Long-Term Rental for VSEs — SMEs

The pitfalls to avoid

In general, the car fleet of an SME varies greatly. It can range from a few units to several hundred vehicles. Therefore, beyond the traditional precautions inherent in any LLD contract, these companies need to empower their drivers, to have advanced management tools, to have flexibility grids, etc. The LLD.fr team lists here a Fifteen precautions to be taken before contracting with an LLD provider.

1. Attention to the definition and quantification of common rules relating to the choice of vehicles
The provision of vehicles in Long Term Rental to the various employees of a company can cause inequity or jealousies. Indeed, the car beyond its utility aspect, is an element of valorization of employees. As such, the management of a company's fleet is a tool of its social policy.

To optimize this social aspect of LLD, it is recommended to set up a “Car Policy”, which means fleet policy. The aim is to define, in advance, the vehicle allocation policy, procedures for choosing, ordering, using and returning vehicles.
To do this, it will be necessary to define the needs of the company beforehand and verify that the services chosen meet its needs.
Some rental companies offer to help you develop this fleet policy, take advantage of it!

2. Beware of vehicles that consume a high level of CO2

Climate change and environmental degradation are largely attributed to the release of carbon dioxide (CO2) into the air. International and European commitments have been made to reduce these emissions. Logically, the implementation of these commitments is aimed at car manufacturers. They committed to reducing emissions to 120g of C02 per kilometer by 2012.

To encourage users of professional vehicles to “drive clean”, new fiscal measures for businesses are now being implemented. Thus, depending on the vehicles chosen and their CO2 emission rate, taxes and duties can vary very substantially. It is important for the company to be aware of these parameters when choosing vehicles, especially since some models in the same category are much less polluting from one brand to another!
The levies concerned are the Tax on Company Vehicles, car registration and non-deductible depreciation.

TVS (Corporate Vehicle Tax)
Thus, the calculation of the Tax on Company Vehicles (TVS), previously calculated according to fiscal power, is now a function of the CO2 emission rate (in grams per kilometer) of the vehicle, as indicated in the table below:

CO2 emission in g/km Cost per g TVTS/year

In addition, as of July 1, 2006, passenger vehicles (VPs) emitting more than 200 grams of CO2 will be subject to an additional tax, due upon registration. This tax will vary according to the CO2 emission rate:

• €2 per additional gram for vehicles that emit 201 to 250 grams of CO2 per km
• €4 per additional gram for vehicles with more than 250 grams of CO2 per km

Depreciation not deductible

Depreciation related to Long Term Rentals is normally deductible from the taxable income of businesses. This rule is subject to a ceiling of €18,300 per vehicle. In addition, since January 1, 2006, this ceiling has been lowered to €9,900 for vehicles that emit more than 200 grams of CO2 per kilometer.

3. Beware of offers that require you to pay a mileage charge
Attention, to providers who are ready to negotiate on everything to get your contract and who at the end of the contract will align you.
Every rental comes with a contract on the basis of which your rent is fixed, a contract that defines the duration of the commitment and your mileage. Depending on the company, this choice is more or less broad. Opt for an organization that lets you freely choose the duration and mileage you want for the car you want, and not fixed packs.
Moreover, only the former also allow you to be able to change your choices during the contract. For example, you can increase your mileage if you change your home and get away from work. Otherwise you will have to pay penalties that can be high.

“We don't have a grid, but nevertheless, we are working to simplify our relationships,”
“For example, for an extra or a kilometer less, we will draw up a contract”,
“The reimbursement system is therefore perfectly transparent”,
“As far as reconditioning is concerned, just before the vehicle is handed over for 120,000 km, we will do an assessment to avoid surprises.”
“A month before, we therefore made a visit to check on the bodywork, which allows you to have them insured”,
“We are looking to establish a relationship of trust.”

4. Beware of service providers who spontaneously would not offer you a refund or outdated schedule.
The end of the contract must be transparent from the start of the commercial relationship.
In addition to the costs associated with the launch of the contract, its implementation and its modifications, the costs of return may constitute a significant unforeseen burden,
The wear and tear of the vehicle returned at the end of the contract corresponds to a standard state of dilapidated condition.
This standard condition must be communicated to you by the lessor, from the start of the commercial relationship. Otherwise, you may face a significant amount of repair costs that you would not have expected.

“For the grid, you ask for it, we give it to you but make no mistake, very few of our competitors do it spontaneously”,
“We do it spontaneously, but that's not the case for everyone”

Attention, some rental companies take into account the age of the vehicle and apply reduction rates on repair costs. A plus for you! Do not hesitate to ask them!

5. Attention: to compare offers, do not hesitate to ask for the general rental conditions (GCL)
The explanations and commercial brochures provided during your first contacts with an LLD provider highlight some of the services offered.
However, in order to be able to compare accurately and objectively, the proposals that will be made, it is strongly recommended to refer to the CGL (General Rental Conditions). This is the legal document that will be signed and binding on both parties, which contains the main commercial conditions relating to the rental service offered.

6. Attention to service providers who do not have European coverage
More and more company employees, on a regular or occasional basis, have to travel across national borders. It is important that the same LLD services (assistance, maintenance...) are offered to them regardless of the country where they are located.
All LLD providers will tell you that they cover Europe. However, some only have partnerships with local correspondents, whose services are uncertain, while other brands are genuinely present in the countries concerned and therefore offer you the same guarantees regardless of where you are. In addition, the management and monitoring of a fleet at European level requires very specific expertise. Attention, not all renters are in a position to respond to this type of offer, so stay very vigilant!

7. Attention to service providers who only work with a small network of garage owners
In case of assistance, maintenance or repair, the user must contact a garage owner who agrees to work with the rental company, in order to avoid any management constraints. It is therefore important that your employees can find a partner garage from your LLD provider wherever it is located.
We therefore advise you to prefer renters who work with a dense network of garages present throughout the country. That is not the case for everyone.

8. Be careful to check that it fits your accounting requirements correctly
Most rental companies can adapt to the way you work.
For example, when it comes to invoicing, make sure that your landlord sends you documents that are in accordance with your organization, in order to avoid any recharging work and facilitate your accounting analyses.
Group management to reconstitute groups. Large structures, global vision of the company, a tool capable of reproducing the structure of the company
Are you able to integrate it into our accounting? Do you send Excel files (how often)? , Do you know how to dematerialize invoices? (Data exchange).

9. Attention to be able to benefit from a computerized reporting tool adapted to the management of your business
LLD allows you to outsource the management of your vehicle fleet and therefore a reduction in administrative constraints. Most often, online monitoring and reporting tools are offered to you.
For this service to be really effective, it is important that your service provider speaks the same language as you, that he adapts to your organization to avoid burdening your management.
To monitor the fleet, you must define with your commercial contact, how often and by what means (e-mail, Excel tables, online tool, etc.) you want to be informed of developments and possible anomalies.

10. Attention to the capacity to manage equipment for each of the service providers
The LLD service offered to you includes the provision of the vehicle but also its maintenance, in particular the management of equipment. Ensure that the services offered meet your expectations.
For example, in terms of tires, a package is offered to you with a defined number of spare tires during your contract. Make sure that you can make the exchange in a center near you. Some rental companies only work with a restricted network while with others you can go and change your tires almost everywhere.
Still in terms of tires, some of your employees will sometimes need “winter” tires. In this case, check that your rental company includes such a service in its pneumatic offer, in particular that the assembly and dismantling of this equipment are included in the package offered.
Can we change the tires wherever we want or should we go to your network?
Do you offer summer/winter tire solutions?
Is tire management globalized or managed car by car?

11. Beware of offers that do not provide you with a replacement vehicle in case your vehicle is immobilized
More than providing a vehicle, LLD is first and foremost a service that must ensure the mobility of your employees at all times.
Thus, in the event of a vehicle being immobilized (failure, maintenance, theft, etc.), your employees must be able to benefit easily, economically and quickly from a replacement vehicle.
To this end, you will be offered by some service providers to subscribe, for a modest fee, to a “Replacement Vehicles” package. In the absence of such a service, in the event of immobilization, it will be necessary to resort to a short-term rental, which is much more expensive.

12. Attention to service providers who do not have a return contract
The vehicle returned at the end of the contract is, by definition, used. Normal wear and tear corresponds to a standard state of dilapidated condition. Beyond that, in the event of abnormal wear or unrepaired damage that should have been the subject of a claim repair, the repair costs will be borne by the tenant.
Your LLD provider must therefore provide you with a return contract that precisely defines, in advance, the criteria for a standard condition of use and the repairs that will have to be invoiced to you.
Beware of service providers who do not offer you discount tables with commitments in terms of allowances?

13. Attention should be paid to service providers who, upon return, assess the repair beyond the deductible or the tolerance threshold.
When the vehicle is returned, the tenant and a representative of the lessor or, most often, an authorized garage owner, together draw up a return statement. This statement will make it possible to assess the amount of repairs.
If this amount exceeds the deductible of your insurer or the tolerance threshold set by the lessor, you will have to cover repair costs. In this case, to ensure that the proposed estimate really corresponds to the necessary repairs, you are entitled to request a counter-expertise.

14. Be careful to differentiate between franchise and tolerance threshold...
A deductible applies to any repair costs, it is directly charged to the cost of repairs and is deducted from the amounts due.
On the other hand, the tolerance threshold corresponds to an amount beyond which all amounts due will be invoiced.

Example 1: €300 franchise
— Repair and reconditioning: €320
— Amount due: 320 — 300 = €20

Example 2: Tolerance threshold of €300
— Repair and reconditioning: €320
— Amount due: €320

Example 3: Tolerance threshold of €300
— Repair and reconditioning: €280
— Amount due: €0

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