Fleet Jargon Explained Part 3 Fleet Jargon Explained Part 3
Depreciation - Loss of value of an asset or vehicle as it is used and ages. Different professions have different definitions. Beware the accountant's definition of depreciation, as they use accounting conventions, and therefore their figures may not reflect the vehicle's actual loss in value. The true depreciation of a vehicle is its purchase price less its current market value or sale price.
Disposal - The final sale or de-fleeting of a vehicle at the end of its life on the fleet. Taken care of by the supplier in contract hire, but is the user's responsibility for most other methods. Keep an open mind on any one method - consider and use auctions, traders and part-exchange as appropriate.
Dilapodations - Often an area of dispute in leasing scenarios. Can be defined as the repairs and refurbishment needed to bring the car back to a "reasonable" condition for age and mileage at end of lease. It is unrealistic for lessors to expect back a fleet car in showroom condition, and hence the industry term of "fair wear and tear". The British Vehicle Rental and Leasing Association (BVRLA) publish clear guidelines as to what should be regarded as fair.
Duty of care - a term which is often used in respect of occupational health and safety, although in law it's much wider than that. However, it is now very clear (from the Report of the Work-Related Road Safety Task Group, 2000/01) that employers owe a duty of care to their employees and to other road users for all situations where the employer requires employees to "use the roads" - including driving, walking (such as postal workers, roadwork contractors etc) and cycling. The duty of care extends to all aspects of the "working environment" and includes issues like the time employees have to spend driving in addition to other duties, providing vehicles which are suitable for the (business) purpose, specialist training if indicated and many more areas. The primary requirement for an employer to demonstrate concern for meeting its obligations is an appropriate risk assessment. See also Risk Management.
Early termination - If a lease agreement is ended by the lessee before its agreed contract term, then the lessor will usually require an early termination payment. This may be a penal charge, but many leasing companies base the charge on the actual losses they incurs due to the premature ending of the lease, in an open-book calculation.
Excess mileage -Most fixed-cost leasing contracts assume a "contract mileage". Any mileage over this will incur additional depreciation and maintenance, which the lessor will seek to recover by the excess mileage charge. Pooling arrangements to aggregate all vehicles returned in a 3- or 6-month period are common. Watch the actual rates, and keep a check yourself, as they can be penal.