GE Capital, Transportation Finance is offering a new Rebate Lease program aimed at reducing the risk of leasing equipment in an uncertain economy. At the expiration of a fair market value (FMV) lease, the company will rebate customers about $0.04 per mile for under use (the difference between the lease threshold for miles and the vehicle’s return miles).
The Rebate Lease program also includes a comparatively low charge of $0.04 per mile for over use. By comparison, most lease programs offer no mileage rebate and charge about $0.06 to $0.07 per mile for over use, says Dan Clark, president and general manager of the Transportation Finance vertical at GE Capital Equipment Finance.
As an example of how the Rebate Lease program works, suppose a trucking fleet estimates it will accumulate 125,000 miles per sleeper tractor, per year, and thus decides to lease a sleeper tractor for four years and 500,000 miles. Suppose economic conditions change and the company only uses 400,000 miles. At the end of the lease, GE Capital, Transportation Finance would issue a rebate of $4,000. Similarly, if the fleet returns the vehicle with 600,000 miles it would pay an additional $4,000. Straight trucks and other equipment under-use rebates and over-use charges may vary.
Suppose the same trucking fleet decided to lease 50 sleeper trucks at 500,000 miles over the next four years. If the company returns half the trucks with an extra 50,000 miles and the other half with mileage under by 50,000 miles, the customer would pay no additional charge. Historically, fleets would pay for trucks over the mileage threshold but receive no benefit for trucks that come in under, says Kirk Mann, strategic initiatives manager.
“Even in good times, customers were coming to us asking if the company could average the miles on trucks at the end of a lease,” he says. “With the Rebate Lease program, fleets can accomplish this on a unit by unit basis.”
The Rebate Lease program is designed specifically for new sleeper cabs and straight trucks, but GE Capital, Transportation Finance can also customize lease programs for reefer trailers based on hours.
Current market conditions favor leasing due to the uncertainty of equipment valuations three to five years from now, Clark says. The Rebate Lease program offers fleets a lower cost of ownership and eliminates the collateral risk of lease programs.
“We wanted to find some way to work with our partners and customers and make their business life more manageable,” Clark says.
For more information on the Rebate Lease program, visit GE Capital