The open-end, TRAC lease allows fleet managers a great deal of flexibility in managing depreciation. One manifestation of that flexibility is allowing fleet managers to amortize vehicles based on vehicle class and usage.
Some call it thinking out of the box, pushing the envelope, or just plain breaking the rules. “Common wisdom” isn’t always the best way to keep a fleet running cost efficiently.
In the commercial fleet industry, the most common amortization rate used for establishing a depreciation reserve is 50 months. Recently, some major fleets extended amortization rates on new-vehicle orders.
Depreciation turns fleet vehicles into “melting” assets. The open-end TRAC lease is an excellent tool to manage depreciation expense; however, maximizing its effectiveness requires establishing the proper depreciation reserve.
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