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 Ten
Questions to Ponder When It’s RFP Time
So the time has come to evaluate your fleet
management company. The review may range
from financing to management services, and
the decision to conduct a review could be
due to a change in reporting structure to
concerns about the financial strength of
your current leasing company. Or, perhaps
your existing contracts have not been
renegotiated in more than five years or your
supplier has stopped providing vehicles.
Whatever the reason, preparing and
evaluating a request for proposal (RFP) can
be a major undertaking for any fleet
manager.
Most of us know that suppliers can be very
inventive when it comes to finding new ways
to charge for their services. Fees can be
buried in such places as finance rates and
sales adjustments. One way to get a
transparent quote from service providers is
to ask the right questions to help uncover
the true costs of a leasing and/or fleet
management program. Below are 10 questions
for you to consider when developing your
RFP.
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1. |
Capitalization Cost |
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How is a vehicle’s
capitalized cost calculated?
Make sure the capitalized
cost is only the vehicle and
up-fitting costs. Why pay
interest on taxes or
delivery fees? |
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2. |
Interest Rate |
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How is the interest rate
calculated? Get a clear
understanding of how the
interest rate is calculated.
Rounding up and cost of
issuance charges can be
hidden in the interest rate
quote. Also, make sure that
you understand exactly which
specific financial
instrument is being used as
the basis for finance
charges. |
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3. |
Amortization |
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How is the first month’s
rental payment calculated?
Ensure that the amortization
portion of the lease payment
is applied to reduce the
vehicle’s book value. |
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4. |
Miscellaneous Fees |
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What are the fees? Find out
if any miscellaneous fees
will be assessed during the
vehicle’s lease term. |
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5. |
Out-of Network Charges |
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Will you be charged for
using out-of-network repair
shops for maintenance and
accident repairs? What
exactly constitutes an
out-of-network shop? |
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6. |
Line Items |
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What line items should you
include? If your
organization requires
additional services such as
driver record checking,
decal applications or
vehicle delivery, be sure to
include line items that
explain your requirements so
fees can be shown up-front
and not be a surprise later. |
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7. |
Rebates |
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Ask the fleet management
company if you can receive
rebates based on the dollar
volume for purchases such as
fuel, maintenance and
repairs. |
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8. |
Termination of Monthly Payments |
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Find out when a vehicle’s
monthly rental payments are
terminated. Is it upon
return of the vehicle to a
dealer or not until the
vehicle is sold? |
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9. |
Sale of Vehicle Fees |
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What fees are assessed upon
the sale of the vehicle?
Does the fleet management
company charge for clean-up
and detailing,
transportation, and/or
de-identification?
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10. |
Payment Terms |
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What are the payment terms?
Get clear payment terms and
ask for a discount if your
company can pay before the
due date. |
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Once you have asked the questions, you need
to do the math. Use a sample vehicle to work
out the mathematical details to ensure your
organization is receiving the best value for
the programs you require.
Contact us for a free initial
consultation
For more information on how Mercury
Associates can help you analyze your
contracts, develop RFPs, rightsize your
fleet and implement fleet management
information systems.
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