Hello Everyone-
Regarding vehicle leases there are many different names that get tossed around. Things like finance leases, open end leases, closed end leases, TRAC leases, etc. How do you keep them all straight?
Well, as the Asset Management Guide discusses in Chapter 5, there are really only two main types of leases; capital leases and operating leases. By answering 4 questions, you can tell which type of lease you have. Those 4 questions are:
- Does the ownership (title) transfer at the end of the lease?
- Does the lease contain an options to purchase the vehicle at a bargain price?
- Is the term of the lease at least 75% of the estimated economic life of the asset?
- Is the present value of the future minimum lease payments at least 90% of the fair market value of the vehicle?
If you answer yes to
any of those questions, then this is a
capital lease. If the answer to all 4 questions is
no, then this is an
operating lease.
Therefore almost any other lease types you may come across are just sub-types of the capital and operating leases.
If you have questions about this topic (or any other topic) please post and we'll discuss.
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Michael Wilson
Fleet Services Manager
University of Iowa
Iowa City IA
(319) 335-5088
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Original Message:
Sent: 02-10-2020 09:54
From: Michael Wilson
Subject: Asset Management Module Discussion Thread
Hello Everyone-
As we know from Chapter 4 of the Asset Management Study guide there are 3 different types of specifications that you use when working with vendors to acquire vehicles. They are: Performance, Design, and Proprietary. There is also a 4th type that is mentioned in the guide called Hybrid. A Hybrid specification combines the elements of the main three specifications types into one specifications. As the Guide mentions, this type of specification works best for specialty vehicles that are built in multiple stages where a body and other equipment is built and mounted on a cab and chassis.
When I am developing specifications for vehicles, I generally use a Hybrid type of specification. My most recent example of this are three 26' straight trucks that are currently out for bid. For the Proprietary section of the specification I required a Cummins engine and an Allison transmission. Both of these are standards in my fleet in order to minimize our parts inventory and to maximize the efficiency of our technicians. The Performance section of my specification included a GVWR requirement as well as axle weight and passenger carrying requirements.
Have a great week and let me know if you have any questions regarding the Asset Management module of the CAFM materials.
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Michael Wilson
Fleet Services Manager
University of Iowa
Iowa City IA
(319) 335-5088
Original Message:
Sent: 09-19-2019 10:50
From: Chris Goyette
Subject: Asset Management Module Discussion Thread
Hi-
Please use this thread for any questions or discussions regarding the Asset Management Module.
Thanks,
Chris
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Chris Goyette
Senior Manager Chapter & Industry Relations
Princeton NJ
(609) 986-1047
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