Hybrid Leasing Flexible Solutions

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Hybrid Leasing Flexible Solutions

A Hybrid lease is based around a finance lease agreement with a guaranteed residual value and operates in very much the same way as contract hire. However, it’s behind the scenes where the differences are seen in cost and simplicity.

Using data from our AWLC system we calculate structured agreements with or without maintenance and with a transparent disposal/residual value to take advantage of the vehicles resale value. We then make adjustments to all the elements to take into account the clients own operational requirements, vehicle type and industry.

The key benefits of a Hybrid Leasing are:

  • Flexibility.
  • No early termination penalties.
  • On or off balance sheet.
  • Lower finance interest rates.
  • Profit on sale of vehicle.
  • No mileage restrictions.
  • No excess mileage charges.

In reality using a Hybrid Leasing transfers control to the company away from the finance provider which in itself provides many benefits. In terms of the cost benefits we use the same principals as with Managed Funding to get the lowest cost of funds from the market place for every vehicle.

Termination

Should you need to end/terminate an agreement for any reason there are no penalties just a simple calculation.

Balance outstanding less vehicle value.

For agreements ending after month 18 almost 50% end up with the client receiving a credit compared to 97% of contract hire agreements which make a charge.

Shared Profit

Probably the most operationally important benefits come from the residual/disposal value structure and process where any profit on disposal is shared 90% to you 10% to Total Motion. Excess mileage or refurbishment costs are not made unless the vehicle fails to meet the required amount.

Possible scenarios

Example A

The vehicle is contracted for 90,000 with a disposal value of £4500.00.
It actually covers 115,000 miles and at disposal realises £4800.00.
But rather than get a charge for 15,000 excess mileages you get a credit for £270.00.

Example B

The vehicle is contracted for 90,000 with a disposal value of £4500.00.
It actually covers 72,000 miles and sells for £6000.00
You receive a credit for £1350.00.

Example C

The vehicle is contracted for 90,000 with a disposal value of £4500.00.
It actually covers 129,000 miles and sells for £4500.00
There is no charge.

 

Vehicle Disposal

An integral part of a Hybrid Lease is controlling its elements – cost of funds and disposal.
Therefore the disposal process is crucial to performance; this is why our approach is different to the leasing industry, so instead of sending all vehicles to an auction we work with the following channels

  • Trade sale to vehicle traders and retailers
  • Retail via our used vehicle car site
  • Sale to staff

Dependent upon the age, mileage, type of vehicle and condition we decide which route will provide the best return. All work surrounding the disposal of the vehicle is completed and managed by our preparation centre.

At present we are achieving 118% of the residual/disposal values, which is giving our clients a profit of 18%.

 

Administration

A major factor in considering Hybrid Lease is that operationally and administratively it’s the same as a contract hire agreement.