Success Stories
Challenge
Renegotiated Rental Agreement
The Client’s existing rental agreement for pickup trucks had a monthly mileage allowance of 2,500 miles. After reviewing the fleet’s historical mileage, it was determined that the crews were averaging 4,000 miles per month for the 33 trucks that were on rent. There was a .25 per mile penalty which would result in over $53k in mileage penalties if the trucks were turned back in.
Creative Solution
The rental agreement had a rent-to-own provision for the pickups. We recommended that the Client work with their Fleet Management Company (FMC) and arrange a buyout for the 33 trucks that were on rent and then lease them from the FMC at a lower monthly lease rate. Since the rental trucks were purchased and put on lease, they did not have to be returned to the rental company, and the $53k mileage penalty was eliminated. The Client was also able to negotiate with the rental company and increase the mileage allowance to 4,000 miles per month with no increase in the monthly rental rate for future rentals.
Challenge
Equipment Rental Conversion
The Rent to Purchase Option (RPO) agreement for three pieces of construction equipment had a provision for a portion of the rent to be applied to the purchase price of the equipment in the event of a buyout within the first 24 months. In this situation, the equipment had been on rent for 26 months and the Client was no longer entitled to apply the rental credit towards the purchase of the equipment. In addition, there were strict turn-in provisions in the agreement in the event the equipment was returned.
Creative Solution
We negotiated on behalf of the Client with the rental equipment dealership. The dealership agreed to apply the full rental credit towards the purchase price if the units were purchased. The Client worked with their finance company and arranged for them to do the buyout and lease the equipment to them for 24 months with much lower monthly payments.
Challenge
Unfavorable Fleet Management Agreement
The Client was in a long-term agreement with a Fleet Management Company (FMC) and the market conditions had changed. The terms and the pricing in the existing agreement were unfavorable and the Client needed to receive better terms.
Creative Solution
We worked with the Client and assisted them in recompeting the existing FMC agreement. This helped to determine what the current market conditions were and as a result, get better terms and pricing. Based on the competition, the Client was able to enter into a new FMC agreement with better terms and pricing as well as other favorable options that the Client did not previously have.