It’s no secret: fleet interest rates are going up. As a fleet manager, you might feel stressed about how this impacts your bottom line. And the reality is, there is a chance your overall fleet costs will rise as a result.
But don’t worry:
There are a variety of actions you can take to keep your costs as low as possible. In this blog, we’ll let you know what they are, so you can start taking better control of your fleet’s spend.
So let’s dive in and look at some key solutions.
5 ACTIONABLE SOLUTIONS TO RISING FLEET INTEREST RATES
Solution 1: Move to a fixed interest rate
If you’re currently on a variable interest rate, we recommend moving to a fixed option as soon as possible.
The variable rate worked to your advantage as interest rates were declining, but now, the trend is the other way. Adjust your contracts to take advantage of the new situation. And, when the rates come down, you can switch back.
Solution 2: Order from the factory
In fact, ordering from a factory will save you $1000 more on average per vehicle, compared to buying from a dealer. Do the math: if you purchase 10 vehicles this year, the savings equate to $10,000 which more than covers the increasing costs associated with rising interest rates.
Bonus: when you order from the factory, you can be sure you’ll get the exact vehicle you want. That’s great news for both the company and your drivers.
Solution 3: Maximize manufacturer rebates
Savvy fleet managers know how to take advantage of maximizing manufacturer rebates. Vehicle manufacturers offer rebates based on whether they’re a sole supplier or not. The amount of the rebate comes down to around $180 - $300 per vehicle. This is a great cost saving area, particularly if you apply it to a number of vehicles.
Also, if you commit to ordering more vehicles from the same manufacturer, you can increase the discount.
Solution 4: Time your vehicle purchase and resale right
At Foss National, we call this Smart Order Management. Here’s how it works:
Take delivery as early in the model year as possible. This is typically in the fall. You will maximize the depreciation on the new vehicle and maximize the resale value of the old vehicle (used car buyers historically offer higher values in the fall than in the winter or summer.)
In addition, using Foss National Leasing’s X-Lease program, you can achieve up to 5% higher than fair market value.
Solution 5: Consider a personal use charge
If you have a sales-focused fleet, another key money-saving tactic is to look at adding a personal use charge. Some fleet managers approach this by increasing the amount they charge the driver to use the vehicle, including fuel and interest costs.
While you can’t control interest rates, there are many strategies you can use to keep your fleet costs as low as possible. Choosing a fixed interest rate, ordering from the factory, taking advantage of manufacturer rebates, and buying and selling seasonally are all very effective ways offset high interest rates.
At Foss National Leasing, our strategy is to look at the proper base rates to ensure the best possible interest rates. We continually strive to lower our customers' interest costs through using the proper benchmarks. Follow our tips, and you won’t need to be so concerned about rising interest rates anymore. Your business will start saving more money in no time!
Authored by David Thornton
Download Factory Ordering: Purchase the Options Your Fleet Requires, For Less. It will help you learn how to plan your factory ordering for maximum savings.