accessible substitute transportation can be so important.

Capital Lease Group offers wheelchair-accessible loaner options in select cases, helping organizations continue serving passengers when an accessible vehicle is temporarily out of service.

For human services organizations, schools, healthcare providers and other transportation programs, that kind of support can make an enormous difference.

What to Compare in Your Vehicle Quote

When you’re looking at two quotes side by side, compare the entire program—not just the monthly number.

Vehicle Quote Checklist

Before approving your next business vehicle, ask:

• ☐ Monthly payment — What is the actual monthly vehicle payment?
• ☐ Cash due upfront — How much is required before or at delivery?
• ☐ Upfit costs — Can they be financed, or must they be paid upfront?
• ☐ Taxes and registration — Are they included, financed or paid separately?
• ☐ Residual or book value — What remains at the end of the term?
• ☐ End-of-term responsibility — What happens if the vehicle is worth more or less than the book value?
• ☐ Maintenance costs — What does the maintenance program cost over the full term?
• ☐ Maintenance coverage — What is actually included? Look specifically at routine service, tires, brakes, roadside support, repairs and replacement transportation.
• ☐ Mileage limits — Is there a contracted mileage amount?
• ☐ Mileage charges — Is there an additional charge if you exceed it?
• ☐ Mileage + residual exposure — Are you paying an over-mileage charge while also carrying responsibility for the vehicle’s end-of-term value?
• ☐ Vehicle sourcing — Can your provider search dealer inventory as well as factory order?
• ☐ Alternative vehicles — Can they consider other makes, models or configurations?
• ☐ Trade-in — Will your provider take your existing vehicle and help you understand its value?
• ☐ Loaner vehicles — What happens if your vehicle is down?
• ☐ Specialized loaners — If your operation requires an accessible or specialized vehicle, can your provider provide an appropriate replacement?
• ☐ Additional fees — Are there administration, termination, disposition or other charges?
• ☐ Total picture — Once everything is included, which option actually works best for your organization?
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Your Vehicle Provider Should Be a Partner

The lowest monthly payment isn’t necessarily the best vehicle solution.

The important thing is understanding what you are paying, when you are paying it, what you are getting in return and what support you will receive after the vehicle is delivered.

At Capital Lease Group, we believe a vehicle provider should do more than hand you a quote.

We help customers source vehicles, coordinate specialized upfits, structure financing, evaluate trade-ins and keep vehicles on the road with ongoing maintenance and support.