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Municipal leasing and rental – attractive alternatives for the waste-disposal sector

What has long been usual for industry with regard to leasing and rental is finding increasing acceptance in the municipal sector, here in the form of municipal leasing from MAN Finance.

The tasks facing a municipal service are wide-ranging and challenging. In order to meet these challenges, it is vital to have the most modern, efficient and low-maintenance technology. But strained budgets are hindering public as well as private waste-disposal operators from making the investments so necessary for carrying out those statutorily prescribed services. MAN Finance offers leasing and financing services for the waste-disposal sector, tailored to the operator's model and requirements.

Municipal leasing for the public sector

For decades, purchasing has been the classic form of procurement for publicly-owned disposal services. This was the case primarily for local authorities at town, city and regional level and their own undertakings or in waste water and waste management associations in which they have controlling rights. Taking into account the room they have for financial manoeuvring, more and more municipalities are interested in alternative procurement options. Here, municipal leasing is ideal for financing public investments. While loan or hire-purchase agreements are still possible in principle, they are generally subject to the same requirements as public borrowing. Leasing is a model of financing that has been well established in trade and industry for many years. MAN Finance Deutschland offers leasing agreements with durations suited to specific sectors, adapted to the long useful lives of public-utility vehicles. Durations of up to 96 months can be agreed. During the period of the agreement, municipalities pay cost rentals that are fixed over the long term on the basis of the pay-as-you-use principle. Subsequently, the vehicles are returned to MAN. This gives the operator the option of rotating new vehicles with continually up-to-date technology into service.

Financing models for private customers

Financing models from MAN Finance Deutschland are also available for companies active in the waste-disposal industry. Initially, the company has to decide whether it wants to become the owner or the user of the vehicle. If it wants to own the vehicle, it can choose between hire purchase and classic loan finance with varying durations. In both these variants, ownership of the vehicle automatically passes to the company on payment of the final instalment. A higher final instalment can be arranged in order to keep the monthly instalments lower. During this period, the company activates the vehicle on its books and writes it off. The VAT owing is a transitory item for which the company compensates by means of input tax deduction. With the transfer of ownership at the end of the financing period, the company is not only able to continue using the vehicle; it also has the opportunity of selling it at a price above the carrying amount on its balance sheet and thus increasing its hidden reserves.

If the privately owned waste-disposal company is interested only in using the vehicle, the kilometre-leasing financing model is the way to go. Here, the company only pays for the use of its modern and efficient MAN vehicle during the period of the agreement. At the end of the agreed period of use, the vehicle is returned to MAN. The company is not involved in selling the vehicle or with the associated risks of the used-vehicle market. Leasing instalments are operating expenses that are immediately tax-deductible and the vehicle does not appear on the lessee's balance sheet.

The range of services offered by MAN Finance is complemented by object/mileage-dependent service packages for maintenance and repair as well as by MAN PremiumCover, the insurance for commercial vehicles.

Complete flexibility thanks to public-utility vehicle rental

In public-utility vehicle rentals, MAN cooperates with the truck rental company BFS. The range covers refuse-collection vehicles for household and industrial waste in the form of rear, front and side loaders as well as road sweepers, winter-service vehicles and set-down and roll-off skip loaders The BFS partner network is a closely knit one with over 55 sites in Germany and Switzerland. Suitable vehicles are available even at short notice, regardless of whether it is a workshop replacement vehicle, a short-term or a long-term rental that is required.

There are many reasons in favour of vehicle rental. In refuse collection, short contract durations often fail to provide companies the security they need in order to build up fleets over the long term using their own resources. Or the vehicles are required seasonally to deal with tasks connected with winter services or with road cleaning. Even though the vehicles were not being used for the remainder of the year, heavy costs would accrue. Vehicle rental is the classic solution to compensate for vehicle downtimes and workshop stops or to expand a fleet for an additional order at short notice.

Besides the rapidity with which vehicles are on hand and the high degree of flexibility in terms of vehicle deployment, rental also scores by enabling calculable fixed costs, improving liquidity, relieving the company of loss-of-value risk and making the very latest technology immediately available.