A new contract hire deal has arrived that allows fleets to pay into a reserve fund to ensure end-of-contract damage charges are covered.

Damage charges have become an increasing cost for fleets with lease companies now more likely to charge for all damage above normal wear and tear.

A Manheim survey recently found that nearly two-thirds (63%) of fleet vehicles inspected in 2008 were damaged beyond normal wear and tear.

More than 90% of those had up to £250 worth of damage.
 

It is unlikely that such damage will be overlooked by a lease provider meaning fleet managers must take end-of-contract damage charges into consideration or introduce contingencies, such as this new service from Lombard Vehicle Management.

Benchmark Distribution, which recently took delivery of 50 Citroën Nemo vans on contract hire from Lombard, was reluctant to go back to contract hire after seven years of running outright purchase vans.

Prior to that it had been “hit” with high end-of-contract damage charges from a previous vehicle provider.

“We carry unpleasant items that can damage the interior,” explained Richard Stock, Benchmark Distribution director.

“The last time we took contract hire vans we had very unpleasant end of contract charges.”

As a result, when Lombard approached Benchmark it agreed to introduce a reserve damage fund, which means the exhaust delivery company faces a higher monthly lease charger per van but has a reserve to cover damage charges at the end of the three-year, 90,000-mile contract.

"This flexible package meets our financial requirements and addresses our concerns over end-of-contract damage charges as Lombard has configured a contract hire agreement, which creates a reserve fund for this contingency,” said Stock.

A Lombard spokesman added: “This is the first time the solution has been provided, in response to the customer's specific requirement of carrying large objects in small vans and inevitable increase on wear and tear inside the vehicles.”